Beginning July 7, 2016, employers in Philadelphia may not consider credit history or other credit-related information for job-related decisions for many non-managerial jobs. This change stems from an amendment to the Fair Practices Ordinance approved by City Council on May 26, 2016, and signed by Mayor Jim Kenney on June 7, 2016. Subject to certain exemptions, the amendment makes it an unlawful discriminatory practice for a covered employer to procure, to seek to procure, or to use credit information of an employee or applicant in connection with hiring, discharge, tenure, promotion, discipline, or consideration of any other "term, condition, or privilege of employment" for the employee or applicant.

Philadelphia employers should guard against potential pitfalls of the new law. For example, it is not enough to merely stop using credit-related information in employment decisions. The amendment also makes it unlawful for an employer to procure or to seek a person's cooperation or consent to procure credit information. Employers should review job application forms for Philadelphia-based positions to ensure that they do not contain language regarding an applicant's permission to access credit information. They should also review their hiring processes to ensure that no covered information is being sought or obtained during screening of prospective employees.

These restrictions do not apply if state or federal law requires the employer to obtain the credit information. In addition, the following types of employers are not covered by the amendment: law enforcement agencies, financial institutions (as specifically defined in the Ordinance), and the City of Philadelphia (in connection with money owed to the City).

Even covered employers may continue to use credit-related information in making employment decisions with respect to certain types of positions with managerial or financial responsibility, namely:

  • Jobs that require an employee to be bonded under Philadelphia, state, or federal law;

  • Supervisory or managerial jobs that involve setting the direction or policies of a business or division/unit of a business;

  • Jobs involving access to confidential or proprietary information that derives substantial value from secrecy; or

  • Jobs involving significant financial responsibility or access to financial information of customers, other employees or the employer, but not including cashiers or other positions handling retail transactions.

If an employer does rely on credit information in considering an adverse employment decision (e.g., refusal to hire, demotion, transfer, termination) for someone in one of these types of positions, the employer must provide written notice and give the person an opportunity to explain the credit information before taking the adverse action. This requirement is similar to the notice provisions of the Federal Fair Credit Reporting Act when employers make adverse employment decisions based on information contained in a credit report.

Attorneys in Ballard Spahr's Labor and Employment Group routinely help employers update their policies and procedures to comply with new laws.


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