A recent class action lawsuit filed against Illinois’s largest electric utility serves as a reminder to Illinois employers to be careful to comply with the state’s Employee Credit Privacy Act when it comes to considering credit history for employment purposes (“ECPA”). The lawsuit was filed against Commonwealth Edison Company by an individual who applied to work as a customer service representative for the company. She alleges Commonwealth Edison obtained a credit report on her in violation of the ECPA. She seeks to have a class action of all customer service representatives certified, and she hopes to persuade an Illinois court to forbid Commonwealth Edison from conducting credit history checks in the future and to require the company to hire her and her class members, awarding them back pay. Although it is too early to tell, and assuming Commonwealth Edison did, in fact, purchase credit reports on applicants for the customer service representative position, we anticipate the company will seek to take advantage of an exception to the prohibition on considering credit history. But first – let us take a look at the ECPA.
Illinois’s Employee Credit Privacy Act contains two principal provisions: the first forbids inquiring about, or considering, an individual’s credit history for employment purposes; and the second provision provides an exception to the prohibition. An employer can consider an individual’s credit history when “a satisfactory credit history is an established bona fide occupational requirement of a particular position or a particular group of an employer’s employees.” The statute does not leave the definition of “bona fide occupational requirement” to the employer’s imagination, however; instead, it expressly defines seven scenarios that qualify as bona fide occupational requirements:
- State or federal law requires bonding or other security covering an individual holding the position.
- The duties of the position include custody of or unsupervised access to cash or marketable assets valued at $2,500 or more.
- The duties of the position include signatory power over business assets of $100 or more per transaction.
- The position is a managerial position which involves setting the direction or control of the business.
- The position involves access to personal or confidential information, financial information, trade secrets, or State or national security information.
- The position meets criteria in administrative rules, if any, that the U.S. Department of Labor or the Illinois Department of Labor has promulgated to establish the circumstances in which a credit history is a bona fide occupational requirement.
- The employee’s or applicant’s credit history is otherwise required by or exempt under federal or State law.
If an employee’s job falls outside these seven scenarios, Illinois’s law will prohibit the consideration of credit history for employment purposes.
Caution should be exercised when seeking to take advantage of these exceptions, as the Illinois courts tend to construe them narrowly. For example, the fifth exception allows employers to check an applicant’s credit history if she will have access to personal, confidential, or financial information. Based upon this, the well-known retailor, Neiman Marcus, ran credit checks on applicants for the position of “Dress Collections Sales Associate.” In addition to having access to thousands of dollars of merchandise, being able to issue $100 refunds, and handling all cash at the cash register, they could also accept customer applications for store credit. These applications were rife with personal identifying information, including full names, dates of birth, social security numbers, driver’s license numbers, and wage and income information. So, Neiman Marcus reasoned, these sales associates have “access” to PII and therefore fall within the fifth exception listed above.
A prospective sales associate who was disqualified by her credit history sued Neiman Marcus, challenging the Company’s analysis. She argued that her “access” to PII would be transitory and therefore insufficient to rise to the level of the “access” contemplated by the ECPA. In resolving this dispute, the Illinois court expressly said it was going to disregard the literal meaning of the word “access” and give it a new definition: access is not access when it is transitory and the recipient will be delivering the PII to a third person. Otherwise, the court worried, all retail sales clerks who receive credit card applications from customers could be subject to credit checks.
Apparently this Illinois court has yet to encounter the iPhone camera.
Practice Pointer: Illinois employers seeking to consider an applicant’s credit history for employment purposes ought first to evaluate the seven exceptions in light of Illinois case law before determining whether the job at issue falls within an exception.
This publication is provided only for educational purposes; it should not be relied upon as legal advice, and it should not be used, in whole or in part, as a basis for establishing employment practices or policies, nor should it be used for resolving disputes or managing risk. Every reader’s circumstances are unique and legal advice should be obtained only from a lawyer with whom the reader has established an attorney-client relationship. Copyright 2017 ©Employment Screening Services, Inc. All material contained within this publication is protected by copyright law and may not be reproduced without the express written consent of ESS.