Legal Question in Business Law in Illinois

Re: would it be discrimination if I allow one person to run a tab and not another

First of all, you can get sued for almost anything. Whether you can get the case dismissed or at least win at trial is another question. And certainly there are things you can do to make it less likely that you will get sued in the first place.

As a business owner, you are free to extend credit on a nondiscriminatory basis. You can even discriminate in extending credit if the class of people you discriminate against is not a protected class. For example, if you said that you would only run a tab for people whose last names started with the letters A through L, you should be OK because people whose last names start with M through Z are not a protected class.

Clearly if you basis the decision on objective factors, like the person's credit score, you can justify the different treatment. You need to be careful, however, that what seems like a reasonable basis turns out to be discriminatory in fact. For example, say that you only extend to people that you have personally known for at least 3 years. If you know a lot of people in one ethnic group because of your own personal and social activities but know few members of other ethnic groups, basing your decision on personal knowledge could be discriminating in a way that is illegal.

If you can't explain your rationale in a way that will be clear or if the effect of the decision has a greater effect on a particular protected class, you are better off not extending credit at all, even if in your own mind you believe that you are making nondiscriminatory decisions,

David K. Staub, a business and tax attorney

Chicago, Illinois