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Senator Nia Gill at the first meeting of the Senate Task Force on Health Insurance Exchange Implementation

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 today by the Senate Labor Committee.

“Using credit checks to screen applicants for employment is unacceptable and unfairly punishes those who have found themselves in difficult financial positions for any number of reasons, be it a layoff, a divorce, or a family crisis,” said Senator Gill (D-Essex/Passaic). “By ending this practice we will better ensure that job seekers are able to regain their financial footing and are not penalized simply because they fell on hard times.”

The bill (a substitute for S-524 and S-1130) 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, as laid out in the bill. 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.

“People across the state are still finding it difficult to find work, and many have been forced to choose between paying credit card bills and feeding their families,” said Senator Turner (D-Mercer). “Denying these individuals employment because of their financial situation is just wrong. Moreover, it creates an impossible situation 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 11 states currently limit employers’ use of credit information in employment: California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington. Similar legislation was introduced in 19 other states in 2014, NCSL reported.

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 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 committee approved the bill by a vote of 4-1.