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.
I realize that in a normal employment environment, credit history can help us determine the degree of responsible behavior we can expect from the employee. But this is not a normal environment. With the abundance of job seekers, reluctance to hire the unemployed, technological ability and financial incentive to outsource, real estate decline and extended duration of this recession, many financially prudent people suffer credit challenges.
I don’t understand the argument about impeding job creation. Certainly we spend time and money implementing policies and procedures to keep abreast of regulations and requirements, but how does not checking credit adversely affect our ability to do business in a state? Credit checks cost a few dollars a candidate and human or computer analysis time. The computer analysis used in secured and unsecured credit decisions contributed to the mortgage and global economic meltdown.
Maybe it is because I work in an at-will, long-term high unemployment state, with severe real estate depreciation hiring non-union employees that I’m oblivious to the impediment of not being allowed to use credit history in hiring decisions for non-financial positions. The exceptions of “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” seems open to all sorts of loopholes to circumvent the intent of this legislation. Maybe the opposition is considering the additional legal cost of violating this law?
Let us not confuse ability (under extenuating circumstances) with willingness to pay.