United States: NYC Commission On Human Rights Clarifies Background Screening Laws

On Thursday, November 19, 2015, Cornell University's ILR School Labor and Employment Law Program hosted "NYC Ban the Box and Stop Credit Discrimination: A Conversation on Enforcement with the City Commission on Human Rights."  Speaking at the program were Carmelyn P. Malalis, Chair of the New York City Commission on Human Rights (the "Commission"); Paul Keefe, Supervising Attorney at the Commission; Joseph B. Cartafalsa, Partner at Putney, Twombly, Hall & Hirson LLP; and Ronald F. Day, Associate Vice President for the David Rothenberg Center for Public Policy at The Furtune Society.

The presentation opened with remarks by Commissioner Malalis on her vision for the Commission.  Mr. Keefe then provided an overview of the Fair Chance Act ("FCA") and the Stop Credit Discrimination in Employment Act ("SCDEA") and the Commission's interpretations of certain of their provisions.  Mr. Cartafalsa and Mr. Day responded with presentations on the impact of these laws on businesses and job seekers.

Mr. Keefe and members of his team at the Commission then made themselves available for questions regarding the Commission's interpretation and enforcement of the new laws.  Key takeaways from the session were as follows:

With respect to both laws:

  • Neither the FCA nor the SCDEA apply extraterritorially.  The laws apply when the position is in New York City or the job requires the individual to be in New York City such that New York City is the "locus of the job."  It generally does not apply to New York City residents applying for jobs outside the city, even if the company's headquarters and HR team are based in New York City.
  • The laws apply to "interns" (as defined by the NYC Human Rights Law); they apply to volunteers only to the extent that those volunteers fall within the definition of interns.
  • The Commission intends to clarify its interpretation as to whether natural person independent contractors that do not fit the definition of employee are covered by the law.  (The Commission's SCDEA Frequently Asked Questions currently state that many independent contractors are protected.)

With respect to the SCDEA:

  • The exemptions are complete.  Accordingly, if an individual falls within the exemption for positions that are subject to regulation by a self-regulatory organization ("SRO"), the employer can obtain the employee's full credit report and consider any of the information contained therein.  (They are not limited only to obtaining information about and considering the specific credit history information, such as bankruptcies, that are required to be disclosed to the SRO.)
  • Based on questions from various financial industry stakeholders, the Commission is actively considering whether individuals such as traders that have the ability to transact in employer or client funds in excess of $10,000 but do not have complete discretion to do so without authorization of a superior are included within the "signatory authority" exemption.  Guidance on this point is expected soon.

With respect to the FCA:

  • Prior to a conditional offer, there should be no inquiry regarding criminal history, including both convictions and pending criminal cases.
  • If an occupational license has criminal record barriers, the employer is not necessarily exempt from the FCA; instead, prior to extending a conditional offer, the employer only may ask whether an applicant is licensed.
  • Employers have a responsibility to collect the information necessary to complete the Fair Chance Notice.  Because a background check report often will not contain all of the required information, employers are advised to request criminal history information directly from the applicant once a conditional offer has been extended (at the same time that it obtains authorization to conduct a background check) so that it can ensure that it has the information it needs to engaged in the Article 23-A analysis, should this be necessary.
  • After sharing a copy of the Fair Chance Notice, an employer must, if requested by the applicant, engage in a "constructive conversation" to discuss the employer's conclusions and how the applicant can address the employer's concerns.
  • The FCA exception for situations in which employment is barred based on criminal history applies only if the employer's decision is compelled by law.  If the employer's choice is discretionary, then the FCA applies.
  • The FCA continues to apply after hiring.  By way of example, if current employees are being considered for a promotion, an individual must be conditionally selected for the promotion before any consideration of criminal history can take place.

NYC Commission On Human Rights Clarifies Background Screening Laws

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