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N.J.: Bill Would Bar Employment-Related Credit Checks

By Diane Cadrain  1/13/2014

A bill that would bar the practice of requiring credit checks as a condition of employment cleared the New Jersey Assembly Labor Committee in mid-December 2013 after having first passed the Senate in May 2013.

Senate Bill 455 states that no employer or its agent may require, as a condition of employment, a credit report on a current or prospective employee if the report gives information about that person’s credit score, credit account balances, payment history, savings or checking account balances, or savings or checking account numbers.

Exceptions would include situations in which:

*The employer is required by law to obtain a credit report.

*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 employer establishes credit history as a bona-fide occupational qualification, meaning one that:

     a. Is a managerial position that involves setting the financial direction or control of the business;

     b. Involves access to customers’, employees’, or employers’ personal or financial information, other than information customarily provided in a retail transaction;

     c. Involves a fiduciary responsibility to the employer, including, but not limited to, the authority to issue payments, transfer money or enter into contracts; or

     d. Provides an expense account for travel.

The legislation would also bar companies from requiring individuals to waive or limit any employment-related legal protections as a condition of employment and prohibits retaliation against employees or applicants who oppose violations of the act.

People aggrieved by violations of this act may file court actions within one year and recover damages and injunctive relief. Additionally, employers found in violation will be required to pay civil penalties of up to $5000 for a first violation and $10,000 for subsequent violations.

The New Jersey Business and Industry Association (NJBIA) opposes the measure, The Business and Industry Association argued the restriction is unnecessary.

“The use of a credit check is just one tool to help employers assess the fitness of an individual for a particular job, NJBIA Assistant Vice President Stephanie Riehl told lawmakers in a hearing. “It’s rare that an applicant doesn’t get hired because of a credit check.”

Assemblywoman Shavonda Sumter defended the proposal, telling the Philadelphia web news source Newsworks that credit checks “state nothing of an [employee or applicant’s] skill unless they're going to work in a financial institution. Some jobs don't even require you do to that, some jobs in customer service, some jobs in advocacy, and there are other sectors that a credit score does not determine your ability to get the job done."

Sumter noted that people often see their credit scores drop when they are out of work, so it's unfair to make it harder for them to find that next job by counting it against them.

Diane Cadrain is an attorney who has been writing about employment law issues for more than 20 years.


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