October 2012

By: Jennifer Adams Murphy, Esq. and Ryan L. Young, Esq.

The Employee Credit Privacy Act

Fact of the Month

The Employee Credit Privacy Act also contains a provision that prohibits retaliation or discriminatory acts against a person because the person engaged in or was about to engage in protected activity (e.g. filing a complaint, opposing a violation, etc.).

1. Joey Akers owns and runs a respected rib joint aptly named Jo Jo’s Bones. Joey noticed that boxes of his award-winning BBQ sauce were missing and the cashier drawer was coming up short. Intent on solving the mystery surrounding the missing sauce and cash, Joey decided to obtain credit reports for all of his employees to determine who would have a reason to steal from the company. The credit reports came back clean with the exception of one employee, Sam Donovan, who had ceased making credit card payments. Joey terminated Sam based on his credit report (and his belief that the credit report indicated that Sam was behind the sauce and cash theft). Has Joey violated the Employee Credit Privacy Act (“Act”)?

2. Which of the following does not constitute an “employer” (and, therefore, is not covered) under the Act?

A. Banks

B. Insurance Companies

C. State Law Enforcement

D. Debt Collectors

E. State or Local Government Agency

F. All of the above

3. Joey plans to hire a new cashier at Jo Jo’s Bones. Mallory O’Malley is his top candidate as she was a cashier at a very reputable department store. He’s worried, however, because Mallory will have access to the business’ cash (which can equal as much as $1,500) without supervision. He decides he needs to know her credit history to determine whether she can be trusted with this much responsibility. He asks her about her credit history during her interview. Is this a violation of the Act?

4. Let’s take the same facts in question 3 above with one change; Joey did not ask Mallory about her credit history because he knew it was not allowed under the Act. Joey did, however, tell Mallory that this was a position that required honesty and trust because she would have unsupervised access to large amounts of cash. Mallory, seeing an opportunity to prove her financial trustworthiness, tells Joey that he is free to check her credit history by obtaining her credit report. Joey tells Mallory that the law prevents him from obtaining her credit report but if she would be willing to waive her rights under the Act, he would be able to obtain the report. Mallory signs a waiver to that effect. Is the waiver valid?

Answers

Answer to Question 1:

Yes. See 820 ILCS 70/10(a)(1) and (3). Joey has violated the Act in two ways: 1) obtaining his employees’ credit reports and 2) discharging Sam because of Sam’s credit report.

Answer to Question 2:

F. See 820 ILCS 70/5 (Definition of “Employer”).

Answer to Question 3:

Yes. Under 820 ILCS 70/10(a)(2), an employer is generally prohibited from inquiring about an applicant’s (or employee’s) credit history. While there is a bona fide occupational requirement exception for positions that have unsupervised access to cash of $2,500 or more under 820 ILCS 70/10(b)(2), the exception does not apply to this situation because the amount of cash does not meet the $2,500 threshold.

Answer to Question 4:

Answer: No. Under 820 ILCS 70/20, an agreement by an employer and applicant (or employee) to waive any right under the act is invalid and unenforceable. Further, an employer is prohibiting from requiring an applicant (or employee) from waiving any right under the Act.