Effective April 18, 2026, it will be an unlawful discriminatory practice for employers, labor organizations, employment agencies or their agents to request or use for employment purposes an applicant or employee’s consumer credit history. This includes using an applicant or employee’s consumer credit history with respect to employment decisions such as hiring, compensation, or other terms and conditions of employment.
“Consumer credit history” includes: 1) a consumer credit report; 2) a credit score; or 3) information obtained directly by an employer from the applicant/employee regarding details about credit accounts (including the number of credit accounts, late or missed payments, charged off debts, items in collections, and credit limit or previous credit report inquiries), bankruptcies, judgments or liens.
Therefore, unless one or more of the below-listed exclusions applies, employers must stop including consumer credit reports/history in their pre- or post-employment background checks when (if not before) this law goes into effect. The exclusions are:
- employers (or their agents) that are required to use an individual’s consumer credit history for employment purposes pursuant to State or federal law or by certain self-regulatory agencies;
- individuals applying for peace or police officer positions or employed in those positions, or in a position with a law enforcement or investigative function in a law enforcement agency;
- individuals in positions that are subject to State Agency background investigations, except that consumer credit history may not be used for employment purposes unless the position is one that is appointed and in which a high degree of public trust has been reposed;
- individuals in positions in which they are required to be bonded pursuant to State of federal law;
- individuals in positions in which they are required to possess security clearance pursuant to (any) state or federal law;
- individuals in non-clerical positions who have regular access to trade secrets, or intelligence or national security information;
- individuals in positions that have signatory authority of third-party funds/assets with a value of $10,000+ or involve a fiduciary responsibility to the employer with the authority to enter into financial agreements valued at $10,000+ on the employer’s behalf; and
- individuals in positions with regular duties allowing them to modify digital security systems that have been established to prevent the unauthorized use of the employer’s or its client’s networks or databases.
There is currently no requirement to remove credit history information from the results of previously-conducted background checks (for example, credit history information contained in a confidential/personnel file). Employers will, however, need to ensure that any third-party companies used for conducting background checks do not request or provide consumer credit information for inquiries conducted on or after the law’s effective date. Employers should review their onboarding procedures and packets to ensure compliance and remove any unnecessary documentation (e.g., where appropriate, credit reporting authorizations; Fair Credit Reporting Act disclosures; etc.).
If you have questions about complying with this new requirement or would like assistance with determining whether an exclusion applies to a particular position or type of employer, please contact us.
