VIEWPOINT: NYS amends Fair Credit Reporting Act to Limit Use of Credit Reports in Employment

On Dec. 19, 2025, Gov. Kathy Hochul signed Senate Bill S03072 (the Amendment) into law, amending the New York State Fair Credit Reporting Act to restrict the use of consumer credit history for employment purposes. With this amendment, New York joins 10 other states and several major cities, including New York City, which have comparable laws currently in place. The Amendment will go into effect on April 18, 2026. Restrictions on Collection & Use of Consumer Credit History Under the Amendment, employers, labor organizations and employment agencies are prohibited from requesting or using an applicant’s or employee’s consumer credit history for employment purposes or discriminating against an applicant or employee in any way related to their employment based on their consumer credit history. Consumer credit history is defined as “an individual’s credit worthiness, credit standing, credit capacity or payment history as indicated by: (1) a consumer credit report, (2) credit score, or (3) information an employer obtains directly from the individual regarding (i) details about credit accounts, including the individuals number of credit accounts, late or missed payments, charged-off debts, items in collections, credit limit or prior credit report inquiries or (ii) bankruptcy judgments or liens.” The Amendment also defines a consumer credit report to include “any written or other communication of any information by a consumer reporting agency that bears on a consumer’s credit worthiness, credit standing, credit capacity or credit history.” Exemptions under the Amendment While the Amendment’s definitions and prohibitions regarding the use of consumer credit history are broad, there are limited exemptions for certain employers and positions, including: • An employer that is required by state or federal law, or a self-regulatory organization to use an individual’s consumer credit history for employment purposes; • Positions such as peace officers or police officers or positions with law enforcement or in an investigative function with a law enforcement agency; • Persons in a position with a high degree of public trust subject to background investigation by a state agency; • Persons in a position that requires security clearance under state or federal law; • Persons in a position that requires the employee to be bonded under state or federal law; • Persons in non-clerical positions that have regular access to trade secrets, intelligence information or national security information; • Persons in positions that have 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; and • Persons in positions 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. However, employers should be aware that these exemptions are narrow and most only apply to specific positions, not to the employer or industry as a whole. Impact on Local Laws The Amendment also specifically states that it does not alter or exempt any employer, labor organization or employment agency duty to comply with any local law, ordinance or regulation regarding the use of consumer credit history where such laws provide greater protection for employees than those laid out in the Amendment. This is particularly relevant for New York City employers because New York City’s Stop Credit Discrimination in Employment Act (SCDEA), which has been in effect since 2015, already places stringent restrictions on employers regarding the acquisition and use of consumer credit history for employment purposes. While the Amendment and SCDEA largely mirror each other, there are some differences. For example, SCDEA contains certain reporting requirements for exemptions that are not included in the Amendment. Therefore, New York City employers should be aware of both laws and be prepared to comply with whichever law offers the greatest protection to employees. Restrictions on Consumer Credit Reporting Agencies Aside from restrictions on employers, the Amendment also places limits on what kind of information consumer credit reporting agencies may provide under the New York State Fair Credit Reporting Act. Under the Amendment, reporting agencies are prohibited from providing consumer credit history in a consumer report for employment purposes unless one of the statutory exemptions listed above applies to the employer or position for which the information was requested. Restrictions on State and Municipal Agencies Lastly, under the Amendment, state and municipal agencies may not request or use the consumer credit history of an applicant, licensee or permittee for licensing or permitting purposes unless the agency is required to do so by law. However, the Amendment does not limit an agency’s ability to consider other information for licensing or permitting purposes such as an applicant’s, licensee’s, registrant’s or permittee’s failure to pay any tax, fine, penalty, or fee that the person has admitted liability for, or for which a judgment has been entered by court or administrative tribunal, or any tax that a government agency has issued a warrant, lien, or levy on property. While the Amendment does not take effect until April 18, 2026, employers should consider what steps they need to take to comply with these new restrictions. This includes reviewing current consumer credit history practices and identifying the applicability of any exemptions.        

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Adam P. Mastroleo is a member (partner) in the Syracuse office of Bond, Schoeneck & King PLLC. He is a member of the firm’s labor and employment practice, helping public and private employers to navigate often overwhelming federal and state employment laws. Contact him at amastroleo@bsk.com. Gavin T. Gretsky is an associate in Bond’s Syracuse office. He works with clients on a wide array of issues. Contact him at ggretsky@bsk.com. This article is drawn from the law firm’s New York Labor and Employment Law Report blog on its website.