Effective April, 18 2026: Employers across New York will face a major shift in how credit history can be used in employment decisions. The state has expanded restrictions that previously applied primarily in New York City to now cover employers statewide. This change reflects a broader national trend aimed at reducing barriers to employment and limiting the use of personal financial information in hiring decisions.
For many years, some employers relied on credit reports as part of pre-employment screening, particularly for positions involving finances or sensitive responsibilities. However, lawmakers and regulators have increasingly questioned whether credit history is a fair or reliable indicator of job performance or trustworthiness. Financial hardship can result from medical debt, identity theft, or economic conditions beyond an individual’s control. By limiting when credit history may be used, New York is reinforcing a more equitable and privacy-conscious approach to hiring.
This law signals a growing shift in how personal data is viewed in the employment context. As more jurisdictions move to restrict certain types of background information, employers must adapt their hiring practices to align with changing legal and ethical standards.
Narrow Exceptions
While the new law broadly restricts the use of consumer credit history in employment decisions, it does not impose a total ban. There are limited, narrowly defined exceptions where credit history may still be relevant and legally permissible. These exceptions are generally tied to roles that involve a heightened level of trust, regulatory oversight, financial authority, or access to sensitive systems or information.
In these circumstances, credit history may be requested or considered when it is directly connected to the responsibilities of the role or required by law or regulation. The intent behind these exceptions is to allow employers to assess financial risk only where it is truly job-related and necessary, rather than as a routine screening practice.
Outside of these limited scenarios, employers should expect that credit history will no longer be an appropriate or lawful part of the employment decision-making process in New York. Applying exceptions too broadly or without a clear connection to job duties may create compliance risk and potential legal exposure.
How This Affects Background Screening
The law also has important implications for background screening providers and the structure of screening packages. If an employer is not legally permitted to consider credit history for a particular role, that information should not be included in the background screening report provided to them. This means screening programs that once included credit checks by default may now need to be reconfigured on a role-by-role or jurisdiction-specific basis.
For employers, this introduces a new layer of responsibility when designing screening workflows. Screening packages should be aligned with job requirements and local regulations to ensure that prohibited information is not collected or shared. For background screening companies, this requires stronger controls to prevent the delivery of non-compliant data and clearer communication with clients about when credit checks are appropriate.
As employment laws continue to evolve, background screening programs are becoming more customized and compliance-driven. Employers that rely on standardized, one-size-fits-all screening packages may face increased risk as state and local laws diverge. Proactive alignment between employers and their screening partners will be essential to maintaining compliance.
Employer Guidance
Employers should view this change as an opportunity to modernize and refine their screening practices ahead of 2026. Reviewing current background screening policies, job classifications, and screening packages now can help prevent compliance issues later. Internal training is equally important, as hiring managers and HR teams need to understand what information can and cannot be considered when making employment decisions.
For multi-state employers, this law reinforces the need to account for varying requirements across jurisdictions. States such as California, Illinois, and Washington have already enacted similar restrictions, and more jurisdictions are expected to follow. Aligning screening programs with the most restrictive applicable laws can help create consistency while reducing compliance risk.
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GIS is committed to helping organizations navigate ever-changing hiring laws and stay compliant through every update. If you have questions about your current background screening process or want to understand the screening laws in your state, we’re here to help.