For quite some time, whether you have good credit or bad credit has often been a factor not just in whether you qualify for a loan but also in whether you get hired. New Jersey has become the latest state to address the use by potential employers of a job applicant’s credit history in the hiring process. In a four to one vote, the state Senate’s Labor Committee decided in favor of a bill which would impose limits on the ability of an employer to use credit history not just in a hiring decision, but also in other areas of employment such as pay raises and job promotions. An exception would be made in the event that the applicant’s lack of good credit would constitute a “bona fide occupational qualification” such as certain managerial financial positions.
Pro-labor proponents of the New Jersey bill believe that the high unemployment over recent years has driven many job seekers into bad credit situations and unfairly prevented them from gaining employment. These folks are thus unable to get decent jobs to regain their good credit lost due to late bill payments and foreclosures.
Pro-business opponents of this type of legislation, including the credit industry, feel that bad credit as a barrier to hiring is not seriously widespread. Their fear is that if this bill becomes law, it will limit what they view as a useful tool of employers, drive up the costs of business and lead to a new cottage industry of employment lawsuits.
Similar bills have failed before not only in New Jersey but also in other states such as California. However, eleven states currently have laws restricting employers from using credit history against job applicants with bad credit.