PHILADELPHIA — A recently enacted amendment to the Philadelphia's Fair Practices Ordinance makes it illegal for employers in Philadelphia to ask for, obtain or use credit-related information when considering whether to hire an applicant for many non-managerial positions.

“For example, if a retail store in Philadelphia is seeking to fill a cashier position, that employer should not be asking the individuals who apply for the position to give consent to a credit check, nor should it consider applicants’ credit history or information in deciding which applicant to hire,” Katherine J. Atkinson, an associate at Ballard Spahr LLP, told the Pennsylvania Record.

The amended ordinance took effect on July 7. It was approved by the Philadelphia City Council on May 26 and signed into law by Mayor Jim Kenney on June 7.

Atkinson said the amended ordinance still allows credit checks to be performed when considering applicants for many management positions, as well as for jobs that carry significant financial responsibility. The amended ordinance also does not apply in circumstances in which state or federal law requires the use of credit information by employers. Law enforcement agencies, specified financial institutions and city workers who collect money are also exempt.

“Employers rely on different screening methods, based on their business needs, when deciding whether to hire employees,” Atkinson said. “Those needs may be different for different types of employees.”

Employers who violate the ordinance could be required to pay compensatory damages, punitive damages and attorneys’ fees. An injunction may also be sought to prohibit violators from continuing to improperly use credit checks in their hiring decisions.

“Employers who violate these credit provisions face the same range of potential penalties as they would for engaging in any other unlawful employment practice under the Fair Practice Ordinance,” Atkinson said.

In addition to hiring considerations, the amended ordinance prohibits using, obtaining or asking for consent to a credit check from covered employees in connection with decisions related to an employee’s firing, tenure, promotions, disciplinary actions and any “term, condition, or privilege of employment.”

Under the amended ordinance, employers who do use credit information when deciding whether to reject an applicant or to demote, transfer or fire an existing employee must notify the applicant or employee that the credit information was used in the decision making process and give that person a chance to explain items included on the credit report before the action is taken.

In May, Lance Haver, the director of civic engagement for the Philadelphia City Council, said in an explanatory piece on the council’s website that 11 states have made the practice of checking credit scores during the hiring process illegal. However, Haver said Pennsylvania is not one of those states.

Haver said it is not fair for employers to use an applicant’s credit history as a basis for hiring decisions because a credit score could be affected by a financial or medical emergency, because roughly one-quarter of all credit reports contain errors, which are very hard to rectify, and because studies have shown that some ethnic groups fall victim to credit report discrimination.

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