Senate Panel Approves Turner/Gill Measure To End Employment Discrimination Based On Credit History

New Jersey Would Become One of Only a Handful of States to Put An End to the Practice

TRENTON – A bill sponsored by Senators Shirley K. Turner and Nia H. Gill was passed by the Senate Labor Committee today, paving the way for the state to put an end to employment discrimination based on an individual’s credit history or financial status, a practice that has become widespread in today’s job market.

“The deep recession has left many individuals and families in financial chaos. Extensive layoffs coupled with few job opportunities have prevented many residents from finding the work necessary to financially support their households,” said Senator Turner (D-Mercer). “These individuals are being branded ‘credit and employment unworthy’ through no fault of their own. This creates a vicious ‘Catch-22’ that prevents people who need jobs the most from obtaining one.”

“A credit report does little to speak for a person’s individual integrity or job capabilities,” said Sen. Gill. (D-Essex). “This is all the more true when you factor in record levels of unemployment and the foreclosure epidemic, which have had devastating financial effects on millions of people who previously had good credit. These circumstances have forced many people to take on debt they wouldn’t normally accrue in order to take care of their families. They should not be penalized in their attempts to become self-sustaining again.”

The bill (Senate Committee Substitute for S-1791 and S-1922) would prohibit an employer from making any inquiries into the credit history or financial status of an 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 sensitive personal or financial information; or a position that oversees an expense account or involves a fiduciary responsibility to the employer. It would also exempt from the bill any current or prospective employee being evaluated for a position in law enforcement.

The federal Fair Credit Reporting Act 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 a survey by the Society for Human Resource Management, sixty percent of employers run credit checks on job applicants. Critics of this practice maintain that allowing employers to discriminate based on credit history creates a vicious cycle that can prevent those who most need jobs the most from getting them, especially during periods characterized by unprecedented unemployment. Hawaii, Washington, Oregon and Illinois already ban the practice of requiring credit checks of job applicants, while similar legislation has been introduced in 15 other states.

The bill would also prohibit an employer from requiring a prospective employee to waive any protections granted under this bill as a condition of applying for or receiving an offer of employment. Any employer found in violation of the provisions of this bill could face civil penalties of up to $5,000 for the first violation, or $10,000 for each subsequent violation. The Commissioner of Labor and Workforce Development would be responsible for the collection of these fines.

The bill now heads to the full Senate for a vote.

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