Aug 16, 2010

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New Illinois Law Bars Credit Checks for Hiring

Illinois seems to be on an employee-protection binge.

In addition to the recently-signed beef up of the Wage Payment & Collection Act, Governor Pat Quinn has signed a new law that prohibits most employers from using credit checks during the hiring process. Specifically, the Employee Credit Privacy Act (HB 4658) bars employers from basing employment decisions1 on an employee or candidate’s credit. The Act also prohibits employers from inquiring about an employee’s credit or obtaining a copy of their credit report.

The theory behind this law – some version of which is winding through a great number of state legislatures right now – is that laid-off workers and unemployed college grads have had their credit adversely affected by the downturn, but bad credit doesn’t mean they’re bad employees. To deny them employment would put them in a feedback loop: they can’t get a job because of their credit, and they can’t repair their credit because they can’t get a job.

Of course, this doesn’t mean there aren’t jobs where pre-employment credit checks are very good things, and thankfully, the law accounts for those circumstances. Insurance companies, banks, and law enforcement and other public-sector employers are exempt. The law also allows employers outside of those industries to use credit checks where the employee has access to personal financial information, or - in certain circumstances - access to company funds or trade secrets.

The law has broad support in the public. Arguments for it focus on the fact that, for most low- to mid-level jobs, an employee’s credit history just isn’t closely related enough to the work they will do, or their work ethic for that matter. It’s common knowledge that a lot of hard working people are not always the best with their personal affairs.

I know there’s been a lot of debate over this law, though public opinion seems to be in favor post-downturn. I’d be interested to know what you think. Leave your take in the comments.

1. “Employment decisions” includes promotions, demotions, etc. [↩]