Philadelphia Expands Ordinance Limiting Employer Use of Credit Checks
On January 20, 2021, Mayor Jim Kenney signed legislation amending the Philadelphia Fair Practices Ordinance, which prohibits covered employers from procuring, considering, or otherwise using a job applicant’s or employee’s credit-related information in connection with hiring, discharge, tenure, promotion, discipline, or consideration of any other term, condition, or privilege of employment with respect to such employee or applicant.
The amendment, which takes effect on February 20, 2021, expands the scope of covered employers to include financial institutions and law enforcement agencies operating in Philadelphia, which were previously exempt from the ordinance’s requirements.
“Credit information” is broadly defined in the ordinance as “[a]ny written, oral, or other communication of information regarding a person’s: debt; credit worthiness, standing, capacity, score or history; payment history; charged-off debts; bank account balances or other information; or bankruptcies, judgments, liens, or items under collection.”
Once in effect, law enforcement agencies and financial institutions (such as banks, insurance companies, and brokerage firms) may not rely, in whole or in part, on credit-related information to take adverse employment action related to job applicants or employees, unless any of the following exceptions applies:
Credit-related information must be obtained under federal or state law; or
The job in question: (i) is supervisory or managerial in nature and involves setting the direction or policies of a business or a division, unit, or similar part of a business; (ii) involves significant financial responsibility to the employer, including the authority to make payments, transfer money, collect debts, or enter into contracts (but not including handling transactions in a retail setting); or (iii) requires access to financial information pertaining to customers, other employees, or the employer, other than information customarily provided in a retail transaction.
The ordinance further provides that if an employer intends to rely on any of the above exceptions, the employer must first: (1) disclose the fact of such reliance to the applicant or employee, in writing, and provide the particular information upon which the employer relied; and (2) provide an opportunity for the employee or applicant to explain the circumstances surrounding the information at issue before taking any such adverse action.
Employers in Philadelphia should review existing policies and practices to ensure they will be compliant with the upcoming amendment. If you have any questions regarding the Philadelphia Fair Practices Ordinance, please reach out to the authors or your Epstein Becker & Green, P.C. attorney.