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Illinois Passes Law Prohibiting the use of Credit
Reports Joining Washington, Oregon and Hawaii
Illinois Prohibits Use of Credit Information in
Employment Decisions With Limited Exceptions:
Illinois Joins Oregon, Washington & Hawaii in
Restricting Use of Credit Information
Recognizing the increasing impact of the
economic downturn on employees' credit
histories, Illinois has become the most recent
state to restrict employers from using credit
information in employment decisions.
On August 10, 2010, Governor Quinn signed the
Employee Credit Privacy Act (H.B. 4658) into
law. The Act prohibits most employers from
using an applicant's or employee's credit
history or other credit information as a factor
in any employment decision (e.g., hire,
discharge, terms of employment). The Act also
prohibits employers from inquiring into an
applicant's or employee's credit history or
obtaining a credit history report from a
consumer reporting agency. The Act restricts
use of a broad range of credit information
regardless of the source of such information; it
is not limited solely to information obtained
from a consumer reporting agency.
The Act applies to employers of any size, but
certain employers are specifically excluded from
the Act's coverage. Many governmental
employers, as well as banks, savings and loan
associations, other financial institutions, debt
collectors, insurance companies and surety
businesses are specifically excluded from the
Act's prohibitions.
The Act also provides limited exceptions that
allow employers to use credit information where
such information is related to a "bona fide
occupational requirement" (BFOR) for a
particular position or group of employees. The
bona fide occupational qualification applies
generally to those positions involving
money-handling or other confidential job
duties. For instance, employers may use credit
information for employees whose duties: require
bonding by state or federal law; have
unsupervised access to cash or certain assets
valued at $2500 or more; have signatory power of
$100 or more per transaction; are in a
managerial position which involves setting
direction or control of the business; or involve
access to confidential information, financial
information, or trade secrets. The Act includes
other limited exceptions and contemplates that
future administrative regulations may define
additional categories of bona fide occupational
requirements permitting exceptions to this Act.
Notably, the Act specifically incorporates BFOQ
definitions from either the state or federal
Departments of Labor.
Employers may not retaliate or discriminate
against a person for exercising rights under the
Employee Credit Privacy Act. Employers who
violate the Act may be sued and ordered to pay
damages including attorneys' fees. Further, the
Act does not allow waivers of the Act's rights
and invalidates any such waivers that exist.
The effective date of the Act is January 1,
2011. Accordingly, employers who use credit
history as part of a background check or other
hiring processes should take stock of their
policies in light of the shifting tide against
use of such information.
* Article Information Obtained from
Seyfarth Shaw Attorneys
Disclaimer
This
information is not given as legal advice. All
employers should consult their legal departments for
more information.
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