Philadelphia the latest city to restrict the use of credit information in employment decisions

Philadelphia Bill No. 160072 amends the city’s Fair Practices Ordinance and will prohibit employers in the City of Philadelphia from procuring or using applicants’ or employees’ credit information for employment purposes.

The law, which will go into effect on July 7, defines “credit information” as any “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.”

Exempt from the law are financial institutions, law enforcement agencies and any employers required by state or federal law to obtain credit information on applicants or employees.

Additionally, according to the law firm Littler Mendelson, there are several different types of jobs singled out from the exempted job types mentioned previously. The job types listed below create special rules for when credit information is used:

a.         jobs requiring the employee to be bonded under city, state, or federal law;

b.         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;

c.         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;

d.         jobs requiring access to financial information pertaining to customers, other employees, or the employer, other than information customarily provided in a retail transaction; and

e.         jobs requiring access to confidential or proprietary information that derives substantial value from secrecy.

If an employer is considering taking an adverse action against an applicant or employee for one of the aforementioned job types based in whole or in part on credit information, the employer must notify the applicant in writing of such decision and its basis, and must provide the applicant with a copy of the credit information used to arrive at the decision. The employer must then give the employee or applicant an opportunity to explain the circumstances surrounding the information at issue or dispute the accuracy of the information before taking any such adverse action.

With the signing of this bill, Philadelphia joins the likes of California, Chicago, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, New York City, Oregon, Vermont and Washington as jurisdictions that have enacted similar legislation to restrict the use of credit information in employment decisions.

To read the full text of the bill, click here.

Source: Littler Mendelson, 6/20/2016

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