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Credit Checks On Employees

There is a very recent Case - Ohle v. The Neiman Marcus Group, 12 L 11206, which is a 2016 Illinois Appellate Court Decision that finds The Neiman Marcus Group violated Illinois State Law by running a credit check on potential Sales Associates and denying Ms. Ohle employment because of credit issues. Specifically, the alleged violation involved a violation of the Employee Credit Privacy Act, 820 ILCS 70/et seq.

That Law, which became effective as of January 1, 2011, prohibits an Employer from running a credit check on an individual Employee who has a conditional offer of employment unless that individual Employee can meet one of the seven (7) exceptions established in the Act in accordance with 820 ILCS 70/10(b);

(b) The prohibition in Subsection A of this section does not prevent an inquiry or employment action if a satisfactory credit history is an established bona fide occupational requirement of the particular position or a particular group of Employees. A satisfactory credit history is not a bona fide occupational qualification unless at least one (1) of the following circumstances is present:

1. State or Federal Law requires bonding or other security covering an individual holding that position;

2. Duties of the position include custody of, or unsupervised access to, cash or marketable assets valued at $2,500 or more;

3. The duties of a position include signatory power over business assets of $100 or more per transaction;

4. The position is a managerial position which involves setting the direction or control of the business;

5. The position involves access to personal or confidential information, financial information, trade secrets or national security information;

6. The position meets criteria in Administrative Rules of the United States Department of Labor or the Illinois Department of Labor promulgated to establish circumstances in which credit history is a bona fide occupational requirement, or

7. The Employee's or Applicant's credit history is otherwise required under Federal or State Law.

Obviously, if the potential Employee does not meet one of the above stated seven (7) exemptions, running a credit history and then using it as a basis for disqualification exposes the Employer to liability.

This case serves as a good reminder for Illinois Employers that a credit check may not be run on all Job Applicants. Simply stated, just because a position may handle some customer information (i.e. credit card processing; cash receipts), it does not necessarily mean that a credit check can be used as part of the background process. For a position to be subject to a background credit check, it must be a position that is entrusted with the processing and maintenance of confidential information (i.e. processing credit applications; receiving and maintaining customer credit reports; analysis of customer financial histories, or decision making of authority with regard to the extension of credit).

With the vast increases in litigation involving all Employers, it is an extremely good idea to be aware of this Act and its potential ramifications.

Questions? Contact Attorney Walter Liszka in our Chicago office at (312) 629-9300 or by email at waliszka@wesselssherman.com

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