Credit Reports No Longer Allowed for Illinois Employers

By Patricia Costello Slovak

Effective January 1, 2011, most employers in Illinois will be prohibited from using credit history in any employment decision. Employers will be prohibited from: 1) ordering credit reports on employees or applicants; 2) inquiring about an employee's or applicant's credit history; or 3) failing or refusing to hire or deciding to fire an individual because of his or her credit history or credit report. (Employee Credit Privacy Act, H.B. 4658) Governor Quinn signed the law on August 10, 2010.

There are some exceptions to the law, both in terms of employers and positions exempted. The exempted employers include banking institutions; insurance companies (including agents); state law enforcement and investigative units; State and local government agencies that require use of credit histories or credit reports; and any entity defined as a debt collector. Because these employers are exempt on a categorical basis, the statute does not appear to apply even with regard to those positions that have no relationship to the money or confidential information.

The positions exempted are ones in which a satisfactory credit history is an established bona fide occupational requirement. In order to meet that standard, at least one of the following must be present:

1. The law requires bonding or other security covering the individual holding the position;
2. The duties include signatory power over business assets of $100.00 or more per transaction;
3. The duties include custody of or unsupervised access to cash or marketable assets valued at $2,500.00 or more;
4. The position is a managerial one that involves setting the direction or control of the business;
5. The position involves access to personal or confidential information, financial information, trade secrets or government security information;
6. The position meets criteria set by the U.S. or Illinois Departments of Labor for positions in which credit history is a Bona Fide Occupational Qualification (BFOQ); or
7. Credit history is otherwise required by or exempt under federal or state law.

The statute prohibits waiver and retaliation, allows for a private right of action and allows for costs and attorneys' fees to prevailing plaintiffs.

To some extent, the legislation is a recognition of the large number of individuals who have suffered adverse economic consequences during this recession but whose skills and abilities have not been affected by their economic problems. Whatever the good intentions, however, the effect of the legislation is to further limit an employer's ability to ensure that it has as much information as possible before it makes a hiring decision. Although credit checks will still be allowed for many positions for which employers would wish to use them, we recommend that employers review their background check practices before January 1, 2011 to ensure that their use is properly limited.

For more information on the new legislation or for assistance with reviewing current policies and procedures to ensure compliance with the new law, contact a Schiff Hardin labor and employment attorney.

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