Illinois recently enacted the Employee Credit Privacy Act (“ECPA” or the “Act”), which prohibits employers from recruiting and hiring applicants based on such individuals’ credit histories or credit reports. The Act, which was adopted on August 11, 2010 and will take effect on January 1, 2011, generally prohibits employers from inquiring about an applicant’s or employee’s credit history or ordering or obtaining an applicant’s or employee’s credit report from a consumer reporting agency. The Act also prohibits an employer from discharging or otherwise discriminating against current employees based on their credit history or credit report or taking retaliatory or discriminatory action as a result of a person filing a complaint under the Act, testifying, assisting or participating in an investigation, proceeding or action concerning a violation of the Act, or opposing a violation of the Act. The provisions of ECPA not waivable by the employee, employers are prohibited from requiring an applicant or employee to waive any right under the Act, and any such waiver would be deemed invalid and unenforceable. Violations of ECPA are actionable against employers in state court, and injured persons may recover injunctive relief, damages or both, in addition to court costs and reasonable attorney’s fees.

However, the application of ECPA is subject to certain significant exceptions. The Act does not apply to situations in which a satisfactory credit history is an “established bona fide occupational requirement,” which includes positions that involve:

  • bonding or security as required by state or federal law;
  • custody of or access to cash or marketable assets of $2,500 or more;
  • signatory power over business assets of $100 or more per transaction;
  • setting the direction or control of the business;
  • access to personal or confidential information, financial information, trade secrets, or state or national security information;
  • criteria in certain U.S. Dept. of Labor or Illinois Dept. of Labor administrative rules promulgated to establish the circumstances in which a credit history is a bona fide job requirement; or
  • a situation where credit history is otherwise required by or exempt under federal or state law.

In addition, certain employers are completely exempt from the requirements of ECPA, namely banks and certain other financial institutions, insurance companies, debt collectors and certain state and other local government agencies. Further, the Act does not prohibit or restrict employers from conducting a thorough background investigation on an applicant or employee without obtaining information on credit history.

Illinois is one of a number of states concerned with the growing trend of pre-employment credit checks amongst employers. Oregon, Washington and Hawaii have passed similar laws, and similar bills are pending in many other states, including California and New York.