Last Wednesday, New York City Mayor Bill de Balsio signed into law an ordinance prohibiting employers from checking an employee or job applicant’s credit history. The ordinance prevents employers from ordering consumer credit reports, credit scores, or asking an employee or job applicant to provide this information.
New York joins a growing list of cities and states that prohibit employers from inquiring about an employee or job applicant’s credit history, a list which includes both the state of Illinois and the City of Chicago. Illinois’s ban on employee and job applicant credit checks is set forth in the Employee Credit Privacy Act (820 ILCS 70/1). This law is similar to New York’s, prohibiting an employer from performing a credit check on an employee or job applicant or asking an employee or a job applicant about his or her credit history. Certain employers, however, are exempt from the Act, including banks, insurance companies, surety businesses, debt collectors, and certain governmental or law enforcement agencies.
Chicago’s ordinance is a little different from the Employee Credit Privacy Act. The City’s ordinance, passed in 2012, does not prevent an employer from obtaining an employee’s or job applicant’s credit history or asking about it. Instead, it prohibits an employer from making an adverse employment decision against someone based on his or her credit history. Again, certain occupations are exempted from this ordinance.
In light of the growing number of jurisdictions banning employers from conducting credit checks, we suggest that employers review their background check policies. Many employers may have language in these policies requiring employees to provide their credit history to employers. This requirement would be illegal in many places, and this language should be removed from employer background check policies. Ultimately, it may be worth contacting an experienced attorney for a review of your background check policies.