Illinois Law Restricts Employer Use of Credit History

The Employee Credit Privacy Act will come into effect January 1, 2011.

On August 10, 2010, Illinois Governor Pat Quinn signed the Employee Credit Privacy Act, which prohibits most Illinois employers from inquiring about an applicant’s or employee’s credit history or using an individual’s credit history as a basis for an employment decision.  The definition of “employer” under the Act exempts banks, insurance companies, law enforcement agencies, debt collectors and state and local government agencies that require the use of credit history.

The Act does not prohibit an employer from checking the credit history of an employee if “a satisfactory credit history is an established bona fide occupational requirement of a particular position.”  That condition is met only if at least one of the following circumstances is present:

  • State or federal law requires bonding covering the employee
  • The employee has unsupervised access to more than $2,500
  • The employee has signatory power over business assets greater than $100 or more per transaction
  • The employee is a manager who sets the direction or control of the business
  • The employee has access to personal, confidential, financial, trade secrets or state or national security information

The Act also does not prohibit employers from conducting a thorough background check that does not include information on credit history, provided the investigation otherwise complies with the Fair Credit Reporting Act.  The Employee Credit Privacy Act contains a private right of action for any person injured by a violation of the Act.

In signing the Employee Credit Privacy Act, Governor Quinn stated that “This law will stop employers from denying a job or promotion based on information that is not an indicator of a person’s character or ability to do his job well.”  Illinois joins Hawaii, Louisiana, Oregon and Washington in the list of states that prohibit or restrict the use of credit histories in employment decisions.