Credit History in Employment: New Jersey Laws & Your Rights

Federal law under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., allows employers to obtain consumer credit reports through a third-party consumer reporting agency, but only with the applicant's written consent and under specific conditions. The FCRA requires employers to provide written disclosure that a credit report will be used and to obtain separate written authorization. However, the FCRA does not prohibit credit checks across the board—it only regulates how they are obtained and used.

Federal enforcement occurs through the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC). The FCRA allows private rights of action, meaning employees can sue employers directly for violations, including negligent or willful non-compliance. Damages include actual damages, statutory damages of $100 to $1,000 per violation, punitive damages in cases of willfulness, and attorney's fees. However, federal law does not establish categorical restrictions on which job types can require credit checks—that authority rests primarily with individual states.

New Jersey's consumer credit law under NJSA 34:6B-5 is substantially stronger than federal law in protecting workers from credit discrimination. While the FCRA regulates the process of obtaining credit reports, New Jersey law goes further by categorically prohibiting credit checks except in narrow circumstances.

Under New Jersey law, an employer may only obtain a consumer credit report if the employee or applicant: (1) is applying for a position involving access to cash, negotiable securities, or credit cards; (2) is applying for a position with access to financial records, bank accounts, or credit accounts; (3) is applying for a position with responsibility for control or supervision of such assets; or (4) is applying for a managerial or executive position where credit information is substantially job-related. Any other use of credit reports in employment decisions is prohibited.

This covers all employers in New Jersey, regardless of size. There is no employee threshold that triggers the law—even sole proprietorships must comply. New Jersey law explicitly rejects the federal approach of allowing credit checks for any position, instead creating a whitelist of permissible uses.

Before checking credit, New Jersey employers must: (1) provide written notice to the applicant or employee, (2) obtain written consent separate from other authorizations, (3) disclose that a credit report will be obtained, (4) provide a copy of the report to the applicant if it is used in a negative decision, and (5) explain the findings that led to the adverse action. Violations result in civil penalties of $100 to $500 per violation, compensatory damages including lost wages and emotional distress, punitive damages, and payment of the complainant's attorney's fees and court costs. The law is enforced by the New Jersey Division on Civil Rights, which investigates complaints and may issue cease-and-desist orders.

The primary exception to New Jersey's credit check prohibition exists for positions genuinely requiring financial responsibility or access to sensitive financial information. This includes positions such as bank tellers, financial advisors, bookkeepers, payroll specialists, and executive-level roles where credit history is demonstrably job-related. However, employers cannot use credit checks as a blanket practice for hiring supervisors, managers, or office workers unless those specific individuals would directly handle cash or financial records.

Critically, New Jersey law does not permit employers to use a blanket policy denying employment based on poor credit history. Employers must demonstrate a legitimate business nexus between the specific position and the financial responsibility involved. Even if an employer lawfully obtains a credit report for a permissible position, using the credit information as a pretext for discrimination based on a protected class (race, gender, disability, etc.) remains illegal under New Jersey's Law Against Discrimination.

The FCRA's dispute process does not override New Jersey law. If an applicant disputes the accuracy of a credit report, both FCRA procedures and New Jersey's requirement for written notice apply. Self-employed individuals and independent contractors may fall outside the scope of NJSA 34:6B-5, though the law's language suggests it applies broadly to any employment relationship.

One nuance: if an applicant voluntarily discloses credit information to an employer (for example, on an application), the employer may consider it without obtaining a formal consumer report. However, once an employer requests a formal credit report, it must comply with all notification and consent requirements. Criminal history and credit history are distinct under New Jersey law—employers have some ability to consider criminal convictions under different legal standards, but credit checks are subject to the stricter restrictions outlined above.

**Step 1: Document Everything.** Immediately save copies of: (1) the job posting and job description, (2) any written notice or email from the employer stating a credit check will be conducted, (3) the written authorization form you signed (if any), (4) any rejection letter or communication citing credit information as a reason for non-hiring or adverse action, (5) emails, texts, or documents showing the employer obtained or reviewed your credit report, (6) the actual credit report used (request this from the employer or directly from the credit reporting agency), and (7) communications showing you were treated less favorably than similarly-situated applicants. Keep a detailed timeline with dates and names of witnesses.

**Step 2: Internal Complaint Process.** Before filing with the state, send a formal written complaint to your employer's human resources or legal department, clearly stating: (1) that you believe your credit was improperly checked in violation of NJSA 34:6B-5, (2) the specific circumstances (date of application, position applied for, how you learned a credit check occurred), (3) that the position does not fall within the permitted categories, and (4) the harm you suffered (job loss, lower starting pay, missed opportunity). Request a written response within 10 business days. Keep a copy for your file. While not legally required, this creates an internal record and may prompt corrective action without filing a formal complaint.

**Step 3: File with the New Jersey Division on Civil Rights.** Visit the official website at www.nj.gov/oag/dcr or call (609) 292-4100. You must file within 180 days of the date the credit check occurred or the date you discovered the violation, whichever is later. File a "Verified Complaint" form (available on the DCR website). Include: (1) your name, address, and contact information, (2) the employer's name, address, and number of employees (if known), (3) a detailed narrative of the violation including dates, (4) the specific provision of NJSA 34:6B-5 you believe was violated, (5) copies of all supporting documentation, and (6) the relief you seek (back pay, compensatory damages, attorney's fees, policy change). You can file online, by mail to: New Jersey Division on Civil Rights, P.O. Box 090, Trenton, NJ 08625, or in person at the DCR office. No filing fee is required.

**Step 4: Investigation Process.** After filing, the Division on Civil Rights will send you a case number and notification that your complaint has been received. The agency typically assigns an investigator within 15–30 days. The investigator will contact your employer for a written response (the employer has usually 20 days to respond). The investigator may conduct interviews, request documents from both you and the employer, and review your credit report and the employer's hiring records. This phase typically takes 2–6 months but can extend to one year or more depending on case complexity and investigator caseload. You will receive periodic updates on case status. The investigator will then issue a Finding or Probable Cause determination. If probable cause is found, the case may proceed to conciliation (settlement negotiations) or administrative hearing before an Administrative Law Judge (ALJ).

**Step 5: Consult an Employment Attorney Early.** While not required, consulting an attorney within 30 days of learning of the violation is advisable. An employment law attorney can: (1) evaluate whether your specific situation qualifies as a violation, (2) identify additional remedies (such as federal FCRA claims), (3) help prepare and file the complaint, (4) gather evidence and develop witnesses, (5) represent you in settlement negotiations or administrative hearings, and (6) maximize your damages award (lost wages, emotional distress, punitive damages). Many employment attorneys work on contingency (no upfront fee), paid from a damages award or settlement. Attorney's fees and costs are recoverable under NJSA 34:6B-5, so the employer may ultimately pay your legal costs.