New York Amends Employment Credit History Law

On February 13, 2026, New York enacted Senate Bill 8789 (S8789) as Chapter 71, amending the state’s General Business Law provisions restricting the use of consumer credit history for employment purposes.

S8789 is a chapter amendment to the underlying law (S3072/Chapter 681, signed December 19, 2025) that adds a definition of “employer,” modifies an exemption for positions subject to state agency background investigations, and repeals a provision from the earlier law.

This update applies to New York employers, labor organizations, employment agencies, and their agents, including the state and its political subdivisions. Both the underlying law and S8789 took effect on April 18, 2026.

What Employers Need to Do

• Review background check and employment screening practices to confirm that consumer credit history is not being requested or used for employment decisions unless a statutory exemption applies.

• Update vendor instructions and consumer reporting agency arrangements, as background screening companies generally may not provide credit history information for employment purposes unless an exemption applies.

• Document the basis for any position where credit history use is claimed under an exemption, including position-specific justification such as bonding requirements, security clearance, or regular access to trade secrets or sensitive financial authority.

• Train hiring managers, HR staff, and any personnel involved in employment decisions on the statewide restriction and the limited exemptions.

Overview

What S8789 Does

• Adds a definition of “employer” to Section 380-a of the General Business Law. An “employer” means any individual, partnership, corporation, or association engaged in a business that has employees, including the state and its political subdivisions.
• Modifies an exemption for positions subject to background investigation by a state agency, removing language that would have limited the exemption to appointed positions involving a high degree of public trust.
• Repeals Section 3 of Chapter 681 of 2025 as a technical cleanup.

The Underlying Law (S3072/Chapter 681)

• Prohibits an employer, labor organization, employment agency, or agent from requesting or using consumer credit history for employment purposes involving applicants or employees.
• Covers employment decisions including hiring, compensation, promotion, demotion, retention, and other terms or conditions of employment.
• Defines “consumer credit history” broadly to include credit worthiness, credit standing, credit capacity, and payment history reflected in a consumer credit report, credit score, or information obtained directly from the individual, including credit accounts, late or missed payments, debts, collections, credit limits, prior credit inquiries, bankruptcies, judgments, or liens.

Limited Exemptions

• Positions where credit history use is required by state or federal law.
• Certain law enforcement or investigative roles.
• Positions requiring bonding under state or federal law.
• Positions requiring security clearance.
• Certain non-clerical roles involving regular access to trade secrets or sensitive financial authority.
• Positions subject to background investigation by a state agency (as modified by S8789).

Why This Matters

This amendment clarifies who counts as an “employer”, including public-sector employers, under New York’s new statewide restriction on the use of consumer credit history in employment decisions. The statewide restrictions already applies S3072/Chapter 681. S8789 clarifies certain aspects of that framework, including employer coverage and exemption language. While S8789 is primarily a clarifying amendment, employers should evaluate hiring, promotion, and other employment practices to ensure compliance with the statewide restrictions that took effect on April 18, 2026.

Key Risks for Employers

• Continuing to use credit history without an exemption: Requesting or using consumer credit history for hiring, compensation, promotion, or other employment decisions may violate the law unless a specific statutory exemption applies.

• Vendor and consumer reporting agency exposure: Background screening companies generally may not provide credit history information for employment purposes without an exemption, and employers relying on outdated vendor practices could face compliance gaps.

• Improperly claimed exemptions: Failing to document position-specific justification for exempt roles could undermine reliance on the exemption if the practice is challenged.

• Public-sector coverage: State and political subdivision employers are expressly included within the definition of employer, reinforcing that public employers are subject to the restriction.

Additional Information

New York City has long restricted employment credit checks under its Human Rights Law. The statewide restrictions were established under S3072/Chapter 681 and took effect on April 18, 2026. S8789 provides clarifying amendments to that law, including the addition of a definition of “employer” and revisions to certain exemptions. Employers with operations both inside and outside New York City should confirm that policies address both the city and state requirements.

Source References

• New York – SB 8789 – Prohibits the use of consumer credit history in hiring, employment and licensing determinations

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