NY Bans Employment Credit Checks Statewide April 18

Governor Hochul signed Senate Bill S3072 on December 19, 2025, prohibiting most employment credit checks statewide effective April 18, 2026—just 71 days away. This law extends New York City's decade-old credit check ban to all employers across Nassau and Suffolk Counties, making New York the eleventh state to restrict employment credit history use and creating immediate compliance obligations for Long Island businesses that currently incorporate credit checks into their hiring processes.

Statewide Ban Mirrors NYC's Existing Restrictions

The new law essentially expands New York City's Stop Credit Discrimination in Employment Act, which has been in effect since 2015, to cover all New York State employers. According to legal analysis from Morgan Lewis, employers cannot request or use consumer credit history for any employment decision including hiring, promotion, demotion, discipline, discharge, or compensation determinations.

The prohibition covers all forms of credit information: credit reports, credit scores, payment history, bankruptcies, liens, and judgments. This comprehensive scope means employers cannot ask about credit history on applications, cannot run credit checks during background screening, and cannot consider credit information obtained through any other means when making employment decisions.

For Nassau and Suffolk County employers who have operated without these restrictions while their NYC competitors faced credit check limitations, April 18 represents a significant shift in hiring practices. Many Long Island businesses currently use credit checks for positions ranging from administrative assistants to sales representatives—practices that must be eliminated within the next 71 days.

The law amends New York's Human Rights Law to classify improper credit check use as an unlawful discriminatory practice, creating enforcement mechanisms through the New York Division of Human Rights and establishing private rights of action for affected employees and job applicants. This means violations carry both regulatory penalties and potential civil liability for damages and attorney's fees.

Limited Exemptions Require Careful Position Analysis

The law preserves narrow exemptions for specific position types, but employers must carefully evaluate whether their roles truly qualify. Law enforcement positions remain exempt, as do positions requiring security clearance or access to classified information. Non-clerical positions with fiduciary responsibilities—such as financial planning or money handling—can still require credit checks, but the exemption specifically excludes clerical workers.

Positions with signatory authority over business assets exceeding $10,000 qualify for exemption, but this threshold requires specific documentation and justification. A bookkeeper who processes payments but lacks signatory authority would not qualify, while a controller with check-signing privileges likely would. The distinction matters because misclassifying positions creates compliance violations and potential liability.

Employees with access to confidential or proprietary information may be subject to credit checks, but this exemption applies narrowly to trade secrets, marketing plans, and similar sensitive business information. General access to customer data or routine business information typically doesn't qualify for this exemption.

Healthcare facilities present particular complexity because positions involving regular access to controlled substances remain exempt from the credit check prohibition. However, this exemption applies only to roles with direct controlled substance access—not all healthcare positions. A pharmacy technician handling prescription medications might qualify, while a medical receptionist would not.

For employers developing comprehensive background check procedures that comply with the credit check ban, documenting the specific exemption justification for each position becomes critical for defending credit check practices that continue after April 18.

Immediate Compliance Actions Required

With 71 days until the effective date, Long Island employers must begin compliance efforts immediately. Start with a comprehensive audit of all current hiring and employment practices to identify where credit checks are currently used. Review job applications, background check authorization forms, and employment policies to document current credit check requirements.

Examine each position that currently requires credit checks against the narrow exemptions. Document the specific business justification for positions where you believe credit checks should continue. This analysis requires more than general assertions about trustworthiness—you must identify concrete exemption criteria that apply to the specific role.

Update job descriptions to clearly identify positions that qualify for exemptions and remove credit check references from all non-exempt positions. This documentation helps establish your compliance efforts and provides clear guidance for hiring managers about which positions can still include credit checks.

Revise background check policies and procedures to eliminate credit check requirements for most positions while maintaining proper procedures for exempt roles. Train HR staff and hiring managers on the new requirements, emphasizing the narrow scope of exemptions and the importance of proper documentation.

Notify background check vendors about the upcoming changes and ensure they understand which positions can still include credit checks. Many employers rely on third-party screening companies that may need to modify their standard packages to comply with New York's requirements.

Industry-Specific Implications

Financial services firms face the most complex analysis because their exemptions depend on specific job functions rather than industry classification. Bank tellers handling cash deposits may qualify for exemptions, while customer service representatives processing loan applications may not. Investment advisory firms must distinguish between advisors with fiduciary responsibilities and administrative staff supporting those advisors.

Healthcare organizations must carefully evaluate which positions involve regular controlled substance access. Nurses administering medications in hospitals likely qualify for exemptions, while nurses in non-medication roles may not. Dental offices must consider whether hygienists handling nitrous oxide qualify differently than reception staff scheduling appointments.

Professional services firms—law firms, accounting practices, consulting companies—must examine whether their employees have access to confidential client information that rises to the level of trade secrets or proprietary business plans. General client confidentiality typically doesn't qualify for the exemption, but access to merger strategies or competitive intelligence might.

Retail and hospitality businesses likely cannot use credit checks for most positions. Store managers with cash handling responsibilities might qualify for exemptions, but sales associates, cashiers, and customer service staff generally would not. The signatory authority exemption requires actual check-signing or financial authorization powers, not just cash register access.

For employers managing multiple New York employment law compliance requirements, integrating credit check policy updates with broader hiring practice reviews helps ensure comprehensive compliance across all regulatory obligations.

Enforcement and Violation Consequences

The New York Division of Human Rights has enforcement authority over credit check violations, with power to investigate complaints, impose penalties, and order corrective action. Employees and job applicants can file complaints directly with the division, triggering investigations that may result in significant penalties and ongoing monitoring of hiring practices.

Beyond regulatory enforcement, the law establishes private rights of action that allow affected individuals to sue employers directly. These lawsuits can result in back pay, compensatory damages, punitive damages, attorney's fees, and injunctive relief requiring changes to hiring practices. The combination of regulatory and civil enforcement creates substantial financial exposure for non-compliant employers.

According to employment law analysis from Seyfarth Shaw, violations can occur not just from conducting prohibited credit checks but also from requesting credit information, asking credit-related questions during interviews, or considering credit information obtained through other sources.

Action Steps for Nassau and Suffolk County Employers

Conduct an immediate audit of all hiring materials, background check procedures, and employment policies to identify current credit check usage. Review each position against the narrow exemptions and document specific justifications for roles where credit checks should continue.

Update job applications, background check authorization forms, and employment policies to remove credit check requirements for non-exempt positions. Revise job descriptions to clearly identify exempt positions and their specific exemption criteria.

Train HR staff, hiring managers, and anyone involved in employment decisions about the new requirements. Ensure they understand which positions qualify for exemptions and the importance of proper documentation for continued credit check usage.

Coordinate with background check vendors to modify screening packages and ensure compliance with New York's requirements. Establish procedures for handling exempt and non-exempt positions differently within your screening process.

Document all compliance efforts, including policy updates, training provided, and exemption justifications. This documentation supports your compliance efforts if questions arise during enforcement actions or legal challenges.

Long Island employers navigating this significant change in hiring practices benefit from comprehensive compliance support that addresses credit check restrictions alongside other New York employment law requirements. Benton Oakfield helps Nassau and Suffolk County businesses adapt their hiring practices while maintaining effective screening procedures within legal boundaries.

This content is for informational purposes only and does not constitute legal, tax, or benefits advice. Requirements vary based on employer size, location, and plan structure. Information is current as of 2026-02-06. Employers should consult qualified advisors for guidance on their specific circumstances.