With “little to no evidence” indicating a correlation between credit history and job performance, a new law will ban employers, labor organizations or employment agencies from conducting consumer credit checks on employees or potential new hires.

Employment Consumer Credit Checks

In today’s job market, the majority of large employers use credit checks as part of their hiring process and in how they treat their existing employees, the bill’s text states, adding that in addition to lacking any such meaningful correlation, a Federal Trade Commission study indicates that as many as one in four consumers may have a “material error” in their credit report.

Signed into law by Gov. Kathy Hochul, the text of the bill states that because millions of Americans have errors in their credit reports, it puts them in a lower credit risk tier, whether they are aware of any errors or not.

Many New Yorkers, through no fault of their own, have less than ideal credit histories that may stem from issues completely unrelated to their job performance or capabilities, making them disadvantaged because employers are using credit reports to determine if they are worthy of a job or a promotion, according to the bill.

Further, the bill states that there is “little to no evidence that shows a correlation between credit history and job performance.”

No More Consumer Credit Checks for Employees, Prospective New Hires in New York State

Effective April 18, 2026, New York state will not allow employers, labor organizations or employment agencies to conduct consumer credit checks on most employees or potential new hires.

The new law will prohibit an employer or potential employer from using a job applicant or employee’s consumer credit report in his or her decision to:

• set the terms, conditions, or privileges of employment.

What Employers Need to Know

Once seen as a litmus test for an employee’s potential responsibility or trustworthiness, credit history may now be identified as a potential source of bias. The law, however, creates a new avenue for employment discrimination claims if credit history is requested or used improperly.

Therefore, employers should be aware that the new law bans credit checks for employees and potential employees, amending New York’s General Business Law to substantially restrict the use of an applicant’s or employee’s credit history in employment decisions, unless they fall within a handful of narrowly defined exceptions.

Except for specific exemptions, employers may not request or use credit history when making hiring, compensation or employment-condition decisions for most employees or job applicants. According to the bill, exceptions may include:

• police officers or peace officers;

• positions requiring bonding or security clearance;

• high‑trust financial roles;

• roles involving regular access to trade secrets;

• persons in a position having signatory authority over third-party funds or assets valued at 10,000 or more or that 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;

• persons in a position with 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.

Employers should not underestimate the scope of this change, and be aware of the new law limiting credit checks on employees and applicants, and also have an understanding about which positions may qualify for exemption from the new law.

What was once a routine part of background checks is now largely off-limits, and missteps could carry legal consequences.

A knowledgeable employment attorney can help you gain an understanding of the unique difficulties each workplace conflict presents and work toward a solution that benefits you. Tully Rinckey attorneys have the experience to assist both employees and employers in achieving their objectives, regardless of the matter, which may include discrimination, sex harassment, or any other claim involving worker rights or employer responsibilities, including employee assessment or hiring practices. Call (888) 968-7138 or contact us online today for a consultation and get an advocate who will fight for your rights and help secure your career and your future.

As a Partner at Tully Rinckey PLLC, Amanda focuses her practice on Federal and State Employment and Labor Law, handling discrimination claims, whistleblower and retaliation claims, retirement matters, and wage and pay claims amongst others. She also handles administrative complaints, investigation and litigation, as well as state litigation.

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