On August 10, 2010, the Governor of Illinois signed into law a bill that will generally prohibit employers from using an individual’s credit history as a criterion in hiring, firing and other employment decisions.

Employers commonly run background checks into applicants’ credit and criminal histories. However, the Employee Credit Privacy Act significantly constrains this practice by prohibiting an employer from (1) failing to hire, discharging, or otherwise discriminating against an individual because of his or her credit history or credit report; (2) inquiring about an applicant’s or employee’s credit history; and/or (3) ordering or obtaining an applicant’s or employee’s credit report from a consumer reporting agency. An employer also may not retaliate against any person who has (1) filed a complaint under the Act; (2) testified, assisted, or participated in an investigation, proceeding, or action concerning a violation of the Act; or (3) opposed a violation of the Act.

The Act contains important exceptions in recognition of the fact that certain employment positions are not appropriate for persons with suspect credit histories. First, the Act does not apply to the following employers: (1) most banking and financial companies, (2) insurance and/or surety businesses, (3) state law enforcement and investigative units, (4) state or local government agencies which otherwise require the use of the employee’s or applicant’s credit history or credit report, and (5) entities that are defined as debt collectors under federal or state statute. Furthermore, a satisfactory credit history can be a necessary employment condition for a job that involves one or more of the following circumstances: (1) state or federal law requires bonding or other security covering an individual holding the position; (2) the position requires custody of or unsupervised access to cash or marketable assets valued at $2,500 or more; (3) the position requires signatory power over business assets of $100 or more per transaction; (4) the position is managerial and involves setting the direction or control of the business; (5) the position involves access to personal or confidential information, financial information, trade secrets, or state or national security information; (6) the position meets criteria in administrative rules, if any, that the U.S. and/or Illinois Departments of Labor have promulgated to establish the circumstances in which a credit history is a bona fide occupational requirement; and (7) the employee’s or applicant’s credit history is otherwise required by or exempt under state or federal law.

In addition to the above exceptions, the Act expressly states that it does not prohibit employers from conducting a thorough background investigation and obtaining a related background report, except that employers who are prohibited from considering an applicant’s or employee’s credit history may not obtain a background report that contains credit history information.

If you have questions regarding compliance with the Illinois Employee Credit Privacy Act, please do not hesitate to contact your employment counsel at Smith, Gambrell & Russell, LLP.