Effective January 1, 2011, Illinois employers who perform background checks or otherwise inquire about credit history as part of the recruitment process or in making other employment decisions must comply with the Illinois Employee Credit Privacy Act (IECPA), which generally prohibits inquiry into and consideration of an applicant or employee’s credit history to make decisions concerning employment, including with respect to recruiting, discharge, compensation and other terms and conditions of employment. The IECPA restricts use of a broad range of credit information without regard to the source of such information, and is not limited to credit information that is obtained from a consumer reporting agency.

The new law provides certain exemptions which will allow employers to continue to consider an applicant’s or employee’s credit history in a variety of situations. The IECPA permits an employer to inquire about and make decisions using an individual’s credit history if a good credit history is an established “bona fide occupational requirement” (BFOR) of the position at issue, which generally means that the position involves money-handling or other confidential job duties. Specifically, the IECPA provides that credit information is a BFOR and may be considered for applicants and employees where the position at issue: (1) must be bonded as a requirement under state or federal law; (2) involves custody of or unsupervised access to cash or marketable assets valued at $2,500 or more; (3) has signatory power over business assets of $100 or more per transaction; (4) is a managerial position which involves setting direction or control of the business; (5) involves access to personal or confidential information, financial information, trade secrets or state or national security information; or (6) is one for which a credit history is otherwise required by or exempt under federal or state law. Additional exemptions may be created as a result of regulations promulgated by the Illinois Department of Labor.

The IECPA applies to Illinois employers without regard to size. However, employers in certain industries are specifically excluded from the statute’s coverage, including state and federal law enforcement and investigative agencies, banks and other financial institutions, insurance and surety companies, and debt collectors.

Significantly, the IECPA does not limit an employer’s ability to consider other “non-credit” background check information. For instance, driving record reports, educational records, prior employment references and other non-credit information still may be used for legitimate employment purposes (i.e., not for discriminatory purposes) so long as the employer obtains such information in keeping with the requirements of the Fair Credit Reporting Act.

IECPA provides for a private right of action by persons injured by a violation of the law. A person who prevails in an IECPA action may obtain injunctive relief and/or damages, including recovery of costs and reasonable attorneys’ fees.

Multiple steps should be taken to ensure compliance with this law. First, employers should analyze their existing job positions to determine which positions fall within the law’s exceptions and, thus, may permissibly involve consideration of an applicant’s or employee’s credit history. Second, employers should review materials such as employment applications, background check consent forms, interview guides and the like to ensure that no questions about credit history are asked and no request for information concerning the individual’s credit is made except in situations satisfying the law’s exceptions. A similar review should be conducted concerning post-hire employment materials, such as promotion interview guides, to ensure that prohibited questions are not asked. Finally, employers should update all managers who play a role in making employment decisions concerning the law’s requirements to ensure they know how to comply.

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