A
major shift is coming to hiring practices in New York—and it’s going to impact how employers think about background checks.
Starting
April 18, 2026, New York significantly restricted the use of credit reports in employment decisions, expanding protections that were previously limited to New York City across the entire state.
If your organization operates in New York—or hires employees there, this is a change you can’t afford to overlook.
What’s Changing?
Under the updated New York State Fair Credit Reporting Act:
- Employers are
generally prohibited from requesting or using credit history
- This applies to decisions involving:
- Hiring
- Compensation
- Promotions
- Discipline
- Any terms of employment
Credit history includes:
- Credit reports and scores
- Payment history
- Bankruptcies, liens, or judgments
- Even information shared directly by the candidate about their finances
Credit checks are no longer a standard hiring tool in New York.
Why This Change Matters
This law reflects a broader national shift away from using financial history as a proxy for job performance.
Research and policymakers have increasingly questioned whether credit history has any meaningful connection to how someone performs at work.
New York now joins a growing list of states limiting or banning this practice altogether.
For employers, this means:
- Rethinking traditional screening processes
- Ensuring hiring practices are
job-related and defensible
- Reducing risk of discrimination claims tied to financial history
Are There Any Exceptions?
Yes—but they are
narrow and specific.
Certain roles may still allow credit checks, including positions that:
- Have significant financial authority
- Require access to sensitive financial data
- Are subject to regulatory or legal requirements
However, employers must be able to clearly justify why a credit check is
directly related to the job responsibilities.
What Employers Should Do Now
1. Review Hiring Practices
Remove any credit check requirements from:
- Applications
- Background screening processes
- Internal hiring policies
2. Train Hiring Managers
Ensure your team understands:
- What can and cannot be asked
- How to evaluate candidates without financial bias
3. Update Vendor Relationships
Confirm your background screening providers are:
- Compliant with New York law
- Not automatically including credit reports
4. Document Exceptions Carefully
If you believe a role qualifies for an exception:
- Clearly define the justification
- Maintain documentation
