New York, N.Y. (August 31, 2021) - Although the New York City Fair Chance Act (FCA) has been in effect since October 27, 2015, it has now been amended and employers need to be aware of the changes in order to achieve compliance. The FCA is one of the "ban the box" laws passed in many jurisdictions in recent years. Unless an exemption applies, it generally prohibits employers from inquiring about an applicant's criminal history prior to making a conditional offer of employment.
The FCA also requires employers to consider certain factors before revoking a conditional offer of employment based on criminal history, including whether the individual's criminal history impacts their ability to perform their job duties, the amount of time that has elapsed between the conviction and application, the applicant's age at the time of conviction, the seriousness of the crime, and whether the applicant has a certificate of good conduct or other evidence of rehabilitation.
After analyzing those factors, an employer may revoke a conditional offer of employment only if (1) there is a direct relationship between the conviction and the job duties, or (2) the conviction history poses an unreasonable risk to people or property. Employers seeking to withdraw a conditional job offer based on the applicant's criminal history must provide the applicant with a meaningful opportunity to respond to the employer's assessment before the employer finalizes its decision.
Summary of the Key Amendments
The amendments, which became effective on July 29, 2021, add new employment protections. Some of the key changes include: (i) new protections that prohibit employers from seeking information about, or taking adverse employment actions based on, "non-convictions"; (ii) expansion of the law to cover current employees, independent contractors, and freelancers; (iii) expansion of the law to cover pending criminal cases; and (iv) new protections requiring employers to provide job applicants notice and an opportunity to respond before rejecting them based on a perceived intentional misrepresentation of their criminal history.
Legal Guidance Issued by the New York City Commission on Human Rights
The New York City Commission on Human Rights (the Commission) – which is charged with enforcement of the FCA - recently issued legal guidance (Guidance) that summarizes the Commission's interpretation of the FCA and corresponding enforcement position. One aspect of the Guidance that warrants particular attention is the Commission's position on conditional offers of employment.
According to the Guidance, a "conditional offer" is the last step in the hiring process and may only be "conditioned on the results of a criminal background check and, if applicable, the results of a medical exam as permitted by the Americans with Disabilities Act (ADA)." The Commission takes the position that employers must, therefore, review and favorably evaluate a candidate's non-criminal qualifications (e.g., academic and education records, employment verification, reference checks, Social Security traces, drug tests) before issuing a conditional offer of employment. Once the employer has extended a conditional offer of employment, the employer may then request and review criminal history information and ask about any self-disclosed criminal history. As driving abstracts often contain criminal and non-criminal information that cannot be segregated, employers may only review driving abstracts after they have extended the conditional offer of employment.
The end result is that employers are required to engage in a bifurcated or two-step background check process that poses additional administrative and compliance burdens on employers – particularly in managing appropriate applicant authorizations and disclosure notices. For example, the Commission directs employers to "omit mention of a criminal background check when seeking an applicant's authorization for an employment related background check prior to a conditional offer." Instead, employers are encouraged to use terms such as "consumer report" or "investigative consumer report" in authorization notices issued prior to the conditional offer.
If an employer's background check vendor is not able to issue two separate reports, the employer must establish a system to internally segregate criminal history information to ensure it is not available to decisionmakers until after the conditional offer of employment has been extended. The Commission explains, however, that employers who don't use two separate reports will bear the burden of showing that criminal information was not available to decisionmakers until after the conditional offer was made.
Although an employer can withdraw a conditional offer of employment based on non-criminal information, it must be able to show, as an affirmative defense, by a preponderance of the evidence, that: (i) the employer could not have reasonably known the information before the conditional offer, and (ii) regardless of the results of the criminal background check, the employer would not have made the conditional offer if it had known the non-criminal information through reasonable due diligence before the offer was extended.
Evaluating the Applicant Using the Fair Chance Act Analysis
If an employer is considering whether to withdraw the conditional offer of employment based on a criminal background check, an employer must engage in a mandatory analysis and consider whether:
- there is a direct relationship between the conviction history or pending case and the prospective job duties; or
- employing the applicant poses an unreasonable risk to people or property.
In conducting this analysis, the employer must consider the Article 23-A factors set forth in the New York Correction Law for criminal convictions and analyze any currently pending cases under the NYC FCA Factors (which are similar but not identical to the Article 23-A factors).
Fair Chance Act Process
Employers may not take adverse employment action based on a pending case or conviction history without engaging in the Fair Chance Process, which requires employers to:
- Disclose the Inquiry – by providing the applicant with everything the employer relied upon in determining the applicant had a criminal record, along with the date and time the employer accessed this information. Typically this can be satisfied by providing the applicant with a written copy of the criminal history report. Employers who rely on criminal record information from sources other than a consumer reporting agency (e.g., internet or public records searches) must provide this information to the applicant as well;
- Provide the Fair Chance Act Notice - by providing the applicant with a written copy of the employer's Fair Chance Act Analysis. The FCA Notice must solicit information from the applicant relating to the Fair Chance Factors, including possible errors in the information reviewed by the employer and evidence of good conduct and/or rehabilitation. The FCA Notice also must inform the applicant of the time within which they must respond to the employer's concerns (which must be reasonable and, pursuant to the FCA amendments, has been expanded from at least three to five business days). The Commission appears to have updated certain portions of the sample FCA Notice that employers can use or adapt to satisfy this requirement. But, as of the date of publication, the sample FCA Notice still lists three as opposed to five business days for an applicant to respond. Employers using this form will need to monitor for updates or revise it accordingly.
- Allow Time to Respond – During the time to respond, employers may not permanently place another person in the applicant's prospective position. The five-day period (or longer, if so provided by the employer) begins to run when the applicant receives both the criminal history report/information and the FCA Notice. The employer must examine any additional information provided by the applicant under the Fair Chance Act Analysis before making a final decision.
It is important to note that the foregoing now applies to current employees as well. If an employer learns that a current employee has a criminal history or a pending criminal matter and is considering taking adverse employment action based on that information, the employer must utilize the process generally described above (with some modifications) before taking any adverse action. An employer is permitted, but not required, to place an employee on leave for a reasonable amount of time while an employer undertakes the Fair Chance Process. The Commission notes, however, that there is a presumption that leave in excess of five business days is unreasonable. As noted above, the FCA also covers independent contractors and freelancers.
Exemption for Legally Mandated Background Checks
Employers who seek to use an exemption for legally-mandated background checks must notify applicants of the specific legal basis for the required criminal background check once they apply for a position. Unless a federal, state, or local law requires an employer to exclude a person from employment because they have been convicted of a specific offense, employers must follow the requirements of the FCA that are not in conflict with the applicable federal, state, or local law. For example, the criminal background check may be conducted prior to the conditional offer of employment, but the FCA procedures must otherwise be followed where the employer has discretion regarding whether to exclude the applicant.
New York City employers must review the amendments and related Guidance and update their practices to comply with all applicable requirements. Best practices include:
- Reviewing all employment recruitment and hiring materials, including job applications, job postings, offer letters, and background check authorizations and disclosures used at each stage of the employment screening process to ensure compliance with the FCA and New York law;
- Ensuring that all background checks, including those performed by outside vendors, include a bifurcated process in which non-criminal information is favorably reviewed prior to making the conditional offer of employment, and that criminal history inquiries take place only after a conditional job offer;
- Updating internal policies and training hiring managers and supervisors to become familiar with the Fair Chance Analysis and Fair Chance Process, including any notice, record retention, and confidentiality requirements; and
- Retaining all records related to any claimed exemption and related notices for a period of three years from the date an exemption is used.
This is a fast-changing field and employers should engage with employment law counsel for a detailed analysis and review of their practices to ensure compliance not only with the FCA, but also federal and New York state law, which have additional requirements.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.