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Governor Quinn signed the Employee Credit Privacy Act (H.B. 4658) into law on August 10, 2010. The effective date of the act is January 1, 2011 and prohibits most employers from using an applicant's or employee's credit history or other credit information as a factor in any employment decision. The Act applies to employers of all sizes but governmental employers, banks, savings and loan associations, debt collectors, other financial institutions, insurance companies and surety businesses are specifically excluded from the Act's prohibitions.

The Act also provides limited exceptions that allow employers to use credit information where such information is related to a "bona fide occupational requirement" for a particular position or group of employees. The bona fide occupational qualification applies generally to those positions involving money-handling or other confidential job duties. For instance, employers may use credit information for employees whose duties: require bonding by state or federal law; have unsupervised access to cash or certain assets valued at $2500 or more; have signatory power of $100 or more per transaction; are in a managerial position which involves setting direction or control of the business; or involve access to confidential information, financial information, or trade secrets. The Act includes other limited exceptions and contemplates that future administrative regulations may define additional categories of bona fide occupational requirements permitting exceptions to this Act. Notably, the Act specifically incorporates BFOQ definitions from either the state or federal Departments of Labor.

Washington

Washington adopted bill 5827 in 2007 which restricts the use of a credit report unless the information is either 1. Substantially related to the job for which the applicant is being considered and the use of the information has been disclosed to the applicant in writing or 2. It is required by law.

Hawaii

In 2009 HAWAII enacted HB 31, The law establishes that the use of credit unless the use of information directly relates to a bona fide occupational qualification under the Hawaii Fair Employment Practices Act.

Oregon

In 2010 OREGON enacted SB 1045, prohibits the use of credit history information with exceptions for financial institutions, public safety offices and other employers if it is job-related and the use of credit has been disclosed to the applicant or employee in writing.

Impact of Legislation

Under federal fair employment law, employers should consider the job-relatedness of credit information in making employment decisions. Rejecting applicants based upon poor credit history may disproportionately exclude certain minority groups from consideration. The EEOC contends an organization should not use such information if it causes a "disparate impact," unless justified by job-relatedness and business necessity.

Although Title VII does not specify debtor status or financial problems as creating a protected class, the EEOC has opined that disqualifying an applicant because of this could have a disparate impact on minority applicants, who are more likely to suffer financial difficulties than whites (a disproportionate number of non-whites are below the poverty level). Thus, if an applicant can show that an employer's practice of screening applicants based upon their credit or financial status results in a racial disparity of employment opportunities, the EEOC has taken the position that the practice must be justified by "business necessity."

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