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Philadelphia Mayor Jim Kenney signed an ordinance that restricts the use of credit checks and credit-related information when making employment decisions. The new law became effective on July 7, 2016.

According to information from Jackson Lewis, under the law, employers cannot consider a job applicant’s or employee’s “credit-related information “in connection with hiring, discharge, tenure, promotion, discipline or consideration of any other term, condition or privilege of employment with respect to such employee or applicant.” The term “credit information” has been defined broadly to include “[a]ny 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.”

If adverse action is taken against an applicant or employee from credit-related information, the employer is required to notify the person in writing. The notification must identify and provide the information that the employer relied upon. Then the applicant or employee must be given an opportunity to explain the information at issue before the employer can take any final adverse action.

Exemptions

The new law applies to any employer, public or private, unless the employer falls into an exemption. Exemptions include:

  • Law enforcement agencies and financial institutions,
  • The City of Philadelphia “where credit-related information is sought “with respect to efforts to obtain information regarding taxes or other debts owed to the City,” and
  • If required by state or federal law.

There are also job-specific exemptions to the law. Credit-related information can be considered for jobs that:

  • Require an employee to be bonded under applicable law,
  • Is supervisory or managerial in nature,
  • Require “significant financial responsibility to the employer” (not including duties customary in the retail setting),
  • Involve access to sensitive financial information (not including information customarily obtained in the retail setting), or
  • Require access to “confidential or proprietary information that derives substantial value from secrecy.”

 

Complaints

Aggrieved individuals can file complaints with the Philadelphia Commission on Human Relations, and individuals may pursue action in court after administrative remedies have been exhausted. Successful litigants may receive compensatory and punitive damages, attorneys’ fees, court costs, and injunctive relief. Employers may also be subject to administrative penalties.

In light of this law in addition to recent significant amendments to Philadelphia’s ban-the-box law, it’s very important that employers review their policies and procedures to ensure they are in compliance with this new law. If you have any questions or concerns, please contact your Corporate Screening account representative.