Illinois Law Restricts The Use Of Employer Credit Reports

Illinois Law Restricts The Use Of Employer Credit Reports

By Robert Capwell

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Illinois Governor Signs Employee Credit Privacy Act (HB 4658) Into Law

Illinois State Governor Pat Quinn has signed the Employee Credit Privacy Act (HB4658) into law.  Illinois is now the fourth state to restrict employers from using credit information for employment decisions; Hawaii, Oregon, and Washington have similar legislation in place. 

Effective January 1, 2011, Illinois employers and agents of employers may not “discriminate against an individual with respect to employment, compensation, or a term, condition, or privilege of employment because of the individual’s credit history or credit report”  or “order or obtain an applicant’s or employee’s credit report from a consumer reporting agency.” 

The law applies to all Illinois-based employers of any size with the following exceptions: 

  • Any bank holding company, financial holding company, bank, savings bank, savings and loan association, credit union, or trust company, or any subsidiary or affiliate thereof, that is authorized to do business under the laws of this State or of the United States.
  • Any company authorized to engage in any kind of insurance or surety business pursuant to the Illinois Insurance Code, including any employee, agent, or employee of an agent acting on behalf of a company engaged in the insurance or surety business.
  • Any State law enforcement or investigative unit, including, without limitation, any such unit within the Office of any Executive Inspector General, the Department of State Police, the Department of Corrections, the Department of Juvenile Justice, or the Department of Natural Resources.         
  • Any State or local government agency which otherwise requires use of the employee’s or applicant’s credit history or credit report.
  • Any entity that is defined as a debt collector under federal or State statute. 

Employers must apply the law to all employees, unless a satisfactory credit history is an established “bona fide” occupational requirement of a particular employee position or group/department.  A satisfactory credit history is not a bona fide occupational requirement unless at least one of the following circumstances is present: 

  • 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 Department of Labor has promulgated to establish the circumstances in which a credit history is a bona fide occupational requirement.
  • The employee’s or applicant’s credit history is otherwise required by or exempt under federal or State law. 

Employers may not require an applicant or employee to waive any right under the Employee Credit Privacy Act, or retaliate or discriminate against a person for exercising rights under the Act.  Employers who violate the Act may be sued and ordered to pay damages including attorneys’ fees. 

Employers subject to these new provisions should consult with the Illinois Department of Labor and/or their legal counsel immediately, and update and revise their current HR policies accordingly.

All information contained herein is provided by Employment Background Investigations, Inc. (EBI), PO Box 629, Owings Mills, MD  21117, and is solely for the convenience of its readers. EBI is not providing legal advice or counsel and nothing provided within should be deemed as legal guidance or advice. Readers should consult with their own legal counsel to determine their legal responsibilities or if they have questions on any information provided by EBI.


About the Author

Robert Capwell

Robert Capwell

EBI’s Chief Knowledge Officer, Mr. Robert E. Capwell, is considered one of the leading experts in the background screening industry with over 22 years of experience in the field. Mr. Capwell was a contributing author of the second edition of the ASIS Pre-employment Background Screening Guidelines and has written numerous articles and whitepapers for various publications including a periodic column on background screening for The Society for Human Resource Management (SHRM) Online. He has been quoted in The Wall Street Journal, Human Resource Executive Magazine, Entrepreneur Magazine, and several HR-related publications. Mr. Capwell speaks regularly to industry colleagues and HR Professionals both nationally and internationally.

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