New Law Prohibits Credit Checks by Most Illinois Employers

employment contract credit check

Illinois Credit Privacy Act

While the use of pre-employment credit checks has increased over the past few years, on August 10, 2010, Illinois Governor Pat Quinn signed into law the Illinois Credit Privacy Act (“ICPA”).  The ICPA significantly limits Illinois employers’ ability to obtain any credit history information for employment applicants, as well as for current employees.  The ICPA applies to virtually all Illinois employers, only excluding banks and financial institutions, insurance companies, state law enforcement units, state and local government agencies and debt collection agencies.

Under the law, covered employers are prohibited from inquiring about an applicant or employee’s credit history or obtaining a copy of their credit report.  Employers may, however, still inquire about an employee or applicant’s credit history for a position in which a credit history is a “bona fide occupational qualification.”  These limited circumstances include positions that involve: (1) bonding or security per state or federal law; (2) unsupervised access to $2,500 in cash or equitable assets; (3) signatory power over business assets of more than $100; (4) management and control of the business; or (5) access to personal, financial or confidential information, trade secrets, or state or natural security information.  A credit history is also permitted where the employee or applicant’s credit history is otherwise required by, or allowed under, state or federal law.

The ICPA prohibits retaliation against any person who files a complaint, participates in an investigation or proceeding, or opposes a violation of the ICPA.  The Act also prohibits employers from requiring applicants or employees to waive any rights that they have under the ICPA.  Any employer that violates the law can be subject to civil liability for damages (including attorneys’ fees and costs), as well as injunctive relief.

The ICPA becomes effective on January 1, 2011.  Therefore, all employers who routinely obtain credit history reports as part of their hiring process need to examine whether or not they are covered under the Act and, if so, they may need to cease obtaining those reports except in circumstances where it is a bona fide job qualification.  For further information on this new law, please contact your employment labor attorney at Arnstein & Lehr LLP.

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