by W. Anthony Andrews and Ryan Morton (Spring 2017)

An Illinois appellate court recently held that retail employers cannot consider a job n Illinois appellate court recently held that retail employers cannot consider a job applicant’s credit history when hiring some sales associates.

In Ohle v. Neiman Marcus Group, 2016 IL App (1st) 141994, the prospective employee argued the store violated the Employee Credit Privacy Act (820 ILCS 70/1) by using her credit history against her. Neiman Marcus responded by saying store clerks are exempt from the Act because they handle large amounts of cash and credit card information. The appellate court, however, decided the legislature did not intend to include clerks as an exception.

According to the undisputed facts of the case, after a job interview, Neiman Marcus told the applicant, Catherine Ohle, that she could expect an offer. However, when the store ran a background check, it learned Ohle had several accounts in collections, as well as several civil judgments against her. The store informed her that she did not get the job, because she failed her credit check. She subsequently sued Neiman Marcus for allegedly violating the Act, alleging discrimination based on her credit history.

Neiman Marcus admitted that it ran a credit check on Ohle, as well as other job applicants. However, in its defense, the store asserted that sales associates are exempt from the Act, because they have access to confidential information when customers fill out credit card applications. Additionally, sales clerks have unsupervised access to large sums of cash and merchandise. Therefore, the store argued, checking a sales clerk’s credit history is a “bona fide occupational requirement,” making it exempt from the Act.

The trial court granted Neiman Marcus’s motion for summary judgment, ruling that the exemption did apply. The plaintiff appealed, and the First District Appellate Court reversed the trial court’s decision. The appellate court determined the legislature did not intend to include sales clerks in the Act’s exemptions.

The Illinois General Assembly passed the Employee Credit Privacy Act (820 ILCS 70/1 et seq.) in 2011, which the governor then signed. The Act prohibits employers from using someone’s credit history when making employment decisions. The Act includes a list of situations, though, where credit information could be used in hiring. One of those exemptions is if “the position involves access to private or confidential information….” (820 ILCS 70/10(a)(5)).

Credit card applications contain private information of customers, including Social Security numbers. Sales associates handle those forms by taking them from customers and placing them in cash registers. However, the court determined such minimal handling of confidential information does not equate to “access” under the Act. Unlike store managers, sales associates cannot access the private information after the forms are entered into the system. Associates do not have authority to handle that information in any substantial way.

Additionally, the court examined the Act’s legislative history and determined the Act was designed to protect low-level employees like sales associates. Legislators specifically asked on the Senate floor whether cashiers were exempted from the bill because they handle credit cards and cash registers, and the bill sponsor responded that exempting those clerks was not the intent. The sponsoring senator also clarified that “unsupervised access to cash,” as stated elsewhere in the bill, required more than simply access to the cash register.

Neiman Marcus also attempted to cite other exemptions to justify its credit check on Ohle. The court rejected those alternative arguments, though, because each exemption focused on actual access and control of money or merchandise. Sales associates do not exercise enough control over these areas to warrant credit checks. The court determined Neiman Marcus did discriminate against the plaintiff by not hiring her based on her credit history.

Employers should use caution when running credit checks, even for positions involving “access to private or confidential information.” Members of our firm welcome calls for consultation on this issue.