Without fanfare, the City of Philadelphia has enacted an ordinance that prohibits many employers from obtaining or using credit-related information regarding employees and job applicants.

For most employers, it is now an unlawful discriminatory practice to procure, to seek a person’s cooperation or consent to procure, or to use credit information regarding an employee or applicant 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.

Credit information is broadly defined to include “any written, oral, or other communication of information” regarding a person’s debt, creditworthiness, credit score, payment history, bank account balances, bankruptcies, judgments or liens.

Employers exempt from the ordinance include law enforcement agencies and financial institutions, investment advisors, broker-dealers and their subsidiaries and affiliates.

All employers still may use credit information if such information must be obtained pursuant to state or federal law, as well as in any circumstance in which the job:

• 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.
• requires access to confidential or proprietary information that derives substantial value from secrecy.

However, if a nonexempt employer that is not mandated by law to obtain credit information uses credit information to make an adverse employment decision (e.g. failure to hire, demotion), the employer must disclose the fact of such reliance 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.

Since the ordinance amends the Philadelphia Fair Practices Ordinance, the Philadelphia Commission on Human Relations is responsible for enforcement. The Commission can impose substantial penalties. After administrative remedies are exhausted, the ordinance also purports to provide a private right of action where a claimant can seek compensatory damages, punitive damages, reasonable attorneys’ fees and court costs.

The law took effect on July 7, 2016.

Article by Steven K. Ludwig of Fox Rothschild LLP