Illinois Employers Can No Longer Use Credit Checks in Employment Decisions Under Most Circumstances

On August 10, 2010, Governor Quinn signed into law the Employee Credit Privacy Act (the “Act”). The new law prohibits employers from inquiring about or using a current or prospective employee's credit history as a basis for employment, recruitment, discharge, or compensation. The Act also prohibits Illinois employers from running credit checks on job applicants, except under limited circumstances. An employer caught accessing such information may be sued and ordered to pay damages, including attorneys’ fees. The new law further prohibits an employer from retaliating or discriminating against a person who files a complaint under the Act, participates in an investigation, proceeding, or action concerning a violation of the Act or opposes a violation of the Act.

Exceptions to the law allow pre-employment credit checks under limited circumstances. The law specifically excludes banks, savings and loan associations, financial institutions, debt collectors, insurance companies and surety businesses from the credit check prohibition. The law also allows employers to use credit information where such information is related to a bona fide occupation qualification for a particular position or group of employees. This exception applies to positions involving money-handling or other confidential job duties, such as those positions where: (1) state or federal law requires bonding of an individual holding the position; (2) job duties include access to $1,000 in cash or assets; (3) job duties include signatory power of business assets of $100 or more per transaction; (4) employees are in a managerial position that involves setting direction or control of the business; or (5) employees who have access to confidential information, financial information or trade secrets. Notably, the law contemplates that future administrative regulations, as well as state or federal Departments of Labor, may define additional categories of bona fide occupational requirements permitting exceptions to this Act.

Rep. Jack Franks, D-Woodstock, originally introduced this Bill. Franks argued that bad credit is not necessarily a sign of financial irresponsibility, especially when unemployment in Illinois is at 11 percent and 20 percent of homeowners owe more on their home than it is worth. Franks added that victims of identity theft who have had their credit ruined often find it difficult to gain employment if they are subject to a pre-employment credit check.

The new law takes effect on January 1, 2011.