Governor Hochul Signs Bill Greatly Restricting Use of Consumer Credit History in Employment Decisions

Quick Hits

• On December 19, 2025, Governor Hochul signed into law legislation amending New York’s General Business Law to restrict the use of an applicant’s/employee’s credit history in employment decisions, effective April 28, 2026.
• The new law prohibits employers from requesting or using credit reports for employees or job applicants unless they fall into specific exceptions, such as certain positions that will have regular access to trade secrets, and positions with fiduciary authority to enter financial agreements of at least $10,000 on behalf of the employer.
• Employers must ensure compliance by not inquiring into or using credit history information unless the position qualifies for an exception and should disclose the relevant exception to consumer reporting agencies.

The new law takes an expansive view of credit history and includes any information touching on an applicant’s/employee’s creditworthiness, credit standing, credit capacity, or payment history, regardless of whether it is obtained through a credit check or credit score. It also includes information obtained directly from an applicant/employee concerning the individual’s credit accounts (including the number of credit accounts, late/missed payments, charged-off debts, items in collection, credit limit(s), and prior credit report inquiries), bankruptcies, judgments, and/or liens.

Under the new law, it is a discriminatory act for an employer to inquire into or use an applicant’s/employee’s credit history for employment purposes unless the employer/position falls into one of the act’s exceptions. These include:

• when the use of credit history “is required by state or federal law or by a self-regulatory organization” under the Securities Exchange Act;
• certain law enforcement roles;
• appointed roles with a high degree of public trust;
• positions requiring bonding under federal or state law;
• roles requiring federal or state security clearance;
• nonclerical roles with “regular access to trade secrets, intelligence information or national security information”;
• roles with signatory authority over third-party funds or assets of at least $10,000, or fiduciary authority to enter financial agreements of at least $10,000 on the employer’s behalf; and
• roles “with regular duties that allow the employee to modify digital security systems” protecting networks or databases.

The exceptions most relevant to private employers are emphasized in italics above.

This law does not override local laws that are consistent with its provisions or that offer more expansive protections, including New York City’s Stop Credit Discrimination in Employment Act. Lastly, to align the new law with background check companies (also known as “consumer reporting agencies” or “CRAs”) practices, the act prohibits CRAs from providing employers with consumer reports for employment purposes unless the employer/position falls within one of the above exceptions.

Key Insights for Employers

• Under S3072, employers are prohibited from inquiring into or using credit history information unless the company/position falls into one of the act’s exceptions.
• The prohibition spans the lifecycle of employment and includes both applicants and existing employees.
• Employers with positions that fall within one of the act’s exceptions may want to disclose the relevant exception to the CRA to ensure that they continue receiving credit information for exempted positions.
• The law should not impact local credit check laws, such as the New York City Stop Credit Discrimination in Employment Act.

Ogletree Deakins’ Background Checks Practice Group will continue to monitor developments and will provide updates on the Background Checks and New York blogs as additional information becomes available.

Additional information is available in the Ogletree Deakins Client Portal in the New York Use & Evaluation – Credit, Asking Questions and Initiating Checks – Credit, and Miscellaneous Background Checks law summaries. (Full law summaries are available for Premium-level subscribers; Snapshots and Updates are available for all registered client-users.) For more information about the Client Portal or to inquire about a Client Portal subscription, please contact us at clientportal@ogletree.com.

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