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New Illinois law to limit use of credit checks by employers

November 12, 2010

An Illinois law effective Jan. 1, 2011, will strictly limit employers’ ability to obtain and use credit history information regarding employees and applicants. The Employee Credit Privacy Act applies to most Illinois employers but excludes banks and financial institutions, insurance companies, state law enforcement units, state and local government agencies, and debt collection agencies.

The Act prohibits covered employers from inquiring about an employee or applicant’s credit history, obtaining credit reports on employees or applicants, and taking any employment action based on an employee or applicant’s credit history or report. However, employers still may ask about credit history and use credit history as a basis for employment decisions for positions in which a satisfactory credit history is a "bona fide occupational qualification." To meet this standard under the new law, one or more of the following circumstances must apply:

• State or federal law requires bonding or other security covering an individual holding the position;

• The duties of the position include custody of or unsupervised access to cash or marketable assets valued at $2,500 or more;

• The duties of the position include signatory power over business assets of $100 or more per transaction;

• The position is a managerial position which involves setting the direction or control of the business;

• The position involves access to personal or confidential information, financial information, trade secrets, or State or national security information; 

• The position meets criteria in administrative rules, if any, that the U.S. Department of Labor or the Illinois Labor Department has promulgated to establish the circumstances in which a credit history is a bona fide occupational requirement; or

• The employee’s or applicant’s credit history is otherwise required by or exempt under federal or State law.

The Act prohibits retaliation against any person who files a complaint, participates in an investigation or proceeding, or opposes a violation of the Act. The Act further prohibits employers from requiring applicants or employees to waive any rights under the Act, and provides that any such waiver is invalid and unenforceable.

Persons alleging violations of the Act will be able to file suit in state court, and if they prevail will be entitled to recover their costs and reasonable attorneys’ fees in addition to damages and injunctive relief.