Philadelphia Regulates Employer Use of Credit Information

Posted: July 23, 2016

Philadelphia Regulates Employer

On June 7, the city of Philadelphia became one of the few cities to regulate the use of credit history information in employment decisions after Mayor Jim Kenney signed Bill No. 160072 into law. Employers should ensure compliance with this legislation by the law’s effective date of July 7, 2016. Under the new legislation (which amended the “Fair Practices Ordinance: Protections Against Unlawful Discrimination”), it is an “unlawful discriminatory practice” for employers to obtain, require an individual to provide or use credit information in an employment decision such as hiring, firing or promoting an individual. The Fair Practices Ordinance applies to any company that has one or more employees in the city. Credit information is defined rather broadly to include:
Any 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 other items under collection.
There are numerous exemptions under the legislation including:
  1. to any law enforcement agency or financial institution1;
  2. to the City of Philadelphia with respect to efforts to obtain information regarding taxes or other debts owed to the City;
  3. if such information must be obtained pursuant to state or federal law;
  4. if the job requires an employee to be bonded under City, state, or federal law;
  5. if the job 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;
  6. if the job 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;
  7. if the job requires access to financial information pertaining to customers, other employees, or the employer, other than information customarily provided in a retail transaction; or
  8. if the job requires access to confidential or proprietary information that derives substantial value from secrecy.
If an employer meets one of the above exemptions outlined in (d)-(h) and relies in whole or in part on credit history information to make an adverse employment decision (i.e., not hire, terminate or refuse to promote an individual), the employer must: (1) disclose that fact to the individual and provide the particular information and (2) allow the individual an opportunity to explain the circumstances behind the information before making a final adverse decision. As a reminder, as of March 14 a stricter version of Philadelphia’s ban the box law is in effect. Among other requirements, the amended law prohibits employers from inquiring into or conducting a criminal history check until after a conditional offer of employment has been extended. Employers must also conduct an individualized assessment, follow strict adverse action protocols and post a summary of the law’s requirements in a conspicuous place on the employer’s website and premises. [1] Financial institution is defined as: Any bank, savings and loan association, credit union, trust company, insurance or surety company, bank holding company, financial holding company, investment advisor, broker-dealer, entity registered with the U.S. Securities and Exchange Commission, or any subsidiary or affiliate thereof.