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Turner/Gill Measure To End Employment Discrimination Based On Credit History Approved By Senate

A view of the Senate Chambers from the 2010-2011 Senate Reorganization.

New Jersey Would Join Only Handful of States to Putting An End to the Practice

TRENTON – A bill sponsored by Senators Shirley K. Turner (D-Mercer) and Nia H. Gill (D-Essex) that would put an end to employment discrimination based on an individual’s credit history or financial status was approved today by the full Senate, a practice which has become widespread in today’s job market.

“At a time when so many New Jersey residents are seeking employment and trying to provide for their families, there is a senseless policy in place that deems them “credit and employment unworthy”. The time has come to end this practice. We need to be doing everything we can to get people back into the work force, not creating obstacles for them,” said Senator Turner.

“A person’s individual integrity or job capabilities should not be unfairly judged by a credit report,” said Senator Gill. “The current economic climate has created a devastating financial impact on 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 seeking to obtain or requiring a credit report on a current or prospective employee, unless the employer is required by law to obtain a credit report or the employer reasonably believes that the employee has engaged in a specific activity that is financial in nature and constitutes a violation of law. The bill would prohibit an employer from discriminating against a current or prospective employee based on information in a credit report. The bill would also prohibit an employer from requiring a prospective employee to waive or limit any protection granted under the bill as a condition of applying for or receiving an offer of employment.

The federal Fair Credit Reporting Act requires employers to obtain consent before conducting background checks on current and potential employees through third-party companies. It is important to note that employers receive a credit report, not a 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. Because the vast majority of employers who conduct credit background checks do so for jobs with fiduciary or financial responsibility, the bill would permit an employer to require a credit history in such cases and when a favorable credit history would be considered a bona fide job qualification.

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 20 other states.

The bill would prohibit any employment discrimination against a current or prospective employee based on information that is in a credit report. Any employer found in violation of the provisions of this bill could face civil penalties of up to $2,000 for the first violation, or $5,000 for each subsequent violation. The Commissioner of Labor and Workforce Development would be responsible for the collection of these fines.

The bill cleared the Senate by a vote of 26-12. It now heads to the Assembly for further consideration.

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