Effective April 18, 2026, New York employers were significantly limited when obtaining or relying on an applicant's or employee's credit history. The amendment to New York's Fair Credit Reporting Act (FCRA) expanded employee protections statewide and closely resembles the credit discrimination protections that have been in place in New York City for several years.
If your hiring process includes credit checks, now is the time to review your policies and determine whether they remain compliant.
What Changed?
Under the amended law, employers, employment agencies, and labor organizations generally may not request, obtain, or use an individual's consumer credit history when making employment decisions. This includes decisions involving:
- Hiring
- Promotions
- Compensation
- Discipline
- Other terms and conditions of employment
The goal of the law is to prevent employment decisions from being influenced by an individual's financial history unless a specific legal exception applies.
What Is Considered Consumer Credit History?
The law defines consumer credit history broadly. It includes information related to a person's financial responsibility or borrowing history, including:
- Consumer credit reports
- Credit scores
- Payment history
- Outstanding or charged-off debt
- Collections
- Credit limits
- Credit inquiries
- Bankruptcies
- Judgments
- Liens
- Information an applicant voluntarily provides about their credit accounts
Even asking applicants questions about their credit history during the hiring process could create compliance concerns.
Are There Any Exceptions?
Yes. The law recognizes that certain positions require a higher level of financial oversight or security. Employers may still be permitted—or required—to consider credit history in limited situations, including positions involving:
- Requirements under federal or state law
- Certain securities industry regulations
- Law enforcement positions
- Government positions requiring extensive background investigations
- Bonding requirements
- Federal or state security clearances
- Access to trade secrets or national security information
- Authority over significant third-party funds or assets
- Fiduciary authority to enter substantial financial agreements on behalf of the employer
- Responsibility for modifying cybersecurity systems that protect employer or client networks
These exceptions are narrowly defined, so employers should carefully evaluate whether a position truly qualifies before requesting a credit report.
What About New York City Employers?
Employers operating in New York City should remember that the City's Stop Credit Discrimination in Employment Act remains in effect.
The statewide law does not replace the New York City requirements. Employers with employees in New York City must comply with both laws.
Can Credit Information Ever Be Obtained?
The new restrictions generally prohibit employers from using credit history for employment purposes. However, the law does not prevent employers from providing information or responding when required by:
- A lawful subpoena
- A court order
- A law enforcement investigation
It's important to note that this exception does not extend to an employer's own internal workplace investigation unless law enforcement or the courts become involved.
What Are the Risks of Noncompliance?
Employees and job applicants who believe their rights have been violated may bring a private lawsuit. Potential remedies can include:
- Actual damages
- Attorney's fees
- Punitive damages in cases involving knowing or willful violations
Because the law allows private legal action, employers should ensure hiring managers, recruiters, and anyone involved in background screening understand these new requirements.
What Employers Should Do Now
If your organization conducts background checks, consider taking the following steps:
- Review hiring and background screening policies.
- Identify positions that may legitimately qualify for one of the statutory exceptions.
- Remove credit checks from positions that no longer qualify.
- Coordinate with your background screening vendor to ensure compliance.
- Train HR staff and hiring managers on the new requirements.
Final Thoughts
States across the country continue to limit the use of consumer credit history in employment decisions, and New York has now joined that growing trend with one of its most significant updates.
Employers should review their hiring practices now to ensure they comply with the amended law before relying on credit information during the employment process.
Need help reviewing your hiring practices or updating your background screening procedures? CNY HR Now can help your organization stay compliant with New York employment laws while reducing legal risk. Contact me to learn more about my HR compliance services.
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