Should You Run Credit Checks on Employee Candidates?
The Illinois Employee Credit Privacy Act and federal laws restrict the use of credit checks on employees. Employers can only conduct credit reports if there is a legitimate occupational need, and it is crucial to be aware of the legal requirement.
Referenced Links:
Employee Credit Checks – Illinois Courts Weigh In
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Transcription:
From time to time we have members ask us about the screening process for new employees. And they’ll ask a little bit about what do we do if we want to run a credit report. Well, Illinois actually has a very specific statute that deals with this. And it’s the Illinois employee credit Privacy Act. And it lays down some pretty strict rules. In addition, there’s some federal laws that also impact the credit score process, and checking that, by the way, if you’re wondering, yes, this includes credit reports, credit history, credit score, you know, these are really interchangeable. And so you want to make sure that we’re talking about all of those things, whatever they might be, and how you refer to them. So what does the employee credit Privacy Act require? Well, at the end of the day, you cannot do a credit check on all of your employees, that narrows the scope on which employees you can actually do credit reports on. So if you have a job that you think, really they need to have a satisfactory credit report history, you actually have to create what is called an established bonafide occupational requirement. In other words, you have to demonstrate that there is a true need to know what this person’s or this potential employees credit score is because it could positively or negatively impact that specific job that they’re applying for.
So what are those factors? Actually, they give us six factors that have to be considered when you go through this process. One, if they’re required to have bonding by state or federal law, then in that case, that would be a bonafide reason. I don’t believe that our offices are going to have that typically happens when sizeable amounts of money are being handled. For example, if you know, we’re talking about the banking industry as an example, if the position duties include unsupervised access to cash or cash assets, worth $2,500 or more, again, that’s if they’re unsupervised access to assets, or cash of $2,500, or more. So that’s the bottom threshold it has to be more than that, or $2,500 or more in order for that wind to kick in. Now, if they have signatory power over $100 or more in each transaction, so if they have signing authority to be able to, handle that $100 or more than that would also be another bonafide potential reason, they have to have that signatory authority there right? Now, if the position is managerial, and involves setting direction or control of a business, that would be another one. So if you’re establishing all the rules for your practice, and you have staff members that may not meet the other ones, you’re like, well, there’s still a manager, but they really don’t set the course if they don’t, if they don’t have that managerial that sets the direction or have control over the business than they would not meet this particular factor that’s in the statute.
Now, it could be that the position involves access to personal or confidential information, financial information, or trade secrets. Now, this is one that could impact our doctors because of the amount of information. But it also gets to be a little bit tricky in here, because of the court cases that follow. Let me cover the next factor, I’m going to come back to this one. So the last factor is that the physician meets the criteria criteria in other regulations that mandate, the opening of the obtaining of credit information. And again, much like the very first one, in our practices, most likely, that’s not going to be the case. So the one that really is that we need to probably focus on just for a few more minutes is the position involves access to personal or confidential information, financial information, or trade secrets. And when you may be thinking about your patients and your patient’s health information. Just because they have access to full HIPAA or to HIPAA information doesn’t mean that they qualify in fact a single appellate court had two different cases that involve actually obtaining credit information, and also in processing credit information for customers for two different retail businesses. And in those cases, they actually ruled differently in each one of them. So just by taking in the information on an application, and one of the cases, they said that wasn’t that they actually truly had access. They were just acting as a conduit. And so that’s really important. Now the next one, they did more processing and so they ruled in favor of the employer at that time to say that they that they could do these credit checks because they had more access. So this is a really fine line. Make sure that you have a true bonafide reason to be able to to to obtain this information on a potential patient.
In a couple of weeks, we’re going to cover another portion of this which is actually what happens if you do obtain it what are the rights and privileges that that person that you’re running that that potential candidate that you’re running the credit check on what are the rights and privileges that they have in relation to federal law we’ll cover that in a couple of weeks catch you next week.
