Credit Check Bill Proceeds Through NJ Legislature

November 1, 2010 ( – Legislation restricting New Jersey employers from conducting pre-employment credit checks may soon come before the full state Assembly.

An Associated Press news report said the measure would bar such checks unless the employer is legally required to conduct them or they’re needed due to the position being sought. Employers also would be allowed to check the credit of prospective employees who they reasonably believe may have been involved in financial crimes such as embezzlement or fraud, according to the news story.

If the bill becomes law, employers who are caught improperly checking applicants’ credit could be fined $5,000 for an initial violation, and $10,000 for each subsequent violation.

The Assembly’s labor committee approved the measure on October14. A full Assembly vote has not been scheduled. Senator Nia Gill has introduced an identical bill that has been referred to the state Senate’s labor committee.

“Let’s face it — in most cases credit checks are unnecessary and say nothing about whether a potential employee is fit for the job,” said sponsor Assemblyman Ruben J. Ramos Jr., according to the Associated Press.

Under the proposed measure, credit checks for potential new hires would be barred except for:

  • Officers and investigators with law enforcement agencies in the state.
  • Management positions that involve setting a firm’s financial direction or control.
  • Positions involving access to the valued possessions or financial information of customers, other employees or employers (except for information customarily provided in a retail transaction).
  • Positions involving fiduciary responsibility to the employer — including the authority to issue payments, transfer money or enter into contracts — or involving property leases.
  • Positions that provide expense accounts for travel.

The measure also would bar employers from requiring job seekers to waive or limit protections granted under the bill as a condition of applying for a job or receiving an offer, the news report said.

The Society for Human Resource Management (SHRM) recently testified before the U.S. House Financial Services Subcommittee on Financial Institutions and Consumer Credit in October that such credit checks are one tool among many that are useful to employers evaluating potential new employees (see SHRM Testifies for Allowing Credit Checks on Job Candidates).