On January 14, 2014, four members of the New Jersey Senate introduced Bill No. S524, which prohibits employers from requiring credit checks on current or prospective employees. That bill passed the Senate in June of 2015, and was referred to the Assembly for review.
On January 14, 2014, four members of the New Jersey Senate
introduced Bill No. S524, which prohibits employers from requiring
credit checks on current or prospective employees. That bill passed
the Senate in June of 2015, and was referred to the Assembly for
The bill explicitly prohibits employers from requiring credit checks, unless the employer is required to perform the credit check by some other law, or the employer reasonably believes that an employee has engaged in a specific financial activity that would be a violation of law. Under the bill, employers can still perform a credit inquiry, or take necessary employment action, if credit history is a "bona fide" occupational qualification. Examples provided by the New Jersey legislature include managerial positions which involve setting the financial direction of the business, a position which involves access to the personal belongings or financial assets or information of customers or employees, positions involving fiduciary responsibility to the employer, positions which provide for travel expenses, or law enforcement positions.
The bill also includes anti-discrimination and retaliation provisions, which prohibit employers from discriminating against a current or prospective employee based on information in a credit report. This includes prohibitions on discriminating or retaliating against an employee who has filed a civil complaint under the provisions of the bill, participated in investigations or proceedings concerning violations of the bill, or otherwise opposed a violation of the bill.
Finally, the bill prohibits employers from requiring prospective employees to waive their rights and protections under the bill as a condition of applying or receiving an offer of employment.
If the bill becomes law, aggrieved employees can file a complaint in court, and can seek injunctions, damages, and attorney's fees. In addition, the bill provides for civil penalties of up to $2,000 for any first violation and $5,000 for any subsequent violation.
Upon its referral to the assembly for review, the New Jersey Assembly Labor Committee passed the bill by a 5-3 vote. The bill must now pass the full Assembly, and be signed by the Governor, before it can become law.
This bill is a continuation of the New Jersey legislature providing increased protections for job applicants and employees for their conduct outside of work, and comes on the heels of the New Jersey Opportunity to Compete Act, commonly known as the "Ban the Box" law, which went into effect in New Jersey in March 2015. Although the credit check bill has not yet been enacted, it is not too early to reexamine your hiring practices and employee policies. The bill demonstrates that employers walk a risky (and potentially expensive) fine line when seeking certain information about job applicants and employees. Theses risks can be avoided, however, by ensuring that your policies are up to date.
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