Insights & News

Employment NewsFlash, August 1, 2016
Philadelphia Now Prohibits Credit Checks by Many Employers

August 01, 2016
Client Alert

Under a recent amendment to Philadelphia’s Fair Practices Ordinance, Philadelphia now significantly restricts an employer’s ability to rely upon credit checks in connection with hiring and other employment decisions.

Philadelphia now deems it an unlawful employment practice to procure, seek a person’s cooperation or consent to procure, or to use credit information in connection with hiring, discharge, tenure, promotion, discipline or consideration of any other term, condition or privilege of employment. Credit information under the new restriction is defined as 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 items under collection.”

The new restriction applies to organization(s) employing one or more persons within Philadelphia. However, exempted from the new restriction entirely are:

  • 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;
  • any law enforcement agency;
  • the City of Philadelphia with respect to efforts to obtain information regarding taxes or other debts owed to the City; and
  • employers where such information must be obtained pursuant to state or federal law.

An employer who otherwise does not meet one of the four exemptions above but who otherwise (a) discloses the fact of reliance on credit information to the applicant or employee in writing and identifies and provides the particular information upon which the employer relied; and (b) gives the employee or applicant an opportunity to explain the circumstances surrounding the information at issue before taking any such adverse action, may rely on credit information only for a position that:

  • requires an 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.

Employers should remain mindful that, if a complaint of discrimination is filed, the employer will be required to demonstrate one of the above exemptions applies.

Even if complying with the new Philadelphia restriction, employers must also remain compliant with the federal Fair Credit Reporting Act, which imposes its own consent and notice requirements in connection with credit reports, and separate restrictions on criminal background checks under Philadelphia and Pennsylvania law.

Information contained in this publication should not be construed as legal advice or opinion or as a substitute for the advice of counsel. The articles by these authors may have first appeared in other publications. The content provided is for educational and informational purposes for the use of clients and others who may be interested in the subject matter. We recommend that readers seek specific advice from counsel about particular matters of interest.

Copyright © 2016 Stradley Ronon Stevens & Young, LLP. All rights reserved.

Related Services

back to top