New York has amended its Fair Credit Reporting Act to tighten restrictions on the use of consumer credit history in employment decisions. These amendments become effective April 18, 2026, at which point employers will no longer be permitted to request or use an applicant or employee’s credit history in making employment decisions, except for a few narrow exceptions. These amendments generally mirror New York City’s existing credit check prohibition to now impact employers throughout the state.
The Amendments Broadly Ban Use of Credit Checks
Under the amended law:
- Employers cannot use consumer credit history in hiring, promotion, compensation, or other employment decisions, unless one of the few narrow statutory exemptions applies.
- “Consumer credit history” is broadly defined as “an individual’s credit worthiness, credit standing, credit capacity, or payment history,” which is indicated by a consumer credit report, credit score, information directly obtained from the individual regarding credit accounts, bankruptcies, judgments, or liens, and shall include “any written or other communication of any information by a consumer reporting agency that bears on a consumer’s creditworthiness, credit standing, credit capacity or credit history.”
But They Do Provide Certain Exemptions to the Prohibition
Credit checks are still permitted in limited circumstances, including, among others, to:
- Non-clerical positions having regular access to trade secrets, intelligence information or national security information;
- Positions with (a) signatory authority over third-party funds or assets valued at $10,000 or more or (b) a fiduciary duty or authority to enter into financial transactions valued at $10,000 or more on behalf of the employer; and
- Positions with regular duties that allow the employee to modify digital security systems.
Employers should carefully review whether a position qualifies for any of these exemptions before requesting credit information. If one does apply, it must first provide the applicant or employee with a notice in writing that: (i) a consumer report may be requested in connection with such application, (ii) the individual upon request will be informed whether or not a consumer report was requested, and (iii) if such report was requested, the name and address of the agency that furnished the report.
Next Steps for Compliance
- Review job descriptions and identify roles that qualify for applicable exemptions.
- Document exemptions if they apply. While the state has not yet issued guidance on required documentation, the New York City Human Rights Commission has long-standing guidance requiring employers to maintain an “exemption log” which they must provide to the Commission upon request. The log should include the following information: the claimed exemption; why the claimed exemption covers the exempted position; the name and contact information of all applicants or employees considered for the exempted position; the job duties of the exempted position; the qualifications necessary to perform the exempted position; a copy of the applicant’s or employee’s credit history that was obtained pursuant to the claimed exemption; how the credit history was obtained; and how the credit history led to the employment action. If and until guidance is provided by the state, employers could consider following this approach.
- Update background check policies and procedures as necessary to ensure compliance with the new prohibition, including coordinating with engaged third party background check vendors.
- Train Human Resources teams to ensure understanding of this prohibition (and its narrow exemptions).
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