New Jersey Legislative Update: New Laws Could Limit Employer’s Use of Credit Reports and Social Networking Information

If passed into law, two bills currently pending before the New Jersey General Assembly will place significant limitations on the categories of information that New Jersey employers may use and rely upon in connection with the hiring, promotion, and termination of employees.

Credit Reports & Related Information

Bill A2840, introduced in the Assembly on May 10, 2012, proposes legislation that would prohibit an employer from obtaining, requiring or otherwise basing employment decisions, such as hiring, promotion, and discipline on reports containing information about an applicant’s or current employee’s credit history, credit score, credit account balances, payment history, and savings or checking account balances or numbers.

The bill creates exceptions to the above restrictions for: (1) those employers who are required by law to obtain a credit report, or (2) when a credit inquiry is related to a bona fide occupational qualification. The bill provides guidance by stating that credit history may be considered a bona fide occupational qualification if the position in question involves setting the financial direction or control of the business, or otherwise involves access to customers’, employees’, or the employers’ personal belongings, financial assets, or financial information (excluding financial information that is customarily provided in a retail transaction). The bill prohibits employers from compelling employees to waive the protections granted under the bill.

The proposed law authorizes enforcement through private civil suits. The bill also provides for the imposition of civil penalties in an amount not to exceed $2,000 for the first violation, and $5,000 for each subsequent violation, collectible by the Commissioner of Labor of Workforce Development.

Over the past 5 years, seven other states – California, Connecticut, Hawaii, Illinois, Maryland, Oregon, and Washington – have passed similar legislation.

Social Network Information

Bill A278, was recently approved by the Consumer Affairs Committee of the New Jersey Assembly and would prohibit employers from asking a current or prospective employee if he or she has an account or profile on a social networking website (e.g., Facebook, LinkedIn, Twitter). Moreover, the bill would ban employers from requesting that an applicant or current employee disclose his or her username and password for such access. The protections granted under the bill cannot be waived. Private civil suits to enforce the proposed law are permitted if filed within one year from the date of the alleged violation. The Court may, as it deems appropriate, order or award the following: (1) injunctive relief (including reinstatement); (2) compensatory and consequential damages; and (3) reasonable attorneys’ fees and court costs. Not surprisingly, the bill prohibits retaliation or discrimination against any employees who refuses to disclose his or her username or password or who files a complaint. Moreover, an employer who violates any provision shall be subject to a civil penalty in an amount not to exceed $1,000 for the first violation and $2,500 for each subsequent violation, collectible by the Commissioner of Labor and Workforce Development.

The Consumer Affairs Committee also approved a similar bill, A279, which bars higher education institutions from asking applicants or students for the disclosure of social networking website information.

Employer Takeaway

In light of these recent developments, New Jersey employers should review their current handbooks, policies, employment applications and practices and consider whether changes will be necessary if these bills are signed into law. We will, of course, keep our readers up to date on future developments as we monitor the progress of the proposed legislation. If you have any questions, please feel free to contact any of the attorneys in the Gibbons Employment & Labor Law Department.

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