Gill-Turner Bill to End Employment Discrimination Based on Credit History Advances

New Jersey State House Dome

TRENTON A bill sponsored by Senator Nia H. Gill and Senator Shirley K. Turner that would end employment discrimination based on an individual’s credit history or financial status was approved by the Senate Labor Committee today.

“When employers use credit checks to screen applicants for employment, they are unfairly punishing people who have found themselves in challenging financial circumstances. These individuals could be struggling financially for any number of personal or health reasons.  It is wrong to take into account their financial position, particularly when it has no bearing on the job they are pursuing,” said Senator Gill (D-Essex/Passaic). “By ending this discriminatory practice we will better ensure that job seekers are able to get back on their feet and are not penalized simply because they fell on hard times.”

The bill, S-545, would prohibit an employer from making any inquiries into the credit history or financial status of a current employee or applicant for employment unless a good credit history or financial status is an established bona fide occupational requirement for a particular position. These exemptions would include: a managerial position that involves setting the financial direction or control of the business; a position that involves access to customers’, employers’ or employees’ personal belongings, financial assets or financial information other than that which is customarily provided in a retail transaction; a position that provides an expense account for travel or involves a fiduciary responsibility to the employer. It would also exempt any current or prospective employee being evaluated for a position in law enforcement or as security personnel.

“For the last several years, many residents have found it difficult to find work, and families have found themselves forced to choose between paying credit card bills or making the rent or mortgage payment,” said Senator Turner (D-Mercer/Hunterdon). “Denying these individuals employment because of their credit history is discrimination, plain and simple. Moreover, it creates a ‘Catch-22’ that leaves them unable to get a job, in order to pay down debt and repair their damaged credit.”

The federal Fair Credit Reporting Act currently gives employers the right to conduct background checks on current and potential employees through third-party companies, with the individual’s approval. It is important to note that employers receive a credit report, not credit score, from consumer reporting companies. A credit report includes debt, bill-paying history, number and types of accounts, and whether an individual has been sued or has filed for bankruptcy. According to the National Conference of State Legislatures, the following 13 states currently limit employers’ use of credit information in employment: California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Illinois, Maryland, Nevada, Oregon, Utah, Vermont and Washington.

The bill contains provisions to prohibit employment discrimination based on information that is in a credit report; to prohibit an employer from requiring a prospective employee to waive any protections granted under the bill; and to prohibit an individual from retaliating or discriminating against another individual because that person filed a complaint under the bill, testified, assisted, or participated in an investigation, proceeding or action concerning a violation of the bill or otherwise opposed a violation of the bill. Any employer found in violation of the provisions of this bill could face civil penalties of up to $2,000 for the first violation, and $5,000 for each subsequent violation.  The Commissioner of Labor and Workforce Development would be responsible for the collection of these fines.

The Senate Labor Committee released the bill by a vote of 4-1, and next heads to the Senate for further consideration.