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New law limits employer use of credit reports

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in Firing,Hiring,Human Resources,Leaders & Managers,Management Training

Effective Jan. 1, Illinois employers must comply with the Illinois Employee Credit Privacy Act (IECPA), which severely restricts the use of an applicant or employee’s credit history in hiring, firing or promotions.

Covered employers may not use credit reports or credit information from sources other than credit reporting agencies when evaluating employees or applicants.

Almost all employers are covered, regardless of their size. (The law does exempt some employers from the restrictions: state and federal law enforcement agencies, banks and other financial institutions, insurance and surety companies and debt collectors.)

Employers may still use credit reports for certain positions. To qualify, a good credit history must be a “bona fide occupational requirement.” Credit reports can be used if an applicant:

  • Must be bonded as a requirement under state or federal law
  • Will have custody of or unsupervised access to cash or marketable assets valued at $2,500 or more
  • Will have signatory power over business assets of $100 or more per transaction
  • Will have a managerial position that involves setting direction or control of the business
  • Will have access to personal or confidential information, financial information, trade secrets or state or national security information
  • Is to occupy a position for which a credit history is otherwise required by federal or state laws.

Advice: Analyze existing job positions to determine which positions fall within the law’s exceptions. Review materials such as employment applications, background-check consent forms, interview guides and so forth to ensure they don’t illegally request credit history information. Examine all post-hire employment materials and promotion interview guides to eliminate prohibited questions. Finally, provide training on the law’s requirements to all managers who have hiring and promotion responsibilities.

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