Employment Law: New Laws for the New Year: Employee Credit Privacy Act

As the new year has now begun, its time to focus on a few new laws that took effect on January 1, 2011 that affect the way employers conduct business.

Illinois employers are now prohibited from discriminating against job applicants or employees on the basis of their credit histories. The new "Employee Credit Privacy Act" forbids inquiries about a person's credit history to determine the terms and conditions of employment, such as promotion, discharge, or compensation. While prohibiting employers from obtaining an applicant's or employee's credit reports in many instances, the law does permit employers to conduct thorough background investigations that do not include a credit history or report.

The new law contains some key exceptions which allow employers to still conduct and consider credit checks when filling positions that involve (1) bonding or security under state or federal law; (2) custody of, or unsupervised access to, $2,500 or more in cash or marketable assets; (3) signatory power over businesses assets of $100 or more per transaction; (4) management and control of the business; or (5) access to personal, financial or confidential information, trade secrets, or state or national security information.


 I have observed situations where an employee's financial woes led to that person stealing from their employer, or worse, their employer's customers. I have clients in the health care and housing industries that serve senior citizens.  Because of the vulnerability level of their clients, these operations sometimes used credit history checks to look out to see if an employee might be more prone to theft if they were experiencing financial difficulties.  Unfortunately, this concept is an inexact science.  And certainly, personal financial difficulty is not necessarily a barometer for determining who is likely to steal.   That appears to be the intent behind this law -- the General Assembly has recognized how truly tough things are in the current recession.  Not since the Great Depression have more Illinois workers faced joblessness or tainted credit records.  Illinois' unemployment rates have been as high as 3 to 4 percentage points above national averages.  In signing the law, Governor Quinn said, “A job seeker’s ability to earn a decent living should not depend on how well they are weathering the greatest economic recession since the 1930s,” adding, “This law will stop employers from denying a job or promotion based on information that is not an indicator of a person’s character or ability to do a job well.”

Penalties for failing to adhere to this new law include the rights of aggrieved persons to bring a suit for injunctive relief, damages or both, and to recover attorneys' fees incurred in successfully bringing suit. It also prohibits employers from retaliating or discriminating against anyone who has filed suit under its provisions, testified, assisted or participated in an investigation, proceeding or action concerning its violation, or opposed such a violation. Interestingly, the law also prohibits employers from discriminating or retaliating against one who “was about to” do any of these things.