Illinois First District Appellate Court Determines That A Credit Check Of An Employment Application Was A Violation Of The Illinois Employee Credit Privacy Act

In Ohle v. The Neiman Marcus Group, the plaintiff was denied a job because of a failed credit check.  The plaintiff alleged that the credit check was in violation of the Illinois Employee Credit Privacy Act (“the Act”), 820 ILCS 7/1 et seq.  The defendant, Neiman Marcus, claimed that the position for which the plaintiff applied fell in an exemption in the Act, because the position gave the employee “access” to personal and confidential customer information.  The First District reversed the grant of summary judgment for Neiman Marcus.

The plaintiff applied for a job at Neiman Marcus’ Oak Brook, Illinois store, as an entry level “dress collection sales associate.”  She was interviewed and informed that pending completion of a successful background check, she should expect a job offer.  Neiman Marcus ran a background check through a third-party vendor, and was informed that the plaintiff failed her credit check and, on that basis, did not investigate the remaining areas of inquiry.  On July 17, 2012, the plaintiff received a letter from the reporting agency informing her that she failed the credit check, and based on her credit report, she would not be hired.

The plaintiff filed suit alleging a claim for violation of the Act.  The Act prohibits an employer from inquiring into a potential employee’s credit history and prohibits and employer from refusing to hire the applicant or discriminating against the applicant because of his or her credit history.  The Act provides an exemption where a “satisfactory credit history” is an “established bon-a-fide occupational requirement of a particular physician.”  For a bon-a-fide occupational requirement to exist, at least one of seven circumstances identified as follows, must be present:

1. State or federal law requires bonding an individual holding the position;
2. The position’s duties “include custody or unsupervised access to cash or marketable assets valued at $2,500 or more”;
3. The job duties include “signatory power over business assets of $100 or more per transaction”;
4. The job is a managerial position involving setting the direction or control over the business;
5. The position involves access to personal or confidential information, including financial information;
6. As required by administrative rules promulgated by the U.S. Department of Labor or Illinois Department of Labor; and
7. The applicant’s credit history is otherwise required by or exempt under federal or state law.

An individual who is injured by a violation of the Act is permitted to bring a civil action to obtain injunctive relief, damages, or both, and if said party prevails, the party may be awarded reasonable attorney fees and costs.

The plaintiff alleged she was damaged by the credit check as she was not hired for the position, and that the credit check was unnecessary as the position for which she applied was not a bon-a-fide occupational requirement for the dress collection sales associate position.

Neiman Marcus argued that three of the enumerated circumstances in the Act were involved in the dress collection associate position, and therefore a satisfactory credit history was a bon-a-fide occupational requirement for employment in that position.  Specifically, Neiman Marcus alleged that:  (1) the position involved access to personal or confidential information, (2) the position included custody of or unsupervised access to cash, and (3) the position included signatory power of $100 or more per transaction.

Plaintiff countered that a credit check was not a bon-a-fide occupational requirement for the job because the evidence established:  (1) the supervision of the employees by way of video cameras and associates are closely supervised by on floor managers; (2) there are policies that limit the amount of cash that can be held in the cash register and handled by sales associates, and according to defendant’s loss prevention manager, there are no stores in Illinois with a cash limit exceeding $2,500; (3) corporate policy requires that store management, and not associates, perform cash withdrawals for $1,000 or more; (4) all employees are permitted receive store credit card applications and corporation policy requires that all employees, including associates, immediately deliver the application to the credit office or secure them in a locked POS drawer; (5) associates do not have custody of “marketable assets” defined by the Act as “company property***safeguarded from public and***only entrusted to managers and select other employees; (6) associates are prohibited from accessing a customer’s personal or confidential information or retaining such information; and (7) associates do not have signatory power over the business assets of $100 or more.

The court noted that the Act was intended to protect sales clerks regardless of whether they applied for a position in a neighbor store or in a high end retail establishment, selling expensive consumer goods like Neiman Marcus.  By accepting defendant’s arguments, this would create an almost limitless exception that would apply to virtually all cash register operations contrary to the intent of the Act.  Consequently, the Court found that Neiman Marcus had not maintained its burden of proof that any exception to the Act applied to the dress collection sales association position and therefore, it admitted discrimination of plaintiff when applying for the job because her low credit score was not permitted under the Act.

The conclusion to be drawn from this is that while there are exemptions in the Act, these are narrowly tailored such that defendant wishes to administer a credit check of an employee must be sure that it is a bon-a-fide position under the Act.