Governor Kathy Hochul recently signed legislation amending the New York State Fair Credit Reporting Act (Senate Bill S3072). This legislation prohibits New York State employers from requesting or using consumer credit history in most employment decisions.
Under the new law, it is an unlawful discriminatory practice for employers to consider credit-related information including credit scores, payment history, bankruptcies, judgments, or liens when making employment decisions related to hiring, compensation, promotions, retention, or termination.
Consumer reporting agencies are also prohibited from furnishing credit history information for employment purposes unless a recognized exemption applies.
The law does carve out narrow exceptions. Employers may still conduct credit checks for positions that:
- Are required by state or federal law to include a credit check
- Involve law enforcement or investigative functions, including the investigation of financial or economic crimes
- Require a federal or state security clearance
- Involve signatory authority or control over financial assets of $10,000, or a comparable level of fiduciary responsibility
- Provide regular access to trade secrets or highly sensitive data
- Involve administration of or access to critical financial systems or cybersecurity infrastructure
For many employers, especially those outside New York City, this law represents a significant shift. New York City has enforced a similar restriction since 2015 under the Stop Credit Discrimination in Employment Act (SCDEA). The new state law expands these protections statewide and reinforces a private right of action, meaning employees and applicants can sue for actual damages and attorneys’ fees if their rights are violated.
For businesses with multiple locations or high-volume hiring, the practical impact is immediate. Background check processes, vendor agreements, and job description classifications all need to be reviewed in light of the new legislation.
Hiring policies, background screening procedures, and vendor contracts should all be updated to reflect the new requirements. Documentation supporting any exemption claim should be maintained in the event of a dispute.
Contact Vincent Costa for additional guidance at 631-738-9100.
Thank you to Isabella Marmo for her research and writing assistance.
