New Year, New Laws in New York

Employers in New York face new employment laws in 2026 after Governor Kathy Hochul signed three bills into law on Dec. 19, 2025.

• “Stay or Pay” provisions banned. The “Trapped at Work Act,” took immediate effect, banning all employers (including subsidiaries and contractors) from requiring reimbursement if a worker decides to leave employment before a defined period of time. The new law does not prohibit an agreement requiring workers to repay wage advances that were not used for employment-related training. Employers are subject to civil fines of $1,000 to $5,000 for each violation; workers (which include independent contractors, interns, volunteers and apprentices) do not have a private right of action under the law.
• Ban on use of consumer credit history. Amending the state’s General Business Law, prohibits employers form requesting or using consumer credit histories when making employment decisions, defined to include decisions to hire, terminate, promote, demote, discipline or compensate employees, or set the terms, conditions or privilege of employment. The term “credit history” covers an individual’s credit worthiness, credit standing, credit history or payment history, as indicated by a consumer credit report, a credit score or information obtained directly from the individual regarding their credit history, debts, bankruptcies, judgments or liens. The law, which takes effect on April 18, 2026, does include exceptions for certain jobs such as those with access to trade secrets; employment as a peace officer, police officer or positions with a law enforcement agency; and those with authority over third-party funds or assets in excess of $10,000.
• Disparate impact theory still viable. In response to President Donald Trump’s April 2025 Executive Order (EO), “Restoring Equality of Opportunity and Meritocracy,” Gov. Hochul signed , amending New York’s Human Rights Law to clarify that an unlawful employment discriminatory practice can be proven based on its disparate impact. declared a new federal policy “to eliminate the use of disparate impact liability in all contexts to the maximum degree possible to avoid violating the Constitution, Federal civil rights laws, and basic American ideals.” Pursuant to the law, an employee in New York must establish that an employment practice causes or will predictably cause a discriminatory impact. An employer can justify the practice if it is job-related and consistent with business necessity and the business necessity could not be achieved by another practice with a less discriminatory effect. The justification must be supported by evidence and not be hypothetical or speculative. An employee then has the opportunity to rebut the justification by establishing that the business necessity could be satisfied by another practice that has a less discriminatory effect. The New York law took immediate effect.

Why it matters: New York employers should take note of the new laws, particularly since two are already in effect, and review their policies with regard to credit checks as well as any practices that might fall under the Trapped at Work law. By passing S03072, New York joins 10 other states that restrict the use of consumer credit history in making employment-related decisions, including California; Colorado; Connecticut; Hawaii; Illinois; Maryland; Nevada; Oregon; Vermont and Washington, as well as New York City; the District of Columbia; Chicago; Cook County, Ill.; Madison, Wisc.; and Philadelphia, Penn.