Amended Law Bans Use of Credit Checks in Hiring, Managing Employees
February 9, 2026
When it comes to the rules for screening potential candidates for employment, a significant change is coming to New York.
Effective April 18, 2026, an amendment to the New York State Fair Credit Reporting Act bans employers from requesting or using a person’s consumer credit history as a basis for hiring decisions. The amendment was signed into law by Gov. Kathy Hochul in December and makes it unlawful for an employer, employment agency or its agent, to request or supply credit history information on a prospective employee.
The amended bill also prohibits the use of a person’s consumer credit history as a factor in promoting, demoting, compensating, disciplining or terminating an employee.
For purposes of the new law, consumer credit history is defined as:
An individual’s credit worthiness, credit standing, credit capacity or payment history, as indicated by:
- A consumer credit report
- Credit score
- Information an employer obtains directly from the individual regarding details about credit accounts, including the individual’s number of credit accounts, late or missed payments, charged-off debts, items in collections, credit limit or prior credit report inquiries, or bankruptcies, judgements or liens.
The law carves out several exemptions. An employer may still utilize consumer credit information in certain narrowly tailored situations. Additionally, the amended law declares it an unlawful discriminatory practice for any state or municipal agency to “request or use for licensing or permitting purposes information contained in the consumer credit history of an applicant, licensee, or permittee for licensing or permitting purposes.” There is an exception to this provision for any agency already required by state or federal law to use an individual’s consumer credit history as part of the licensing process.
It is important to note that for employers in New York City, this amendment largely mirrors the Stop Credit Discrimination in Employment Act (SCDEA) that took effect for New York City in 2015. The new amendment does not preempt the SCDEA, so employers downstate must apply whichever law affords the greatest protection for their employees.
The bottom line: It has become commonplace for employers, especially large ones, to use consumer credit information as part of the hiring and ongoing employment process. While the law does not officially take effect until April 18, now is the time to educate your hiring personnel on the new rules. It is also critical if you utilize an outside hiring agency to make sure they are operating within the amended rules.
Our Employment Law team works closely with employers proactively to ensure compliance with all state and federal laws and regulations. If you would like to discuss your employment law needs, please give me a call to see how the team at Gross Shuman may be able to assist you. We represent clients in all areas of employment law, from preventative counseling to defending litigation.
Kevin Lelonek is a shareholder attorney in our Commercial Bankruptcy and Reorganization and Employment Law practice groups. He can be reached at 716-854-4300 ext. 297 or klelonek@gross-shuman.com
