Bill to Ban Employee Credit Checks Clears Legislative Hurdle in New Jersey

Think bad credit can’t hurt you beyond getting making it difficult to get a loan?  Think again.  For several years, it has been common practice for employers and hiring managers to conduct credit checks on prospective and even current employees.  To an employer, a less than optimal credit score can be a red flag signaling possible inability to budget or handle finances as well as a lack of judgment and responsibility – all qualities that those who hire want to shy away from when it comes to their hires.   

Although this may seem logical to some, others question just how fair this practice is.  Since  one’s credit can be hurt by a spouse’s irresponsible behavior or by other factors that an individual has limited control over, prying into the financial lives of a prospective employee may unfairly discriminate against them.  This leaves many without a job they may very well be capable of handling, and ironically, only adds to their financial and credit woes.  For this reason, some state legislatures have begun to look into regulating or eliminating this practice.     

Yesterday morning the New Jersey statehouse bureau issued a release reporting that a bill to ban credit checks on current and prospective employees advanced in the Senate Labor Committee yesterday by a party-line vote of 4-2.  The bill, which is a comibination of measures by state Sens. Shirley Turner and Nia Gill, will now be considered by the full senate. 

The bill is aimed at helping avoid the aforementioned “catch 22” for those hit hard by the recession.  Exceptions to the bill include that employers may still conduct credit checks for jobs that include a large amount of money handling, managing accounts or financial information.  

The direction that this bill goes in, whether its ultimately passed or thrown out altogether, should be interesting to follow as it could possibly set the precedent for whether similar bills will be created from state to state in the future.  In the mean time, it’s important to realize that employers can still can run credit checks on employees, and are likely to find several loopholes allowing them to do so in the future regardless of regulations.  As an employee or interviewee its always important to be armed with your best possible credit report and to seek the help of a credit repair specialist when your credit is in question.