The following question was submitted to John Roska, an attorney/writer whose weekly newspaper column, "The Law Q&A," runs in the Champaign News Gazette.
Can an employer check my credit report when I apply for a job?
In general, no. Some employers can, but most are prohibited from using credit reports or credit histories for any reason.
This requires looking at both federal and Illinois law. And because state law protects consumers more than the federal law, the state law applies.
The federal law, the Fair Credit Reporting Act (FCRA), is the main law governing credit reports. It regulates anyone who keeps them, uses them, or provides information for them.
The FCRA says employers can obtain credit reports for “employment purposes.” Although the employee’s or applicant’s consent is required, not many would want to rock the boat by refusing.
To protect job applicants and employees, in 2011 Illinois enacted the Employee Credit Privacy Act (ECPA). The heading on the main section of the law sums it up clearly: “Employment based on credit history or credit report not permitted.”
Employers therefore can’t use credit reports or histories to hire, fire, or set pay and conditions. The ECPA trumps the federal law, to assure that the public gets the greater protections of the state law.
The Illinois law does not apply to certain employers: banks, insurance companies, state law enforcement, state and local governments, and debt collectors. Those employers can use credit reports, but still need your consent under the federal law.
Employers who are generally prohibited by the ECPA from using credit reports are still allowed to use them for certain positions. Then, “if a satisfactory credit history is an established bona fide occupational requirement of a particular position,” the employer can use credit reports.
The law specifies that a “bona fide occupational requirement” only exists if:
- state or federal law requires the employee to be bonded;
- there’s unsupervised access to $2,500 in cash or “marketable assets”;
- there’s “signatory power over business assets of $100 or more per transaction”;
- there’s “access to personal or confidential information; or
- it’s for a “managerial position which involves setting the direction or control of the business.”
A recent Appellate Court case said that handling credit applications wasn’t “access to personal or confidential information,” when salespeople just delivered those applications to where they were actually processed. Nieman Marcus therefore couldn’t use that exemption from the law to avoid liability for using credit reports to screen out applicants for a sales position.
That case also said that the access-to-cash exemption shouldn’t apply to cashiers, since the law “was intended to protect sales clerks regardless of whether they applied for a position in a neighborhood retail store or a high-end retail establishment selling expensive consumer goods.”
The ECPA makes it illegal for employers to retaliate against anyone who tries to enforce the law. Filing a complaint, assisting an investigation or testifying on someone’s behalf, or doing anything to “oppose a violation” of the law, are all protected against retaliation.
Employees or job applicants can sue to stop violations, and for damages. If they win, the losing employer must pay their attorney fees.