Philadelphia Expands Criminal History And Credit Screening Ordinances, Further Restricting Employment Decisions

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Under the amended FCRSS, employers cannot automatically exclude applicants or current employees, independent contractors and gig workers with criminal conviction records from a job or class of jobs.
United States Employment and HR
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Effective April 1, 2021, Philadelphia's Fair Criminal Record Screening Standards Ordinance (FCRSS) will protect not only job applicants but also current employees, independent contractors and gig workers.

The FCRSS prohibits employers from inquiring into a candidate's criminal history until after a conditional employment decision has been made. Under the amended FCRSS, employers cannot automatically exclude applicants or current employees, independent contractors and gig workers with criminal conviction records from a job or class of jobs. Instead, employers must make an individualized assessment of the relationship between the conviction and the particular position, based upon six factors listed in the ordinance. If an employer rejects an applicant or current employee based on his or her criminal record, the employer is required to notify the candidate in writing and provide the basis for its decision as well as a copy of the criminal history report.

FCRSS AMENDMENTS

Protect Current Employees and Applicants

Previously, the FCRSS only applied to job applicants. Under the amendments, employers cannot consider an applicant or current employee's criminal history during the "employment process," which includes reemployment or continued employment, such as a promotion, raise or termination. After making the conditional employment decision (whether that be a job offer, promotion, raise or termination), employers can consider a candidate's criminal history in accordance with the individualized assessment and notice requirements in the ordinance.

Permit Reporting and Consideration of Employee Pending Criminal Charges

The amendments provide that employers are permitted to inquire and require employees to respond to inquiries about pending criminal charges when certain conditions are met and to require employees to report pending criminal charges provided that the employer does so pursuant to a written policy detailing what offenses are reportable. While the amendments describe the circumstances under which an employer may take adverse action against an employee based on a pending criminal charge, in light of the restrictions under Pennsylvania's Criminal History Record Information Act (CHRIA) relative to applicants, employers should focus on the conduct giving rise to the arrest and not the arrest itself to minimize (not eliminate) risk.

Extended Coverage Protects Gig Workers and Independent Contractors

The amendments also extend protections to independent contractors, transportation network company drivers, ride-hailing app drivers and other gig economy workers. Covered employers now include third parties or entities that facilitate the relationship of work between two other parties as full- or part-time employees or as independent contractors.

Provide Liquidated Damages Instead of Punitive Damages

Previously, the FCRSS provided punitive damages not to exceed $2,000 per violation. Under the amendments, a complainant can recover liquidated damages equal to the payment of the maximum allowable salary for the job subject to the complaint for a period of one month, not to exceed a total of $5,000.

Note that the requirements under the city's FCRSS are in addition to the restrictions under CHRIA and the federal Fair Credit Reporting Act (FCRA). For example, the FCRA requires (1) written authorization from the applicant or employee, (2) a pre-adverse action notice and (3) a post-adverse action notice. The FCRSS requires an additional step, namely the employer must provide the applicant or employee with a copy of the criminal history report and 10 business days to provide evidence of the inaccuracy of the information or provide an explanation.

AMENDMENTS TO PHILADELPHIA'S CREDIT SCREENING ORDINANCE

Effective March 21, 2021, the amendments to Philadelphia's credit screening ordinance, which prohibits employers from asking for or using an applicant or employee's credit history in connection with employment decisions, update the statute's procedural requirements and expanded restrictions to law enforcement and financial institutions.

Procedural Requirements Now Align with Federal FCRA

Under the amendments, employers are required to follow the processes in the federal FCRA and, before taking adverse action, provide the individual with a written copy of the information relied upon and the right to dispute such information.

Expanded Restrictions for Law Enforcement and Financial Institutions

Previously, the city's credit screening ordinance exempted law enforcement agencies and financial institutions. Under the amendments, law enforcement agencies and financial institutions can conduct credit screenings only if another exception under the ordinance applies. For example, employers may conduct credit screenings "pursuant to state or federal law" or if "the job requires an employee to be bonded under City, state, or federal law."

Note that the requirements under the city's ordinance are in addition to the requirements under the FCRA.

WHAT THIS MEANS FOR EMPLOYERS

Philadelphia, like many other jurisdictions, continues to restrict the use of criminal history in employment decisions. In light of the amended FCRSS, Philadelphia employers should assess whether and under what circumstances to inquire about an applicant or employee's criminal background. Employers also should review their hiring and employment practices to ensure compliance with the FCRSS as well as Pennsylvania's CHRIA, including with respect to gig workers and contractors. In doing so, employers help ensure that they are complying with existing FCRSS website posting requirements.

Employers should also be mindful that the U.S. Equal Employment Opportunity Commission (EEOC) and other government agencies encourage case-by-case evaluation of an applicant's criminal conviction history as a means of combatting unlawful discrimination. For example, in its 2012 Enforcement Guidance on the consideration of criminal records in employment decisions, the EEOC stated that the disqualification of applicants based on criminal records may have a disparate impact on certain racial and ethnic groups. The EEOC Enforcement Guidance recommends that employers conduct individualized assessments using, as a starting point, the "green" factors, which are: (1) the nature and gravity of the offense or conduct; (2) the time that has passed since the offense, conduct and/or completion of the sentence; and (3) the nature of the job. Under Philadelphia's FCRSS, employers must consider additional factors, including any evidence of rehabilitation. Further, employers operating outside of Pennsylvania must be mindful that states such as California, Illinois and New York impose additional requirements and/or restrictions, such as with respect to notices to applicants and employees, convictions that can and cannot be considered and factors that must be applied when making employment decisions.

Additionally, all Philadelphia employers, including law enforcement and financial institutions, should reevaluate their credit screening processes in light of Philadelphia's credit screening ordinance, in addition to compliance with the federal FCRA.

For More Information

If you have any questions about this Alert, please contact Jonathan A. Segal, Jonathan D. Wetchler, Elisabeth Bassani, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.

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