On Aug. 10, 2010, Illinois enacted a new state law called the Employee Credit Privacy Act that will take effect Jan. 1, 2011. This new Illinois law will prohibit most employers from using an individual’s credit history or credit report in decision-making, including hiring or recruiting, as to covered jobs, positions and areas of responsibility.

The law generally prohibits employers from making any employment decision — hiring, recruiting, discharging or modifying compensation — based upon an individual's credit report or credit history. The law also prohibits employers from obtaining a credit report regarding an applicant or employee, and from asking an applicant or employee about their credit history.

Certain employers, such as those in the banking, insurance and some government agencies, are exempt from the law. Some positions are excluded from the law, including if:

• The employer is required by law to obtain bonding or other security for the individual in the position.
• The employee has unsupervised access to cash or marketable assets valued more than $2,500.
• The employee has signatory power over business assets of $100 or more per transaction.
• The employee is in a managerial positions that involve setting the direction or control of the business.
• The job involves access to personal or confidential information, financial information, trade secrets, or state or national security information.
• The position meets criteria under any state or federal regulations that are designed to establish when credit history can be a bona fide occupational qualification.
• The individual’s credit history is required by or exempt under federal or state law.

Employers should consult an attorney before assuming an exempt status.

Hawaii, Oregon and Washington have already enacted similar laws that restrict the use of credit history in employment decisions and about a dozen other states have similar legislation pending.