Credit check

Philadelphia expands ordinance limiting employer credit checks

On January 20, 2021, Mayor Jim Kenney signed legislation amending the Philadelphia Fair Practices Ordinancewhich prohibits Covered Employers from obtaining, reviewing, or otherwise using an applicant’s or employee’s credit information in connection with hiring, firing, tenure, promotion, discipline or review of any other term, condition or privilege of employment with respect to such employee or candidate.

the amendmentwhich takes effect 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 requirements of the order.

“Credit information” is broadly defined in the order as “[a]any written, oral or other communication of information concerning: a person’s debt; creditworthiness, reputation, capacity, score or history; payment history; canceled debts; bank account balances or other information; or bankruptcies, judgments, liens or collectibles.

Once effective, law enforcement agencies and financial institutions (such as banks, insurance companies, and brokerage firms) may not rely, in whole or in part, on the information. relating to credit for taking adverse employment actions regarding applicants or employees, unless one of the following exceptions applies:

  • Credit information must be obtained under federal or state law; Where

  • The work in question: (i) is of a nature to supervise or manage and involves setting the direction or policies of a company or a similar division, unit or part of a company; (ii) involves significant financial responsibility to the employer, including the power to make payments, transfer money, collect debts or enter into contracts (but not including the management of transactions in a retail establishment); or (iii) requires access to financial information about customers, other employees, or the employer, other than information customarily provided in a retail transaction.

The order further provides that if an employer intends to avail itself of any of the above exceptions, the employer must first: (1) disclose the fact of such recourse to the plaintiff or the employee, in writing, and provide the particular information upon which the employer relied; and (2) provide an opportunity for the employee or requester to explain the circumstances surrounding the information at issue. before take such adverse action.

Philadelphia employers should review existing policies and practices to ensure they will comply with the upcoming amendment. If you have any questions regarding Philadelphia’s Fair Practices Ordinance, please contact the authors or your Epstein Becker & Green, PC attorney.

©2022 Epstein Becker & Green, PC All rights reserved.National Law Review, Volume XI, Number 35