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Employment Tip of the Month – April 2026
Q: What should employers know about the new amendments to the New York Fair Credit Reporting Act?
A: Beginning on April 18, 2026, employers in New York, with few limited exceptions, will be barred from obtaining or using an individual’s credit score or consumer credit history during or after hiring of an employee. Specifically, Governor Kathy Hochul has made it an “unlawful discriminatory practice” for an employer or prospective employer to use a candidate or employee credit score for any employment purpose, and it is an unlawful discriminatory practice to even request a credit score from the relevant individuals.
If I am hiring for a position requiring financial trust and skill, are there exceptions I can use?
The amendments to the New York Fair Credit Reporting Act also include several relevant exceptions for employers that include:
Persons in a non-clerical position who have regular access to trade secrets,1 intelligence information, or national security information
Persons in a position with: (A) Signatory authority over third-party funds or assets valued at $10,000 or more
(B) Fiduciary responsibility to the employer with authority to enter financial agreements valued at $10,000 or more on behalf of the employer
For employers that wish to continue using credit scores, the law provides only limited and narrowly-defined exceptions for employees who do not fall within the categories above, such as:
An employer that is required under state or federal law, or self-regulatory organization2, to use an individual’s consumer credit history for employment purposes
Candidates and current employees serving as peace officers, police officers, and similarly-situated positions in law enforcement and investigation
Persons in an appointed position bearing a high degree of public trust who are subject to background investigations by a state agency
Persons in a position that requires bonding under state or federal law
Persons in a position requiring a security clearance under state or federal law
Persons in a position whose regular duties include modifying digital security systems
How do these restrictions apply to indirect credit checks conducted through a credit agency? What if an employer voluntarily provides their credit information?
The amendments are clear: employers cannot, except under the enumerated exceptions listed above, use an individual’s credit score for any employment purposes. Consumer reporting agencies are barred from providing reports about employees that contain information bearing on a consumer’s credit worthiness, credit standing, credit capacity, or credit history. In other words, consumer credit agencies cannot provide employers with an individual’s credit report. Further, employers are specifically barred from using any information directly obtained from an individual regarding their consumer credit history.
How do these amendments relate and compare to New York City’s credit check ban?
On September 3, 2015, the Stop Credit Discrimination in Employment Act (SCDEA) went into effect in New York City and largely covers the same topics as the new state law amendments. In fact, the SCDEA and state law amendments are strikingly similar, but the SCDEA is likely harsher and narrower than its state law counterpart. For example, the SCDEA narrows the $10,000 exemption by construing it to be generally limited to executive-level employees, such as chief financial officer or chief operating officer. Similarly, the digital systems exemption is narrowed to executives who control complete access to a company’s computer systems. Given that city discrimination protections are generally considered to be broader than their state law mirrors, it is no surprise that city law is narrower and harsher than state law in this domain.
How should employers move forward?
Employment and labor laws are ever evolving and changing, demanding that employers stay on the cutting edge to adapt before running afoul of these amendments. For employers who already operate alongside the SCDEA, these state amendments will change almost nothing. Employers should make concerted efforts to avoid asking credit-related questions in interviews and in office, continue to construe all the above exemptions narrowly, and keep records of exemptions for at least five years. For employers not covered by the SCDEA that will now be covered by the state amendments, these same steps will be key to assuring compliance.
These new amendments make for an opportune time for employers to take a moment and assess whether they are up-to-date and in compliance with the most recent changes to New York state employment law. Employers that currently use consumer credit history for any employment purposes, whether in hiring or in day-to-day operations, need to make sure that the individual falls under the proper narrowly-defined exemption, keep accurate records of the exemption for at least five years to be safe, and assure that any usage of consumer credit history outside of these exemptions has ceased.
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1 “Trade secrets” means information that: (A) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; (B) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy; and (C) can reasonably be said to be the end product of significant innovation. The term “trade secrets” does not include general proprietary company information such as handbooks and policies. The term “regular access to trade secrets” does not include access to or the use of client, customer or mailing lists.
2 FINRA (“Financial Industry Regulatory Authority”) is considered a common example of a self-regulatory agency which may be exempt.
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