By Jennifer Winking, email@example.com, 217-223-3444
On January 1, 2011, the Illinois Employee Credit Privacy Act (IECPA) went into effect. The law prohibits Employers from using an individual’s credit history as criteria in employment decisions, such as hiring. Employers cannot:
-Refuse to hire or otherwise discriminate against an individual with respect to the terms or conditions of employment because of the individual’s credit history or credit report;
-Inquire about an applicant’s (or employee’s) credit history; or
-Secure an applicant’s (or employee’s) credit report from a consumer reporting agency.
Any entity employing one or more individuals is an Employer under the Act. However, certain businesses are exempt from coverage, including certain banks, insurance companies, law enforcement agencies, state and local government agencies that require the use of credit history, and debt collectors.
Exceptions do exist for those non-exempt Employers who can show that a satisfactory credit history is an established bona fide occupational requirement for a particular position. The bona fide occupational requirement is met if one of the following is present:
1. The position requires bonding or other form of security for the employee holding the position under Federal or State law;
2. The employee has unsupervised access to $2,500.00 or more in cash or marketable assets;
3. The employee has signatory power over business assets greater than $100.00 more per transaction;
4. The employee is a manager who sets the direction or controls the business;
5. The employee has access to personal, confidential, financial, trade secrets, or state or national security information;
6. The position meets criteria that is determined by the U.S. Department of Labor or the Illinois Department of Labor as one in which a credit history is a bona fide occupational requirement; or
7. The credit history is otherwise required by or exempt under federal or state law.
IECPA prohibits retaliatory actions by an Employer and opens the door for individual liability by management who do not comply.
Finally, IECPA prohibits waiver of rights. Thus, an Employer cannot circumvent the requirements by securing or requiring employees to waive their rights.
This new act in Illinois is in addition to the Fair Credit Reporting Act (FCRA), which is a federal statute limiting an Employer’s use of commercial reporting agencies or credit bureaus for evaluating applicants.
Despite the restrictions, IEPCA expressly states that it does not prohibit Employers from conducting thorough background checks that do not include information on credit history.
If you are looking to hire, be sure to keep these new requirements in mind. As always, if you have any questions regarding compliance with the IEPCA or FCRA, please call the employment law experts at Scholz, Loos, Palmer, Siebers & Duesterhaus. We are here to serve you.