Recently, an Illinois Appellate Court found that Neiman Marcus violated state law by running credit checks on potential sales associates. In Ohle v. The Neiman Marcus Group, Ohle claimed that her conditional offer of employment was rescinded after the store ran a credit check revealing judgments and collections against her. Ohle argued that by running a credit check on an entry level sales associate position, Neiman Marcus violated the Illinois Employee Credit Privacy Act (the “Act”), and the First District Appellate Court agreed.
The Act prohibits employers from inquiring into an applicant’s credit history, refusing to hire an applicant, or discriminating against an applicant based on his or her credit history unless one of the exceptions listed in the Act is satisfied. There are seven exceptions identified in the Act, three of which were argued by Neiman Marcus in this case: (1) the position’s duties include custody or unsupervised access to cash or marketable assets valued at $2,500 or more; (2) the position’s duties include signatory power over business assets $100 or more per transaction; and (3) the position involves access to personal or confidential information. Dismissing the first two arguments based on the plain language of the statute and legislative history, the Court primarily focused its analysis on the third exception - whether Ohle would have had access to personal and confidential information.
Neiman Marcus argued that because its sales associates could accept credit card applications from customers and input some of that information, they had “access” to personal and confidential information. As with most credit card applications, these applications contained customer names, addresses, and social security numbers, all of which constitute personal and confidential information. While the Circuit Court judge agreed with Neiman Marcus, the Appellate Court rejected the retailer’s argument. In reaching its decision, the Appellate Court determined that the word “access” was read too loosely by the Circuit Court and that any access to such information was in fact minimal. The sales associates essentially accepted the information and either turned it over to their managers or the credit office, or placed the applications in a locked box in their cash register. The Appellate Court noted that being mere conduits for this information was not enough to constitute “access” under the Act.
This case serves as a good reminder for employers that a credit check may not be run on all applicants. In other words, just because a position may handle some customer information, it does not necessarily mean a credit check may be used in the background check process. Instead, for positions believed to be exempt from the Act’s requirements because of “access” to personal and confidential information, the issue becomes whether the position is entrusted with the processing and maintenance of confidential information. As part of this analysis, employers should review whether the position involves any of the following duties: (1)processing credit applications; (2) receiving and maintaining customer credit reports; (3) analysis of customer detailed financial histories; and (4) possession of decision-making authority to determine whether to extend credit are likely not exempt from the Act’s prohibition against credit checks.