New York Archives

Bankruptcy Records: Credit Reports Erase Them But Employment Background Checks Find Them

Many people assume that once a bankruptcy drops off their credit report, it disappears everywhere.

Not true. And this difference matters, especially for employers and job seekers.

Credit Reports Follow Standard FCRA Time Limits

Under the Fair Credit Reporting Act (FCRA), national consumer reporting agencies (TransUnion, Experian, Equifax) must remove bankruptcies after specific time periods:

Chapter 7: reportable for up to 10 years
Chapter 13: typically removed after 7 years, sometimes sooner
Once these limits are reached, credit bureaus delete the record entirely, meaning they cannot provide it for any purpose, including employment screening.

Employment Background Checks Work Differently

Employment screening companies are also consumer reporting agencies under the FCRA, but they don’t rely solely on credit bureaus. They frequently pull records directly from the courthouse, which may contain older bankruptcy filings long after the credit bureaus deleted them.

Under the FCRA’s $75,000 salary exception, employment background check companies may report adverse information with no time limit. So if a bankruptcy exists in public court records, it may still appear on an employment background check even though it no longer appears on a credit report.

State Reporting Laws Add Another Layer

Several states have their own rules on how long bankruptcy records may be reported in employment background checks–specifically California, Colorado, Kansas, Maryland, Massachusetts, Montana, New Hampshire, New Mexico, New York, Texas, and Washington. California, for example, prohibits reporting a bankruptcy that is more than 10 years old measured from the date of the relief order, unless a narrow exception applies.

Bottom Line

A bankruptcy “dropping off” your credit report does not guarantee it disappears from employment background checks. Different rules, different timelines.

Disclaimer: This communication is for general informational purposes only and does not constitute legal advice. The summary provided in this alert does not, and cannot, cover in detail what employers need to know about the amendments to the Philadelphia Fair Chance Law or how to incorporate its requirements into their hiring process. No recipient should act or refrain from acting based on any information provided here without advice from a qualified attorney licensed in the applicable jurisdiction.

January 29th, 2026|Compliance Corner, Employment Decisions|

New Year, New Rules: Recap of What’s Coming in 2026 in Employment Screening

2026 marks a series of newly enacted laws taking effect across the country. Employers must adapt quickly to ensure compliance and maintain fair hiring practices. Below are the most significant changes taking effect this year.

District of Columbia: Second Chance Law (Effective January 1, 2026)

Automatic sealing of decriminalized offenses (such as pre-2015 marijuana convictions) and various older convictions.
Petition avenues for sealing additional convictions.
Employers are not permitted to access or act on any records sealed under this new law.

Philadelphia: Criminal Record Screening Amendment (Effective January 6, 2026)

Look-back periods cut; only felonies within the past 7 years and misdemeanors within the last 4 years are eligible for consideration, while minor offenses (summaries/infractions) are entirely excluded.
Requires “pre-adverse action notices” over a ten-day candidate response period, and robust documentation, even extending the 90-day protection against adverse action following protected activity.

New York State: Credit-Check Ban (Effective April 18, 2026)

Employers, including staffing firms, cannot request or use any “consumer credit history” for hiring, promotion, compensation, or other employment decisions, unless a statutory exemption applies.
This statewide ban aligns with New York City’s Stop Credit Discrimination in Employment Act (SCDEA), extending similar protections across the entire state.
The expansive definition of “credit history” covers credit reports, scores, credit accounts, and payment histories and, similar to the SCDEA, it likely prohibits searches of public records for bankruptcies, judgments, and tax liens unless an exemption applies.

Washington State: Fair Chance Enhancements (Effective July 1, 2026)

Employers with 15+ employees must wait until “after extending a conditional job offer” to inquire about criminal history; this rule extends to all employers by January 1, 2027.
Arrests, juvenile convictions, and non-conviction adult records are off-limits in hiring decisions. Only relevant adult convictions may be considered and only with a documented legitimate business justification, accompanied by a written notice and at least two business days for a candidate’s response.

Virginia: Clean Slate Law (Effective July 1, 2026)

Numerous misdemeanors and low-level felonies will be “automatically sealed” disappearing from standard background checks.
Employers and screening vendors are expressly barred from reporting or considering such sealed convictions in hiring decisions

San Francisco: Updated Fair Chance Poster

The City and County of San Francisco issued a revised version of its Fair Chance Ordinance (FCO) notice poster, replacing the prior version released in 2023. The updates include changes to official contact information and a Vietnamese-language translation, in addition to English, Spanish, Chinese, and Tagalog. The updated poster can be found here.

Disclaimer: This communication is for general informational purposes only and does not constitute legal advice. The summary provided in this alert does not, and cannot, cover in detail what employers need to know about the amendments to the Philadelphia Fair Chance Law or how to incorporate its requirements into their hiring process. No recipient should act or refrain from acting based on any information provided here without advice from a qualified attorney licensed in the applicable jurisdiction.

January 13th, 2026|Compliance Corner, Employment Decisions|

New NYS Law Restricts Use of Credit History in Employment Decisions

What is this about:

New York State recently enacted S.3072/A.1316, a law that broadly prohibits employers, staffing agencies, labor unions, and their agents from requesting or using “consumer credit history” in employment decisions, covering hiring, firing, promotions, compensation, and other terms of employment unless a narrow statutory exemption applies.

Effective date:

Signed by Governor Hochul on December 19, 2025, the law takes effect on April 18, 2026.

What this means:

Employers cannot use credit history for hiring, firing, promotions, or compensation decisions unless an exemption applies, e.g., legal requirement, public trust roles, access to sensitive systems, or authority to bind contracts over $10,000. Except for these exemptions, any such use is classified as an “unlawful discriminatory practice” under General Business Law § 380-b.

The definition of “consumer credit history” in the new state law mirrors the definition in the New York City Stop Credit Discrimination in Employment Act (SCDEA), and means an individual’s credit worthiness, credit standing, credit capacity or payment history, as indicated by:

a consumer credit report;
credit score; or
information an employer obtains directly from the individual regarding (i) details about credit accounts, including the individual’s number of credit accounts, late or missed payments, charged-off debts, items in collections, credit limit or prior credit report inquiries, or (ii) bankruptcies, judgments or liens.

As in the SCDEA, a “consumer credit report shall include any written or other communication of any information by a consumer reporting agency that bears on a credit capacity or credit history.”

Unlike the SCDEA, the NYS law does not require a written notice to the candidate specifying the exemption under which credit information is obtained. However, employers should maintain internal documentation to justify the exemption.

Why this matters:

This development aligns New York State with similar protections in NYC (since 2015), and places it among eleven states limiting credit checks in employment. Credit histories are frequently inaccurate and disproportionately affect economically vulnerable and minority applicants—this law helps reduce those biases.

Disclaimer: This communication is for general informational purposes only and does not constitute legal advice. The summary provided in this alert does not, and cannot, cover in detail what employers need to know about the amendments to the Philadelphia Fair Chance Law or how to incorporate its requirements into their hiring process. No recipient should act or refrain from acting based on any information provided here without advice from a qualified attorney licensed in the applicable jurisdiction.

January 6th, 2026|Compliance Corner, Employment Decisions|

The New York Clean Slate Act

What is this about?
The New York State Clean Slate Act (the “Act”) will allow certain state criminal records to be sealed from public access once an individual completes their sentence and after a specified period passes without another conviction. This statewide law makes it unlawful for employers to inquire about or use sealed convictions against applicants or employees (unless required by law).

Effective Date:
November 16, 2024

What this means:
Under the Act, individuals who have completed their sentence (including probation and parole time) will have their records automatically sealed, as follows:
• Eligible misdemeanor convictions are to be sealed three years after the completion of the sentence.
• Eligible felony convictions are to be sealed eight years after the completion of the sentence.

What else:
It is still being determined whether sealed records will be removed from public access in New York. Also, delayed implementation may occur for budgetary reasons, meaning that “automatically sealed” records may still be publicly available. If criminal record information is obtained from other sources (such as disclosure by the subject, media, or motor vehicle record) we will continue to verify it with information from the relevant New York court. If no correlating court record is found, we will assume the record was sealed and is, therefore, not reportable.

NYC’s Fair Chance Act & the Two-Step Process:
The Clean Slate Act does not change a New York City employer’s obligation under the city’s Fair Chance Act (FCA), which offers more expansive protections to individuals with criminal backgrounds. Our current procedures for complying with the FCA remain unchanged.

October 15th, 2024|Compliance Corner, Employment Decisions|

New York Drunk Driving Laws: DWI v. DWAI v. DUI

Almost everyone has heard the terms DWI and DUI, and many think that both are interchangeable. New York law uses a third term – DWAI. None of these terms are interchangeable and New York law does not use the term DUI or driving under the influence.

In New York, there are two main “drunk driving offenses” – DWI and DWAI. DWI stands for “driving while intoxicated,” while DWAI stands for “driving while ability impaired.” A DWI means that the driver is legally intoxicated, with a blood alcohol content of at least 0.08 percent. A DWAI involving alcohol means the driver’s blood alcohol content is between 0.05 and 0.07 percent.

Although the penalties for a New York DWI and DWAI are nearly the same, there is a big difference between them regarding the offense level. A DWI conviction is a criminal offence, while a DWAI conviction is a violation – which in New York is a non-criminal offence.

The practical effect of this distinction is that a DWAI conviction will appear on a New York driving record (usually stated as “driving while impaired”), but the court conviction will not appear on a New York Statewide CHRS report because these reports do not include non-criminal offenses such as violations.

June 6th, 2022|Compliance Corner, Guidance|

Does New York law require notice to the employee in order to have a consumer reporting agency conduct a background check in connection with the employee’s misconduct?

The NY FCRA sets forth notice and authorization requirements for investigative consumer reports as shown in “https://law.justia.com/codes/new-york/2017/gbs/article-25/380-c/” NY Gen Bus L § 380-C. However, this section is silent on the issue of employee misconduct investigations and we found no language in NY FCRA law that is analogous to the federal FCRA exemption for employee misconduct investigations as provided in 15 U.S.C.1681a(y)(1).

When analyzing this question, we reviewed a 2006 opinion by the Oklahoma Attorney General that addressed a very similar issue. A state senator wanted to know whether OK employers could rely on the FACTA amendment to the federal FCRA that provides the exemption for employee misconduct investigations and dispense with the OK notice requirements for consumer reports. The OK AG said “no,” the reason being that the OK statute (which specifically references the previously enacted federal FCRA) was enacted before FACTA and the OK legislature did not indicate in the statute that amendments to the original FCRA would also be adopted.

Of course, the AG opinion is not a binding law anywhere, including in OK. But it does show how the issue may be analyzed to the detriment of the employer if it arose in litigation. Like the OK statute, the NY FCRA was enacted well before the FACTA amendment in 2003 (NY FCRA was enacted in 1977). However, unlike the OK statute, the NY FCRA does not include any references to the federal FCRA and, therefore, does not rely on any of its language as originally enacted. That is a distinction that can undermine an OK AG-type analysis to the NY FCRA.

The most we can say is that the NY FCRA does not address employee misconduct investigations and that the federal FCRA does set forth an express exemption from its notice requirements for such investigations. Whether there is a conflict between the NY notice requirements (or any other state’s notice requirements) and the federal exemption for employee misconduct investigations remains to be seen and there are no court opinions addressing the issue.

In the absence of guidance from NY FCRA regarding employee misconduct investigations, the employer can follow the federal FCRA exemption for these investigations. It would be prudent for the employer to document the need for confidentiality of the investigation, specifying the reasons why alerting the employee would undermine the investigation.

December 20th, 2021|Compliance Corner|

Reminder to New York City employers about requirements when taking adverse action based on a criminal record

Let’s say you are an employer in New York City with a position to fill. During the hiring process, you learn that an applicant has a criminal conviction. What should you do if you elect not to hire her and want to avoid breaking the law?

The answer is not simple.

In New York State, it is unlawful to deny employment or take an adverse action against an applicant because of a criminal conviction unless a direct relationship exists between the criminal offense(s) and the specific position sought, or the employment of the individual would involve an “unreasonable risk” to property or to the safety and welfare of specific individuals or the general public.

Before an adverse employment decision may be based on a conviction record, Article 23-A of the New York State Correction law provides a list of factors that employers must consider:

New York’s stated public policy “to encourage the licensure and employment of those with previous criminal convictions.”
The specific duties and responsibilities related to the employment sought or held.
The bearing, if any, the criminal offense(s) for which the individual was convicted will have on her fitness or ability to perform one or more of the position’s duties or responsibilities.
The time elapsed since the occurrence of the criminal offense(s).
The age of the individual at the time of the occurrence of the criminal offense(s).
The seriousness of the criminal offense(s).
Any information produced by the individual (or on her behalf) addressing rehabilitation and good conduct. Any certificate of relief from disabilities or certificate of good conduct creates a presumption of rehabilitation with regard to the offense specified in the certificate.
The legitimate interest of the employer in protecting property and the safety and welfare of specific individuals or the general public.

An employer must apply each of these factors on a case-by-case basis before making an adverse employment decision. If all the factors are properly weighed and an employer makes a reasonable, good faith decision that the criminal offense bears a direct relationship to the job duties or that the applicant’s employment would involve an unreasonable risk to safety and welfare, it is not illegal to deny employment.

New York law does require that if employment is denied because of a conviction record, a statement setting forth the reasons for the denial must be provided upon request of the applicant, in writing and within 30 days.

Another wrinkle for employers who use a third-party to perform a background check: the federal Fair Credit Reporting Act (FCRA). If an employer elects not to hire an employee based in whole or in part on the background check, the statute requires the applicant receive a copy of the background check report, a notice of intent to take adverse action and a notice of rights.

Employers in New York City, however, have additional legislation to contend with. The Fair Chance Act (FCA), enacted in 2015, applies to employers with at least four employees. Covered employers are prohibited from inquiring about a job applicant’s criminal history until after a conditional offer of employment has been extended.

Assuming the offer has been made and an employer has learned of a conviction that proves troubling, the FCA sets forth several requirements for an employer to rescind the offer without running afoul of the statute.

After the factors of Article 23-A have been applied, an employer must follow a “fair chance process.” This involves providing applicants with a copy of their background check report – and if a third party was used to perform the check, the FCRA notice of rights and a notice of intent to take adverse action, per the FCRA – and any other information relied upon in connection with the employment decision, such as Internet searches or written summaries of oral conversations.

In addition, employers must provide an analysis of the Article 23-A factors (the New York City Commission for Human Rights (NYCCHR) provides a Fair Chance Act Notice Form for employers to use)) and the opportunity for the applicant to address the criminal history at issue and present any mitigating information or material prior to the employment offer being revoked.

The prospective position must be held open for at least three business days from the applicant’s receipt of the necessary documentation to allow time for a response. Further, if the employer used a third-party background check company, the FCRA also mandates that applicants receive a reasonable period of time to respond (the Federal Trade Commission has suggested that five business days would be sufficient in most circumstances).

The Notice Form requires employers to evaluate each Article 23-A factor and select which exception – direct relationship or unreasonable risk – it is relying upon, with the burden on the employer (and space provided on the Notice Form) to articulate its conclusion. In addition to the Notice Form, employers that made use of a background check report must provide an applicant with an adverse action notice required by the FCRA.

If an employer rescinds a conditional offer after receiving information about the applicant’s criminal history, the FCA established a rebuttable presumption that the withdrawal was due to criminal history.

To rebut the presumption, an employer must demonstrate that the revocation was due to a permitted reason, such as the results of a medical examination (where an exam is otherwise permitted), material information the employer could not have known before the conditional offer was made and would have kept the employer from making the offer in the first place or evidence that the employer did not have knowledge of the applicant’s criminal history prior to revoking the conditional offer.

Some employers are exempt from the FCA when hiring for certain positions if federal, state or local laws require a criminal background check or prohibit employment based on certain criminal convictions. Companies in the financial services industry or employers hiring police and peace officers, for example, may not be subject to the law’s requirements. Those employers who believe they are exempt must inform an individual upon application and keep a record of their use of the exemption.

June 21st, 2018|Employment Decisions, Legislation|

Medical marijuana laws put employers in a tough spot

The growing number of jurisdictions permitting medical marijuana is putting employers in a tough position. One the one hand, marijuana remains illegal under federal law and a workforce under the influence isn’t much of a workforce at all. On the other hand, 23 states and the District of Columbia now permit the use of marijuana for regulated medical purposes and some state laws include anti-discrimination provisions prohibiting employers from taking action against employees based on their status as a registered medical marijuana user.

A first-of-its-kind lawsuit demonstrates the conundrum. In December, the American Civil Liberties Union filed suit in a Rhode Island state court on behalf of an individual who allegedly was denied an internship after she disclosed that she lawfully carried a medical marijuana card for severe migraines.

According to the complaint, the company told the applicant that she had been rejected because of her status as a cardholder, and despite promises not to bring medical marijuana on the premises or come to work under the influence, the applicant was denied the position.

The lawsuit charges that the company violated Rhode Island’s medical marijuana law which prohibits schools, employers, and landlords from refusing “to enroll, employ, or lease to, or otherwise penalize, a person solely for his or her status as a cardholder.” The complaint – which also includes allegations of disability discrimination under state law – seeks compensatory and punitive damages.

Employers in states permitting medical marijuana would be well-advised to review their relevant law when considering marijuana use or marijuana-related criminal records in employment decisions. While Rhode Island is not alone in including an anti-discrimination requirement in its law, joined by Arizona, Connecticut, Delaware, Illinois, Maine, Minnesota, Nevada, and New York, other states – including California, Massachusetts, and New York – are clear that employers have no obligation to accommodate an employee’s medical marijuana use or permit them to work under the influence.

Read the complaint.

January 29th, 2015|Employment Decisions|

Pennies add up to $18.7 million in allegedly illicit gains

A bit different from the billion dollar frauds that frequently made the headlines in the years past, a complaint filed on October 5, 2014 by the justice department in the federal district court in Manhattan accuses two former New York brokers of securities fraud and conspiracy for secretly adding a few pennies to the cost of securities trades they processed to generate $18.7 million in gains. The SEC also filed civil charges against the men, and added another broker as a defendant. The SEC’s complaint alleges that from at least 2005 through at least February 2009, the defendants perpetrated the scheme by falsifying execution prices and embedding hidden markups or markdowns on over 36,000 customer transactions. According to the SEC, the defendants charged small commissions—typically pennies or fractions of pennies per share; the scheme was devious and difficult to detect because they selectively engaged in it when the volatility in the market was sufficient to conceal the fraud. One of the defendants, who was in charge of entering the prices into the trading records and playing a critical role by controlling the flow of information, already pleaded guilty to securities fraud and conspiracy.

October 15th, 2014|Criminal Activity, Fraud|

New York City’s new bill would restrict using credit reports for employment decisions

Last month, the New York City Council’s Committee on Civil Rights held a hearing on a bill that would amend the city’s administrative code, prohibiting employers from using consumer credit reports for personnel decisions. Although the hearing ended without a disposition, it is expected that this bill will pass in some form in the near future. The Committee is holding a separate hearing in December on a bill that would prohibit employment discrimination based on an applicant’s or employee’s criminal history.

October 15th, 2014|Employment Decisions, Legislation|