Question

Can an employer check my credit report when I apply for a job?

Answer

It depends. In Illinois, in many cases, the answer is no.

Both federal and Illinois state law cover this issue.  State law protects consumers more than the federal law.

The Fair Credit Reporting Act (FCRA), is the main federal 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."  But the employee’s or applicant’s consent is required.

In Illinois, the situation is different. The FCRA allows states to set their requirements for credit reports. Illinois passed such a law in 2011, the Employee Credit Privacy Act (ECPA).  It says employers can not use credit reports or histories to hire, fire, or set pay and conditions for many types of jobs in Illinois. 

The Illinois law doesn't cover everything. It does not apply to the following employers:

• Banks,
• Insurance companies,
• State law enforcement,
• State and local governments, and
• Debt collectors.  

Those employers can use credit reports. But they need your consent.

Other employers may be allowed to use credit reports for certain jobs. Such jobs are those for which credit history is a "bona fide occupational requirement."

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 assets that can be sold;
• there’s power over business assets of $100 or more per transaction”;
• there’s access to personal or confidential information, financial information, trade secrets, or State or national security information;
• it’s for a managerial position which involves setting the direction or control of the business;
• it's described as such under administrative rules issued by the U.S. Department of Labor or Illinois Department of Labor; or
• the applicant's credit history is otherwise required by or exempt under federal or State law.

A 2016 Illinois Appellate Court case, Ohle vs. The Neiman Marcus Group interpreted some of these terms. The court said that handling credit applications for a department store wasn’t “access to personal or confidential information.” The salespeople merely delivered those applications.  So the defendant could not use credit reports to screen out applicants for a sales job.

The case also said the exemption shouldn’t apply to cashiers. The reason is the law was intended to protect sales clerks, no matter where they worked.

The ECPA makes it illegal for employers to retaliate against anyone who tries to enforce the law.  The following activities are protected:

• Filing a complaint,
• Assisting an investigation,
• Testifying on someone’s behalf, and
• Doing anything to “oppose a violation” of the law.

Employees or job applicants can sue to stop violations.  If they win, the losing employer must pay their attorney fees. The Illinois Attorney General accepts complaints from people who believe an employer has violated the law.

This question and the answer was based on a column by John Roska, an attorney/writer whose weekly newspaper column, "The Law Q&A," ran in the Champaign News Gazette.