HR Management & Compliance

New Illinois Law Prohibits Use of Credit History in Hiring Decisions

by Steve Brenneman

Effective January 1, 2011, Illinois employers will have yet another restriction on their ability to make employment decisions. A new law will prohibit many employers from basing hiring, promotion, and other employment decisions on an employee or job applicant’s credit history.

The Employee Credit Privacy Act (HB 4658), which was signed into law by Governor Pat Quinn yesterday, also forbids employers from inquiring about or obtaining a copy of an applicant or employee’s credit history or credit report. Illinois joins Washington, Hawaii, Oregon, and Louisiana in prohibiting the use of credit histories in employment decisions.

Employers will still be permitted to conduct background checks on employees so long as the check doesn’t include a credit history or report. There are limited exceptions to the law: Covered employers may still use credit history for employment decisions for positions that involve unsupervised access to more than $2,500, signatory power over business assets of more than $100, or access to personal, financial, confidential, trade secret, or state/national security information.

Although the new Illinois law doesn’t apply to banks, insurance companies, law enforcement, and many public-sector jobs, it will apply to a broad swath of private employers in Illinois. Supporters of the new provision say the measure will stop employers from denying a job or promotion based on information that doesn’t relate to a person’s ability to perform a job, while opponents contend the law is yet another batch of red tape that will impede job creation in the state.

Read more about the new law in the September issue of Illinois Employment Law Letter.