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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 that would end employment discrimination based on an individual’s credit history or financial status was approved today by the Assembly Labor Committee.

“New Jerseyans continue to face financial challenges as a result of the economic recession. Men and women across the state are still finding it difficult to get work, and they have been forced to choose between paying credit card bills and feeding and sheltering their families,” said Senator Turner (D-Mercer). “Denying these individuals employment because of their financial circumstances 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 use of credit checks by employers to screen applicants for a position is unacceptable. It punishes those who may have been forced into difficult financial situations for any number of reasons, be it a layoff, a divorce, an unexpected medical emergency or a family crisis,” said Senator Gill (D-Essex/Passaic). “This legislation will end this practice and help to provide a fair playing field for those who need jobs most. Doing this 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 (S-455) 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 from the bill any current or prospective employee being evaluated for a position in law enforcement or as security personnel.

The federal Fair Credit Reporting Act currently gives employers the right to conduct background check 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.

“Denying someone employment based on their credit history, when this information is irrelevant to the position they are seeking, is discriminatory,” said Senator Turner. “This bill will ensure that applicants are treated fairly when applying for employment and subject to credit screenings only when the job includes direct financial responsibilities.”

“Unless a position includes financial responsibilities, an employer has no right to examine an applicant’s banking information, to review bill-paying history or to the amount of debt a prospective employee has taken on,” said Senator Gill. “This legislation provides employers with the narrow ability to conduct a review of a job candidate’s financial background when relevant, but protects applicants from being subjected to blanket credit checks to determine whether they are employment worthy based on their financial past.”

According to a survey by the Society for Human Resource Management, 60 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 from getting them, especially during periods characterized by unprecedented unemployment.  According to the National Conference of State Legislatures, seven states currently limit employers’ use of credit information: California, Connecticut, Hawaii, Maryland, Washington, Oregon and Illinois. Similar legislation has been introduced in dozens of other states.

The bill would prohibit any employment discrimination against a current or prospective employee based on information that is in a credit report. It 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. In addition, it would 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 approved the bill by a vote of 22-12 last year. The bill now heads to the full Assembly for a final vote.