New York Is The Eleventh State To Restrict Employers' Use Of Credit History

On December 19, 2025, New York Governor Kathy Hochul signed into law S03072, amending the New York Fair Credit Reporting Act¹ to prohibit New York employers from obtaining or using consumer credit history in hiring and personnel decisions.

The amended statute, which takes effect 120 days after enactment—on April 18, 2026—tracks the New York City Stop Credit Discrimination in Employment Act (SCDEA) that took effect in 2015, and makes New York the eleventh state to enact legislation restricting such use of consumer credit history, joining California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington, as well as New York City; the District of Columbia; Chicago; Cook County, Illinois; Madison, Wisconsin; and Philadelphia, Pennsylvania.

Statutory Prohibitions

The New York credit history discrimination law amends the New York General Business law by prohibiting the acquisition of or use by employers of an applicant's or employee's consumer credit history, that is, the individual's credit worthiness, credit standing, credit history or payment history, as indicated by a consumer credit report, a credit score, or information obtained directly from the individual regarding their credit history, debts, bankruptcies, judgments or liens. The statute makes it an unlawful discriminatory practice for an employer, labor organization, employment agency or their agent to:

1. Request consumer credit history;
2. Use consumer credit history of an applicant for employment or of an employee; or
3. Otherwise discriminate against an applicant regarding hiring, compensation or the terms or conditions of employment based on the consumer credit history of the applicant or employee unless the position sought or held is within one of the enumerated exemptions.

Statutory Exemptions

Like all such laws, the statute contains several exemptions from its general prohibition on the use of an individual's consumer credit history. These exemptions largely mirror the exemptions in the New York City SCDEA. Specifically, the statute does not apply to:

1. Employers required by state or federal law or by a self-regulatory organization to use an individual's consumer credit history for employment purposes;
2. Persons applying for employment as peace officers, police officers, or positions with a law enforcement agency;
3. Persons in a position subject to a background investigation by a state agency where the person is in an appointed position bearing a high degree of public trust;
4. Persons in a position required to be bonded under state or federal law;
5. Persons in a position requiring security clearance under state or federal law;
6. Persons in a non-clerical position having regular access to trade secrets,² intelligence information or national security information;
7. Persons in a position with (a) signatory authority over third-party funds or assets valued at $10,000 or more or (b) have a fiduciary duty or authority to enter into financial transactions valued at $10,000 or more on behalf of the employer; or
8. Persons in a position whose regular duties allow the employee to modify digital security systems.

Similar to the exemptions under the New York City SCDEA, these exemptions are narrowly defined and are expected to be narrowly construed by courts and state agencies.

Restrictions on Consumer Reporting Agencies

The New York State statute goes further than any of the other similar laws by prohibiting consumer reporting agencies (credit bureaus and background check companies) from providing consumer reports for employment purposes that contain information bearing on an individual's credit worthiness, standing, capacity, or history unless the employer or position is exempt from the statute. This provision of the law may be subject to a preemption challenge by consumer reporting agencies to the extent it narrows the permissible scope of credit reporting under the federal Fair Credit Reporting Act.

Scope of Coverage

As the New York State credit history discrimination law amends the New York Fair Credit Reporting Act, on its face (and absent any contrary guidance from state agencies enforcing the statute),³ the amendments apply to any individual in New York whose credit or personal data may be used by employers or other entities through a consumer reporting agency for employment purposes. This application differs from the scope of the New York State Human Rights Law, which is interpreted to cover decisions regarding employment in New York, employment decisions made in New York, or that have an effect on employees working in the state. As a practical matter, this means an individual who lives in New York but applies for a position in another state whose credit history is obtained for employment purposes may be covered by the New York credit history discrimination law.

Conclusion

Employers conducting credit history checks for employment purposes for positions in New York or on persons located in New York should review their policies and practices and closely monitor guidance issued by agencies enforcing the amended statute in advance of the April 18, 2026 effective date of the statute.

Footnotes

1. N. Y. Gen Bus. L. §380 et seq. The new credit history discrimination provisions amend N.Y. Gen. Bus. L. §§380-a and 380-b.

2. "Trade secrets" means information that: (A) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; (B) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy; and (C) can reasonably be said to be the end product of significant innovation. The term "trade secrets" does not include general proprietary company information such as handbooks and policies. The term "regular access to trade secrets" does not include access to or the use of client, customer or mailing lists.

3. While the statute tasks the New York State Division of Human Rights (NYSDHR) with monitoring the use of exemptions under the statute and reporting on such use to the state legislature, it does not specify whether NYSDHR or the agencies that enforce violations of the New York State Fair Credit Reporting Act (i.e., the New York Department of Financial Service and the New York Division of Consumer Protection), will enforce violations of these credit history discrimination provisions.

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