Article contributed by Anthony Vassallo, Ellenoff Grossman & Schole LLP
Effective April 18, 2026, New York State employers are prohibited from using consumer credit history when making employment decisions. For hospitality employers who have long relied on credit checks as part of their standard pre-employment screening, the change is immediate and requires action.
Background
Prior to this law, only New York City employers were restricted from using credit history in hiring under the city’s Stop Credit Discrimination in Employment Act, which has been on the books since 2015. New York State has now followed suit, joining ten other states that have enacted similar restrictions. The statewide law does not preempt the city law (both remain in effect) and where the two conflict, the more protective standard applies. For NYC employers already in compliance with the city law, the practical impact may be limited. But for employers operating outside the five boroughs who have continued to run credit checks as a matter of course, this law represents a significant change.
What the Law Prohibits
The law prohibits employers, employment agencies, labor organizations, and their agents from requesting, obtaining, or using an applicant’s or employee’s consumer credit history in connection with any employment decision, hiring, compensation, promotion, termination, or any other term or condition of employment. The definition of “consumer credit history” is broad. It covers formal credit reports and credit scores, but also information an employer might obtain from the individual, questions about late payments, outstanding debts, accounts in collections, bankruptcies, judgments, or liens. In other words, asking an applicant about their finances during an interview is no different under this law than pulling their credit report. Both are now
prohibited.
The law extends to background screening companies as well. A consumer reporting agency may not furnish a credit history report for employment purposes unless a statutory exemption applies. Employers cannot work around the restriction by outsourcing the inquiry to a third party.
The Exemptions Are Narrow
The law does provide exemptions, but they are limited and unlikely to apply to most hospitality roles. Employers may still consider credit history for positions requiring federal or state security clearance, roles involving regular access to trade secrets or national security information, positions where the employee holds signatory authority over $10,000 or more in third-party funds or has fiduciary authority to bind the employer financially, roles requiring the employee to be bonded under state or federal law, and positions where a separate law independently requires the employer to obtain credit information. Law enforcement and certain government-appointed positions are also carved out.
For most positions in the hospitality industry (front-of-house, back-of-house, supervisory, and administrative roles alike) none of these exemptions will apply. Credit history is simply off the table.
What Employers Should Do
Because the law is already in effect, employers who have not yet adjusted their practices are already exposed. The first priority is understanding where credit checks currently exist in your hiring process, whether through a formal background screening vendor, questions embedded in your application, or inquiries made during interviews, and eliminating them for any role that does not fall within a statutory exemption.
Employers should also communicate with their background screening vendors. Third-party providers need to understand that credit history reports may no longer be furnished for employment purposes in New York absent an applicable exemption, and employers should confirm in writing that their vendor’s processes reflect that requirement. Relying on a vendor to stay current without explicit direction is a risk not worth taking.
Looking ahead, HR personnel involved in hiring should be trained on the new restrictions, and employment applications, onboarding materials, and interview guides should be reviewed and updated to remove any solicitation of financial history. The prohibition is broad enough that even seemingly benign questions about an applicant’s financial situation could create exposure.
Please do not hesitate to reach out to your EGS contact with any questions about how this law applies to your business or whether any of the exemptions are relevant to your specific roles and hiring practices.
Anthony Vassallo is an Associate in the Labor & Employment Group at Ellenoff Grossman & Schole LLP. His practice includes representing management in traditional labor relations, employment discrimination actions and wage and hour litigation.
Prior to joining Ellenoff Grossman & Schole LLP, he was an associate at Bee Ready Fishbein Hatter & Donovan LLP, where he represented various municipal entities, ranging from counties and townships to villages and special districts. Mr. Vassallo can be reached at (212) 370-1300 or avassallo@egsllp.com.
