New York State to Prohibit Employers’ Use of Consumer Credit Information Starting April 2026

New York state has joined New York City and the other jurisdictions that limit an employer’s ability to use an applicant’s or employee’s credit information in making employment decisions. Beginning April 18, 2026, New York employers will be prohibited from requesting or using an applicant’s or employee’s consumer credit history for employment decisions, unless one of the law’s narrow exemptions applies.

New York Governor Kathy Hochul signed the changes into law on December 19, 2025 by approving amendments to the New York State Fair Credit Reporting Act (the NY FCRA Amendments). The NY FCRA Amendments prohibit an employer from considering an applicant’s or employee’s consumer credit history in hiring, compensation, or the terms, conditions, or privileges of their employment.

New York State’s Fair Credit Reporting Act (the NY FCRA) defines “consumer credit history” as “an individual’s credit worthiness, credit standing, credit capacity or payment history,” which is indicated by a “consumer credit report,” a “credit score,” or “information an employer obtains directly from the individual regarding” their credit accounts or any bankruptcies, judgments or liens.

The amendments make it an unlawful discriminatory practice for an employer, labor organization, employment agency, or any agent thereof to request or use “consumer credit history” for employment purposes. The NY FCRA defines “employment purposes” as “a report used for the purposes of evaluating a consumer for employment, promotion, reassignment or retention as an employee.”

NARROW EXEMPTIONS TO THE PROHIBITION ON USING CREDIT INFORMATION IN EMPLOYMENT

The NY FCRA Amendments set forth narrow exemptions to the general prohibition on using “consumer credit history” to make employment decisions.

These exceptions mirror the exceptions in New York City’s Stop Credit Discrimination in Employment Act.

First, this prohibition does not apply to employers or agents of employers that are required by state law, federal law, or a self-regulatory organization (as defined by Section 3(a)(26) of the Securities Exchange Act of 1934) to use an individual’s consumer credit history for employment purposes. The prohibition also does not preclude employers from requesting consumer credit history to respond to a lawful subpoena, court order, or law enforcement investigation.

The NY FCRA Amendments also provide that employers may continue to consider an applicant’s or employee’s consumer credit history in the following roles:

• Peace or police officers, or those in a position with a law enforcement or investigative function in a law enforcement agency
• Positions subject to background investigation by a state agency; this state agency may only consider consumer credit history for employment purposes if the position is one in which the public has a “high degree of public trust,” as will be further defined by rulemaking
• Positions in which an employee is to be bonded under state or federal law
• Positions in which an employee is required to possess a security clearance under federal law or the law of any state
• Non-clerical positions having regular access to trade secrets, intelligence information, or national security information
• Positions that either have signatory authority over funds or assets valued at $10,000 or more, or involve a fiduciary responsibility to the employer with the authority to enter financial agreements valued at $10,000 or more on behalf of the employer
• Positions which have regular duties that allow the employee to modify digital security systems established to prevent the unauthorized use of the employer's or client's networks or databases

While the NY FCRA Amendments include these exceptions, they are limited by the way in which key terms are defined. For example, the NY FCRA Amendments define “trade secrets” as information that derives “independent economic value” from not being generally known or readily ascertainable, is the subject of efforts to maintain its secrecy, and is reasonably said to be the end product of “significant innovation.” The term does not encompass general proprietary company information such as handbooks and policies or client, customer, or mailing lists.

“Intelligence information” is defined as any “records and data compiled for the purpose of criminal investigation or counterterrorism,” whereas “national security information” means “any knowledge relating to the national defense or foreign relations of the United States” that is owned or produced by the federal government or otherwise under its control.

Accordingly, before assuming that a position qualifies for an exemption, employers should carefully assess how each key term in the exemption is defined before making a final determination.

ENFORCEMENT AND PENALTIES

The prohibition on using consumer credit history for employment purposes will be enforced in the same way as the other requirements of Section 380-b of the NY FCRA. Specifically, applicants and employees have a private right of action against employers that negligently fail to comply with the law. Aggrieved individuals also may seek actual damages and reasonable attorneys’ fees. Notably, while the NY FCRA also contains a private right of action for willful noncompliance, which provides for actual damages, attorneys’ fees, and punitive damages, those remedies are not available for violations of this new subsection of the law.

TAKEAWAYS FOR EMPLOYERS

New York State is the latest jurisdiction to restrict the ways in which an employer can use consumer credit history to make employment decisions. However, several other jurisdictions, including New York City, already restrict an employer’s ability to use this information. Employers in New York State should review their pre- and post-hire screening processes to determine whether they are procuring consumer credit history about applicants and current employees and, if yes, whether their use of this information fits within the narrow exemptions to the NY FCRA Amendments.

As noted, this statute mirrors the requirements implemented by the New York City Stop Credit Discrimination in Employment Act. Thus, to better understand their obligations under the amendments, employers could consider consulting the guidance set forth by the New York City Commission on Human Rights. However, whether a court interprets the law’s requirements and limitations in the same way as the Commission remains to be seen.

NEXT STEPS

To prepare to comply with the NY FCRA Amendments, employers should engage in a position-by-position review of roles to determine whether any positions at the company fall into a covered exemption.

Employers should also ensure that when performing credit checks, they implement procedures to comply with the federal Fair Credit Reporting Act and the NY FCRA, specifically regarding each law’s disclosure and authorization requirements and, when applicable, any pre-adverse action and final adverse action obligations.