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The Employer's Legal Maze

As every employer is well aware, the "legal obligations" imposed on an employer get deeper and more confusing with each passing year. I am fairly certain that a business executive from the 1950s or early 1960s would be amazed at the substantial number of additional legal pitfalls that bedevil employers on a daily basis in today's business climate. They would also wonder if the "legal maze" was a contributing factor to our economic problems - they would not be wrong!

Unfortunately, your federal and state legislators have not run out of opportunities to create even more legal pitfalls for you. There are several states, including the State of Illinois, that currently prohibit employers from conducting credit history or credit report checks for certain job applicants and employees (current legislation - California, Connecticut, Hawaii, Oregon, Washington, and Maryland; considering passing legislation - Florida, New York, Pennsylvania, Ohio). These laws impose restrictions on an employer's ability to obtain credit history or credit reports for a job applicant or employee. For example, the Illinois Credit Privacy Act, which became effective as of January 1, 2011, prohibits a covered employer from refusing to hire, discharge or otherwise discriminate against an individual with respect to employment compensation or a privilege of employment because of that individual's credit history and credit report. The term "credit history" includes an individual's past borrowing and repaying behavior, including the individual's ability to pay bills on time and manage debt and other financial obligations. "Credit history" includes any written documentation or communication of any information by a consumer reporting agency that affects or impacts a consumer's credit worthiness, credit standing or credit history. The legislation in the other states is very similar to the Illinois law. Again, if you are an employer in one of the aforementioned states, caution may be the watch word before requesting a credit history or credit report on a job applicant or employee.

The prohibition against "discriminating against unemployed job applicants" has taken on a new area of concern as well. All of us are aware of the very high unemployment rates in the United States. Unfortunately, the economic climate is not changing quickly, but the legal landscape dealing with this issue certainly is. Effective June 1, 2011, the State of New Jersey became the first state to prohibit discrimination against unemployed job applicants. This law prohibited any employer and/or their agent and/or their representative from publishing a job listing that establishes that current employment is a requirement for a position or - conversely- that unemployed job applicants would not be considered for a position. This same language appears in the Fair Employment Opportunity Act of 2011, which is currently pending before our Federal Congress. If passed in its current form, the Fair Employment Opportunity Act of 2011 would make it an unlawful employment practice for an employer of 15 or more employees to fail to hire a person because of their unemployed status. It should also be noted that additional states, including, Illinois, Michigan, and New York, are considering passage of similar legislation. Obviously, the watch word for any employer going forward is that the "legal maze" is becoming more obscure and the potential for litigation and damage assessments is even greater today than in previous years.

Questions? Contact Walter J. Liszka in the Chicago office at waliszka@wesselssherman.com or by phone at (312) 629-9300. 

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