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New Illinois Law Prohibits Use of Credit History
in Hiring Decisions
Margherita M. Albarello
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Effective January 1, 2011, many Illinois employers will be prohibited from inquiring about or ordering a job applicant's or employee's credit history. The new law is called the Employee Credit Privacy Act. In recognition of the negative impact of the economic crisis on personal credit histories, and the perpetual cycle of bad credit caused by lack of employment, the law seeks to remove barriers to employment due to credit history. Illinois joins Hawaii, Louisiana, Oregon, and Washington in prohibiting the use of credit histories in making employment decisions. Employers who violate the Act can be sued in court for damages, attorneys' fees and costs, and injunctive relief.
Employers still will be able to conduct background checks on employees, provided the check doesn't include a credit history or report. "Credit history" is limited to information about an individual's "past borrowing and repaying behavior, including paying bills on time and managing debt and other financial obligations." "Credit report" is limited to information obtained from a consumer reporting agency bearing on "a consumer's creditworthiness, credit standing, credit capacity or credit history." Thus, the Act does not prohibit employers from conducting and using background checks if traditional credit information is not included (and the checks are in accordance with the Fair Credit Reporting Act (FCRA)). For instance, driving and educational records, prior employment references, and other non-credit information may still be gathered and used.
Recognizing that some businesses need the comfort of a satisfactory credit history, the Act excepts certain types of employers from its reach. The law doesn't apply to banks, insurance companies, law enforcement agencies, debt collectors, and various public sector jobs. Likewise, covered employers can obtain and inquire about credit information and make employment decisions based upon the information "if a satisfactory credit history is an established bona fide occupational requirement of a particular position or a particular group of an employer's employees." The Act states that a "bona fide occupational requirement" exists for jobs that involve: (1) bonding or security required by state or federal law; (2) unsupervised access to cash or certain assets valued at $2500 or more; (3) signatory power over business assets of more than $100 or more per transaction; (4) managerial duties that include setting the direction or control of the business; (5) access to personal, confidential, financial, trade secret, or state/national security information; or (6) duties meeting the criteria of any applicable administrative rule promulgated by either the U.S. or Illinois Departments of Labor.
To facilitate compliance with the Act, employers should amend their FCRA disclosure and authorization forms to include language that indicates the applicable exceptions which make the credit check permissible under the Act.
