New York State Bans Use Of Credit Reports In Most Employment Decisions

New York employers who rely on credit reports when making employment decisions must prepare for a significant change in the new year. On December 19, 2025, Governor Kathy Hochul signed S3072 into law (the "Law"). The Law aims to reduce discrimination and reliance on potentially inaccurate or irrelevant credit information by prohibiting the use of a job applicant's or employee's credit report when making employment decisions. It is set to take effect on April 18, 2026, although additional "technical revisions for clarity" are anticipated before enforcement begins.

While the Law makes most employers' requests for "creditworthiness, credit standing, credit capacity or credit history" off-limits, it provides specific exemptions for certain roles where access to credit information may be deemed necessary. These exceptions include:

1. any position with an employer that is required by law to use an individual's consumer credit history for employment purposes;
2. persons applying for positions as or employed as police officers, or in a position with a law enforcement or investigative function in a law enforcement agency;
3. persons in a position that is subject to background investigation by a state agency, provided, however, that the appointing agency may not use consumer credit history information for employment purposes unless the position is an appointed position with a high degree of public trust;
4. persons in a position in which an employee is required to be bonded under state or federal law;
5. persons in a position in which an employee is required to possess security clearance under federal or state law;
6. persons in a non-clerical position having regular access to trade secrets, intelligence information or national security information;
7. persons in a position:
   1. having signatory authority over third party funds or assets valued at ten thousand dollars or more; or
   2. that involves a fiduciary responsibility to the employer with the authority to enter financial agreements valued at ten thousand dollars or more on behalf of the employer; or
8. 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.

Under the Law, "trade secrets" refers specifically to information that: (i) derives independent economic value from not being generally known and not being readily ascertainable; (ii) is the subject of efforts to maintain its secrecy; and (iii) can reasonably be said to be the end product of significant innovation.

This Law builds on existing protections under both state and federal law. While previous New York regulations and the federal Fair Credit Reporting Act (FCRA) required employers to disclose their intent to seek credit reports during the hiring process, this Law goes further by outright banning the practice in most situations, except where explicitly allowed. Similar laws already exist in states such as California, Illinois, Maryland, and Oregon.

New York City has banned the use of credit checks for employment decisions since 2015, as described in our prior advisory, and which includes the same exceptions as the state law. The state Law does not preempt city law, and clarifies that applicants and employees must receive the broadest protections available under all applicable laws.

Takeaways

New York employers should act now to prepare for compliance with the new requirements. Key actions include:

• Discontinue routine credit checks for job applicants and current employees where not explicitly required by the position.
• Identify roles that may fall within exemption categories (e.g., jobs involving significant financial responsibility or access to sensitive trade secrets).
• Update internal hiring policies and procedures to align with the new requirements.
• Train HR personnel, hiring managers, and other staff involved in the recruitment and promotion process on the new restrictions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.