Philadelphia Boosts Protections for Credit History Used in Employment Decisions

A consumer’s credit history is highly protected. What shows up affects consumers seeking jobs, housing, vehicles and more. Some laws promote accuracy, fairness, and the privacy of information with credit bureaus. Several federal, state and local laws limit how credit reports are used for employment decisions too.

Unlawful credit checks may cause potential harm and undue limitations to job seekers. One of the most populous U.S. cities, Philadelphia, recently updated laws regarding credit history use for employment purposes.

On January 20, 2021, Philadelphia Mayor Jim Kenney signed three bills into law. One amends the Philadelphia Fair Criminal Record Screening Standards law (FCRSS) and the others update the city’s law regarding credit history use in employment. The city aims to protect those seeking to secure employment. Let’s review what has changed for credit history use in employment.

Credit History Restrictions for Job Seekers

Philadelphia’s existing law places restrictions on the use of credit information for employment purposes.  Section 9-1130 of the Philadelphia Code contains such current credit history restrictions. With limited exceptions, the law makes it an unlawful discriminatory practice for an employer within the city to get or use credit information regarding a candidate in connection with:

• Hiring
• Discharge
• Tenure
• Promotion
• Discipline
• Consideration of any other term, condition, or privilege of employment

Addressing Cracks in Credit History Restrictions

The law defined in Section 9-1130 has been amended by two recent bills. Let’s take a look at those changes:

1. Taking Account of Previous Exemptions

Credit history restrictions now apply to law enforcement agencies and financial institutions. Under Bill 200413, they are no longer exempt from the credit history ban, unless another exemption for them under the law exists.

2. Reiterating Federal Adverse Action Requirements

Under the Fair Credit Reporting Act, taking adverse action based on a candidate’s credit history contained in a consumer report requires notices be given to the candidate before the adverse action is taken.  Philadelphia is taking an extra step to make sure those steps are followed. Bill 200614 amends the City’s law to double down on the FCRA. An employer that intends to take adverse action based in whole or in part on credit information is required to, before taking adverse action against a candidate and pursuant to 15 U.S.C. § 1681b(b)(3):

• Provide them a written copy of the information used for the employment decision
• Give them an opportunity to obtain and dispute the information

The amendments went into effect on March 21, 2021.

Not sure how to use credit history for employment decisions in Philadelphia? Just like criminal history, this consumer information may be subject to anti-discrimination laws. Better definitions of how and when credit reports may be used for hiring decisions in Philadelphia help guide employers. Need more information on how the amendments to Philadelphia’s law might impact you? Please talk with a trusted legal advisor.