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Attention Philadelphia Employers: Background Screening Ordinances Expanded

In addition to limitations imposed by the Fair Credit Reporting Act (FCRA) and Pennsylvania’s Criminal History Record Information Act (CHRIA), Philadelphia has had a long history of restricting Philadelphia employers’ use of criminal history in employment screenings. On January 20, 2021, the mayor signed three separate bills amending Philadelphia’s Fair Criminal Record Screening Standards (FCRSS) and credit ban ordinances to further expand application of both.

Effective April 1, 2021: The FCRSS definitions of employees and employers are expanded. First, the definition of “covered employee” now specifically includes independent contractors, rideshare drivers, and other gig economy workers. It also expands the restrictions and procedural requirements related to the use of criminal convictions in employment decisions from “applicants only” to “applicants and current employees.”

For employers, the amendment expands the definition of a private employer to include “any third-party person or entity that facilitates the relationship of work for pay between two other parties, as full-time or part-time employees or as independent contractors.”

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 Effective March 21, 2021: The FCRSS provides for a private right of action, and up until the amendment, allowed for punitive damages. Under the amendment; however, “punitive damages” changes to “liquidated damages,” with maximums up to “the maximum allowable salary for the job” or $5,000. Without regulations, it is unclear how the “maximum allowable salary” will be determined for flexible work arrangements. There is concern that this language could result in an increase in class action suits, similar to FCRA class actions.

The bill also expands the credit ban ordinance by eliminating previously carved out exceptions. The credit ban law currently prohibits employment credit screening with the exception of law enforcement agencies and financial institutions. However, the amendment removes these exceptions. Post-amendment, law enforcement agencies and financial institutions will only be able to conduct a credit screening if another exception applies, such as where one “must be obtained pursuant to state or federal law” or where the “job requires an employee to be bonded under city, state, or federal law.”

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 Effective March 21, 2021: Employers acting under the credit ban ordinance must now follow the FCRA’s pre-adverse action and adverse action notice requirements for credit screening. The amendment clarifies prior procedural confusion as to whether the city’s credit ban ordinance required the same notices as the FCRA.

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Philadelphia employers should take this time to review their overall employment and screening practices and determine if any revisions are necessary to comply with these amendments. Additionally, gig economy businesses and others that use independent contractors must ensure their screening practices also now comply with these laws.

At Hire Image, we understand ongoing compliance in the face of constantly shifting laws and regulations. Please contact us if you need any assistance in reviewing your policies and procedures.


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