On June 7, 2016, Philadelphia Mayor Jim Kenney signed a bill to make it unlawful, with limited exceptions, for employers to procure or use an applicant’s or employee’s credit history for employment purposes. Philadelphia joins the growing list of jurisdictions that have enacted similar laws: California, Chicago, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, New York City, Oregon, Vermont, and Washington. The Philadelphia legislation goes into effect July 7, 2016.
Employers that use credit reports for employment purposes in any of these jurisdictions should therefore review, and, if appropriate, modify, their policies to ensure they comply with the law in all jurisdictions in which they operate.
Philadelphia Bill No. 160072 will amend the Philadelphia “Fair Practices Ordinance: Protections Against Unlawful Discrimination” to make it an unlawful discriminatory practice for an employer generally to procure or use an applicant’s or employee’s “credit information” for employment purposes, which means making decisions in connection with any individual’s hire, discharge, tenure, promotion, discipline or consideration of any other term, condition or privilege of employment. The bill defines “credit information”” as “[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.”
The ordinance contains several exceptions to this general prohibition. The prohibition does not apply to financial institutions, law enforcement agencies, or the City of Philadelphia when it is collecting taxes or other debts owed the city. The prohibition also does not apply to any employer that is required by state or federal law to obtain credit information.
In addition to exempting these employers from the ordinance’s prohibition on using credit information for employment purposes, the ordinance carves out five different types of jobs from the blanket prohibition, but it creates special rules when credit information is used:
- Jobs requiring the employee to be bonded under city, state, or federal law
- Jobs that are supervisory or managerial in nature and involve setting the direction or policies of a business or a division, unit or similar part of a business
- Jobs involving significant financial responsibility to the employer, including the authority to make payments, transfer money, collect debts, or enter into contracts, but excluding jobs that involve handling retail transactions
- Jobs requiring access to financial information pertaining to customers, other employees, or the employer, other than information customarily provided in a retail transaction
- Jobs requiring access to confidential or proprietary information that derives substantial value from secrecy
Employers that take an adverse action against an individual (e.g., rejecting an applicant or terminating an employee) who is applying for, or working in, any of the job categories listed above based in whole or in part on the individual’s credit information must notify the individual in writing of the reason the employer considered the individual’s credit information, and the specific credit information on which the employer relied. The employer must also provide the individual an opportunity to explain the circumstances surrounding the information at issue before taking adverse action.
Coverage and Remedies
Because this ordinance will become a new part of the Philadelphia Fair Practices Ordinance, it will apply to any organization that employs one or more employees in Philadelphia. The ordinance will provide aggrieved persons with the right to file a complaint with the Philadelphia Commission on Human Relations or, after timely exhausting administrative remedies, to pursue a private right of action to recover the full panoply of damages available under the Fair Practices Ordinance, which includes compensatory damages, attorney’s fees and punitive damages.