New York Employers: Prepare Now for Credit History Ban in Hiring, by Jake Falk, Esq. and Keith J. Gutstein, Esq., 3-5-2026

New York has enacted a statewide ban on requesting or using an applicant’s or employee’s consumer credit history for employment purposes, with limited exceptions, effective April 18, 2026. New York employers should review their hiring and employment practices ahead of this prohibition.

General Prohibition
Under the new law (S3072/A1316), which amends the New York Fair Credit Reporting Act, employers may not (with certain exceptions):

• Request or use a consumer credit report or other credit history information for employment purposes.
• Use an applicant’s or employee’s consumer credit history when making employment decisions, including hiring, promotion, termination, demotion, discipline, compensation or in setting the terms, conditions or privileges of employment.

“Consumer credit history” is broadly defined to include an individual’s credit worthiness, credit standing, credit capacity or payment history, as indicated by:

• A consumer credit report;
• Credit score; or
• Information regarding creditworthiness, credit standing, credit capacity, or payment history, whether obtained from a consumer reporting agency, the individual, or another source.

Exceptions
The statute contains certain exceptions permitting the request or use of consumer credit history in special circumstances, including:

• When required or expressly authorized by federal or New York state law or regulation.
• When requested or received pursuant to a lawful subpoena, court order, or in connection with a specific law enforcement or regulatory investigation.
• When the position falls within limited statutory categories where credit history is integral to the role (e.g., certain fiduciary or financial positions involving substantial authority over third-party assets), as defined by the statute.

Outside of these limited categories, New York employers should assume that use of credit history for employment purposes is prohibited.

Enforcement and Liability
Violations of the new credit‑history restrictions constitute an unlawful discriminatory practice under the New York Fair Credit Reporting Act. Applicants and employees have a private right of action and may seek actual damages and reasonable attorneys’ fees for negligent violations of the statute, but punitive damages are not available for violations of this specific subsection.

Relationship to Federal FCRA and NYC Law
Note that the federal Fair Credit Reporting Act (FCRA) continues to govern how employers obtain and use consumer reports, including notice, authorization, and adverse‑action requirements. However, New York’s new law imposes more restrictive substantive limits on using consumer credit history for employment decisions. New York employers must comply with both the federal FCRA’s procedural rules and the state’s broader prohibitions—whichever standard is more protective applies.

New York City already restricts most uses of credit history in employment under its Human Rights Law, subject to narrow exemptions. This new statute extends similar protections statewide and may impose broader or overlapping obligations. Employers operating both in NYC and elsewhere in New York must comply with the law that affords greater protection to applicants and employees.

Employer Action Items
In advance of the implementation of this law on April 18, 2026, New York employers should:

• Eliminate credit checks from standard background screening for positions in New York, unless a clearly applicable statutory exception exists.
• Review and update written hiring and background check policies, offer letters, and any forms that reference credit reports.
• Coordinate with background check vendors to ensure they do not provide consumer credit reports for New York positions except where an exception applies.
• Identify and document any roles the employer believes qualify for an exception and consult counsel to confirm alignment with the statutory language.
• Train HR, recruiters, and managers not to request or rely on credit information in employment decisions except as specifically authorized by law.

Authors: Long Island Attorney Jake Falk and Keith J. Gutstein, Chair of KD’s Labor and Employment Law Practice Group and Co-Managing Partner of the Long Island Office