Your Credit is No Good Here: Philadelphia Becomes Latest Jurisdiction to Make It Unlawful to Use Credit Information in Employment

On June 7, 2016, Philadelphia Mayor Jim Kenney signed into law Philadelphia Bill No. 160072, which amends Philadelphia’s “Fair Practices Ordinance: Protections Against Unlawful Discrimination,” Chapter 9-1100, et seq. of the Philadelphia Code.  Employers comprised of one or more people are covered by the Ordinance, which, as amended, prohibits an employer from procuring, or seeking a person’s cooperation or consent to procure, credit information regarding an employee or applicant in connection with hiring, discharge, tenure, promotion, discipline or consideration of any other term, condition or privilege of employment.  Philadelphia’s Ordinance follows other several other jurisdictions, including New York City, which have enacted similar laws.

The ordinance does provide some exceptions to its anti-discrimination provisions, which guide businesses seeking to utilize credit information in lawful ways.  These exceptions include allowing business to seek credit information if the information must be obtained pursuant to state or federal law, or if the specific job the employer seeks employee credit information for:

• requires the employee to be bonded under City, state, or federal law;

• 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;

• 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;

• requires access to financial information pertaining to customers, other employees, or the employer, other than information customarily provided in a retail transaction; or

• requires access to confidential or proprietary information that derives substantial value from secrecy.

However, if an employer relies on the credit information either in whole or in part when considering adverse action in these instances, it must disclose its reliance thereon and provide the particular information upon which it relied. Employers are also required to give the employee or applicant a chance to explain the circumstances prior to making an adverse decision.

Employer Takeaways: 

• Employers should evaluate their hiring and internal employment processes to ensure it complies with the new ordinance and with the federal Fair Credit Reporting Act (and local iterations).

• If a credit check is done in certain circumstances, the employer should disclose its reliance and should allow for any explanation or clarification on behalf of the employee or applicant.

For more information regarding the potential impacts of this legislation or how your business can prepare to develop a compliant credit-check policy, please contact Dina M. Mastellone, Esq., Chair of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.