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Retailers Cannot Use Credit Checks to Deny Employment

creditA low credit score or a poor credit history can be very difficult to overcome. For many people with bad credit, the first step toward recovery is getting a new job that pays decent, reliable wages. Unfortunately, a low credit score can create a vicious cycle as some companies refuse to hire applicants with questionable credit histories. In some situations, such screenings make sense as a person’s ability to manage finances could directly impact his or her ability to do the job for which he or she is applying. In others, however, a person’s credit score has no bearing on his or her qualifications for the available position, and a recent Illinois appellate court has determined this to be the case for most retail sales positions.

Employment Credit Privacy Act

Back in 2010, then-Illinois Governor Pat Quinn signed a measure that prohibited employers in Illinois from discriminating against job applicants on the basis of their credit history. The Employee Credit Privacy Act was drafted by lawmakers in response to the national recession of the early 2000s that left many individuals with less than ideal credit scores. Under the Act, employers are not even permitted to run a credit check on an applicant unless a “satisfactory credit history is an established bona fide occupational requirement of a particular position.” Such positions generally include those in which an employee would handle large amounts of money without supervision or has access to personal, confidential, or financial information.

Lawsuit From 2012

It is the last point that was called into question in a lawsuit that began nearly five years ago when an applicant at the Neiman Marcus store in Oak Brook was denied a floor sales position due to the results of a credit check. The company claimed that because their floor associates handled money and credit applications, credit checks were not in violation of the Employee Credit Privacy Act. When the applicant filed her claim, a Cook County judge issued a summary judgment in favor of Neiman Marcus, but the rejected employee appealed.

Appeals Court Overturns Ruling

On appeal, the Illinois First District Appellate Court overturned the lower court’s ruling. The appeals court determined that the law was not meant to apply to entry-level retail workers and that taking applications for credit cards was not the “access to personal or confidential information” referred to in the Act. The appeals court based its conclusions, in part, on the transcripts of discussions on the floor of the State Senate during the passage of the Employee Credit Privacy Act.

According to reports, Neiman Marcus discontinued credit checks for entry-level sales associates soon after the incident but continued to defend its actions throughout the appeal. The case was remanded back to the Cook County circuit court for further proceedings.

Develop Compliant Hiring Guidelines

If you own a business that requires a team of employees to operate properly, it is crucial that your hiring practices remain in compliance with all applicable state and federal laws. Contact an experienced Schaumburg employment law attorney and get the guidance you need. Call 847-995-1205 to speak with a member of the team at The Miller Law Firm, P.C. today.

 

Sources:

http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=3277&ChapterID=68

http://www3.illinois.gov/PressReleases/ShowPressRelease.cfm?SubjectID=1&RecNum=8737

http://cookcountyrecord.com/stories/511013834-retailers-can-t-use-credit-checks-to-turn-down-sales-associate-job-applicants-panel-says

http://www.illinoiscourts.gov/Opinions/AppellateCourt/2016/1stDistrict/1141994.pdf

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