The New York State Fair Credit Reporting Act (“FCRA”) (Gen. Bus. Law § 380 et seq.) has been amended to prohibit employers from requesting or using an applicant’s or employee’s consumer credit history for employment-related decisions beginning April 18, 2026.
Under the amended FCRA, “consumer credit history” is broadly defined to include an individual’s creditworthiness, credit standing, credit capacity, or payment history, as reflected in a credit report or credit score, or information obtained directly from the individual related to credit accounts, bankruptcies, judgments, or liens.
It makes it an unlawful discriminatory practice for an employer to request or use an applicant’s or employee’s consumer credit history for employment purposes, or to otherwise discriminate against an individual in hiring, compensation, or the terms and conditions of employment based on the credit history.
Exemptions Under the FCRA
There are limited exemptions under the FCRA including when employers are required, such as under state or federal law, to use an individual’s consumer credit history for employment purposes. This includes for individuals who are:
- Employed as or applying for peace officer, police officer, or law enforcement positions;
- Subject to background investigation by a state agency; provided, however, that consumer credit history information may be used only where the position is an appointed role requiring a high degree of public trust;
- Employees who are required to be bonded;
- Employees who are required to possess security clearance;
- Non-clerical employees with regular access to trade secrets, intelligence information, or national security information;
- In a position (1) with signatory authority over third party funds or assets valued at $10,000 or more, or (2) involving fiduciary responsibility to the employer with the authority to enter into financial agreements valued at $10,000 or more; or
- Employees whose regular duties include modifying digital security systems designed to prevent unauthorized access to the employer’s or client’s networks or databases.
Nothing in the FCRA precludes an employer from requesting or receiving consumer credit history information pursuant to a lawful subpoena, court order, or law enforcement investigation.
New York City’s Stop Credit Discrimination in Employment Act
Employers should be mindful of New York City’s decade-old Stop Credit Discrimination in Employment Act (“SCDEA”) (N.Y.C. Admin. Code § 8-107(24)), which has prohibited employers from requesting or using credit information for employment-related purposes since September 3, 2015. The FCRA mirrors the SCDEA and sets out the same exemptions.
Importantly, the FCRA makes clear that the law does not annul, alter, affect or exempt an employer from complying with local law that is consistent with the FCRA, and local laws are deemed consistent even if they afford greater protection than the FCRA. Accordingly, New York City employers must ensure compliance with requirements under both the FCRA and the SCDEA.
Recommended Next Steps
Employers should take steps now to ensure compliance before the FCRA’s effective date of April 18, 2026. In particular, employers should:
- Review their hiring and onboarding procedures;
- Update employment applications and background check forms;
- Audit employment policies and handbooks; and
- Confirm that consumer credit history information is not requested or considered in employment decisions unless a statutory exemption applies.
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