On December 19, 2025, New York Governor Kathy Hochul signed Senate Bill S3072 into law, significantly altering the landscape for pre-employment screening and background checks in the state. This new legislation, known as the “Credit History Ban Bill,” prohibits most employers from using a job applicant’s or employee’s consumer credit history in employment decisions.
The law, which aims to increase fairness in hiring and reduce barriers to employment for individuals with less-than-perfect credit, is set to take effect on April 18, 2026.
Background: The Push for Fairness
The justification for S3072 stems from the premise that a person’s credit history does not reliably predict their job performance or trustworthiness. Advocates for the bill argued that credit reports often contain errors and that using them in employment decisions disproportionately affects low-income individuals and people of color, creating systemic barriers to economic opportunity. By enacting this ban, New York joins a growing list of jurisdictions seeking to eliminate this practice.
Key Provisions of the Act
Under the new law, it is an unlawful discriminatory practice for an employer, labor organization, or employment agency to request or use consumer credit history for employment purposes. This prohibition covers a wide range of employment decisions, including:
- Hiring and Firing. Employers cannot use credit history to decide whether to hire or terminate an individual.
- Promotion and Demotion. Credit history cannot be a factor in decisions regarding promotions or demotions.
- Compensation. Employers are barred from using credit information to set compensation levels.
- Terms and Conditions. The law extends to all terms, conditions, and privileges of employment.
Exceptions to the Rule
While the ban is broad, it includes specific exceptions where credit checks are still permissible due to the nature of the role. Employers may still request or use consumer credit history for positions that involve:
- State or Federal Mandates. Roles where credit checks are required by state or federal law or by a self-regulatory organization (e.g., FINRA).
- Fiduciary Responsibilities. Positions involving fiduciary duties to the employer, including the authority to enter into financial agreements valued at $10,000 or more.
- Access to Trade Secrets. Roles with regular access to trade secrets or intelligence information.
- Cybersecurity. Positions with duties that allow the modification of digital security systems.
- Law Enforcement and Security. Roles as police or peace officers, or positions requiring high-level security clearance.
- Financial Authority. Jobs with authority over third-party funds or assets valued at $10,000 or more.
Next Steps for Employers
With the effective date approaching, New York employers should take the following steps to ensure compliance:
- Review Background Check Processes: Audit current hiring and screening procedures to ensure consumer credit checks are removed for exempt positions.
- Identify Exempt Roles: Carefully assess which positions within the organization may fall under the specific exceptions listed in the law.
- Update Vendor Agreements: Contact background check providers to adjust screening packages and ensure they are not automatically running credit checks for New York applicants unless specified.
- Train HR and Hiring Managers: Educate human resources staff and hiring managers about the new restrictions to prevent inadvertent violations during the interview and selection process.
