On Monday, the Assembly Labor Committee voted to advance to the floor a package of bills that would prohibit employers from conducting credit history checks on employees and job applicants. 


A2298/S1130 would prohibit employers from obtaining, requiring, or discriminating on the basis of credit reports.


A2310/S524 would prohibit employers from requiring a credit check as condition of employment.


On its face, this legislation sounds like just another regulatory mandate, but under the surface, it would dramatically increase the liability risk businesses in New Jersey must face since it would encourage employees and job applicants to take non-compliant employers to court.


We appreciate the sponsors’ concern for ensuring a fair evaluation of prospective employees, recognizing that a bad credit report can result from a variety of circumstances beyond an employee’s control. Indeed, the evaluation of credit history is just one data point in prospective employee evaluation, depending on its relevance to the job in question and on the reasons for the credit difficulties.


Our concern is that these bills would take credit history out of consideration entirely for most employment scenarios. While there is a carve-out for some positions where credit history is most evidently relevant, there are nevertheless several significant difficulties with the bill as currently structured.


First, the carve-out is under-inclusive and does not encompass full range of positions for which a poor credit history is potentially relevant. It expressly does not include the sort of retail positions that involve unsupervised access to cash; nor does it cover positions where employees would have access to high value inventory, such as narcotic pharmaceuticals.


Compounding that difficulty, the carve-out is also necessarily vague and subject to interpretation. That uncertainty of interpretation becomes a problem primarily because the enforcement mechanism is litigation, incentivized with fee-shifting that provides plaintiffs with attorney’s fees and court costs.


Finally, in addition to the express private right of action provided in the bills, prohibiting the consideration of credit history would also facilitate the type of disparate impact litigation that has been brought by the EEOC at the federal level.


 Click here to read our full testimony in opposition to this legislation.


We will let you know if and when this legislation is scheduled for a vote in the Assembly, but in the meantime, we encourage you to reach out to your Assembly Members and tell them you oppose the liability aspect of this legislation.


If you have questions or comments about this legislation, please contact Alida Kass, NJCJI’s Chief Counsel.