The Equal Employment Opportunity Commission has taken the position that an employer cannot use credit history background checks unless the credit screening is job-related.  This position, however, is based upon an adverse impact theory – in other words, that an employment practice neutral on its face is unlawful if it disqualifies a disproportionate number of members of one protected class, as compared to other groups, without being sufficiently related to successful job performance. 

Absent a showing of adverse impact, there is no federal prohibition on the use of credit scores for employment purposes.  However, seven states (California, Connecticut, Hawaii, Illinois, Maryland, Oregon and Wisconsin) have laws restricting such use of credit scores.  Twenty additional states have proposed legislation which would impose similar constraints on employers, and a legislative proposal in the Pennsylvania House of Representatives recently made it the twenty-first state to consider prohibiting the use of credit history in making most employment decisions.

Pennsylvania House Bill 2619 proposes to amend the Pennsylvania Human Relations Act (PHRA) to make it an unlawful, discriminatory practice – without an initial showing of an adverse impact – for an employer to require an employee or applicant for employment to consent to the creation of a credit report that contains information about their credit score, credit account balances, payment history, savings or checking account balance or account numbers.  The only exceptions to this proposed prohibition are for positions with the Office of Attorney General or law enforcement agencies, where the report is required by law, or where the report is substantially related to the individual’s present or prospective job.  The proposed Act defines “substantially related” to the candidate’s present or prospective job as a position which: 

(1)  Is a management position involving setting the direction and control of the business;

(2)  Involves access to customer, employee or employer personnel or financial information other than information customarily provided in retail transactions;

(3)  Involves fiduciary responsibility to the employer, including but not limited to, the authority to issue payments, transfer money or enter into contracts;

(4)  Requires access to confidential information that derives value from secrecy, and efforts are made to keep the information secret; or

(5)  Involves regular access to $10,000 or more in cash.

While House Bill 2619 is a proposed amendment to the law which bars discrimination based on age, ancestry, color, disability, race, religion, sex, etc., the Bill is not necessarily being put forward to remedy social ills caused by these traditional types of discrimination.  Rather, similar to proposed legislation to prohibit discrimination against the unemployed, the Bill is more an outgrowth of the poor economy and continued high percentage of unemployment.

For now, employers in the Commonwealth can continue to rely upon credit background information in making employment decisions – at least subject to the risk of it having an unlawful adverse impact on a protected class of the workforce.  However, if House Bill 2619 is passed, employers in Pennsylvania can anticipate that courts will interpret the non-governmental exceptions to House Bill 2619 narrowly, and may have to consider limiting their continued use of credit checks to either financial positions, as outlined in the Bill, or senior management positions.  Visit the Employment Essentials blog often for word on whether this Bill actually becomes law any time in the future.


Allison Williams focuses her practice in the area of labor and employment law, litigation, and higher education law. Ms. Williams' practice includes cases pending in state and federal courts, as well as actions pending before the West Virginia Public Employees Grievance Board, the West Virginia Human Rights Commission, and the Equal Employment Opportunity Commission.
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