New Philadelphia Law Prohibits Employers from Using Credit Information of Employees and Job Applicants

 CreditReport

Written By ESR News Blog Editor Thomas Ahearn

The Philadelphia (PA) Ordinance No. 160072 that took effect on July 7, 2016, amends Chapter 9-1100 of The Philadelphia Code entitled “Fair Practices Ordinance: Protections Against Unlawful Discrimination,” by adding a section that prohibits employers from obtaining or using credit information regarding employees and job applicants in certain circumstances.

Signed into law by Philadelphia Mayor Jim Kenney, Ordinance No. 160072 makes it unlawful for employers to use the credit information of Philadelphia job applicants or employees – unless covered by an exception – for employment decisions such as hiring, firing, or promotion. “Credit information” is defined as any written, oral, or other communication regarding:

  • 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.

However, Ordinance No. 160072 prohibiting the use of credit information of job seekers and employees in Philadelphia by employers shall not apply in the following exceptions:

  • To any law enforcement agency or financial institution;
  • To the City of Philadelphia with respect to efforts to obtain information regarding taxes or other debts owed to the City;
  • If such information must be obtained pursuant to state or federal law;
  • If the job requires an employee to be bonded under City, state, or federal law;
  • 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;
  • If the job involves significant financial responsibility to the employer, including the authority;
  • 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;
  • 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
  • If the job requires access to confidential or proprietary information that derives substantial value from secrecy.

Under the law, if an employer relies on credit information to consider adverse employment action with respect to any person, and certain subsections of the law apply, the employer:

  • Shall disclose the fact of such reliance to the person in writing and identify and provide the particular information upon which the employer relied; and
  • Give the employee or applicant an opportunity to explain the circumstances surrounding the information at issue before taking any such adverse action.

As reported earlier by ESR News, the National Financial Educators Council (NFEC) conducted a survey of 1,100 workers that revealed 5.2 percent of the respondents reported that they were turned down for jobs due to their credit information while 26.3 percent of them reported that employers ran credit background checks on them.

In addition, ESR News also reported that Harvard University released a study of bans on credit checks by employers meant to help job applicants with bad credit find work revealed that people with mid-to-low credit scores, those under 22 years old, and African-Americans were more likely to be unemployed as a result of these laws.

More Information about Credit Reports from ESR

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