New York City Fair Chance Act: New Guidance Clarifies Background Screening Process
July 29th, 2021 | Angela Preston, Senior Vice President and Counsel, Corporate Ethics and Compliance
As previously reported, New York City amended its Fair Chance Act (“FCA”) on December 10, 2020, when the New York City Council passed Int. 1314-A, Prohibiting Discrimination Based on One’s Arrest Record, Pending Criminal Accusations or Criminal Convictions (the “Amendments”). The Amendments, which take effect July 29, 2021, expand the FCA and extend additional protections for workers in New York City.
On July 15, 2021 the New York City Commission on Human Rights released new guidance titled Legal Enforcement Guidance on the Fair Chance Act and Employment Discrimination on the Basis of Criminal History (the “Guidance”). The Guidance clarifies the Commission’s interpretation of the Fair Chance Act and the Amendments, and provides some insight into the changes required for use of criminal history when hiring and conducting background checks for New York City applicants.
Two Step Screening
The Guidance states that employers should break down their screening into a two part process, first conducting all non-criminal screening prior to the conditional offer, and then after a conditional offer has been extended the employer can inquire about criminal history and run a criminal check following the FCA process:
Employers who request background checks on applicants should first receive the non-criminal information, evaluate it, and then receive and evaluate the criminal information. Receiving the information in two stages, non-criminal information before the conditional offer and criminal information after, also insulates the employer from liability for criminal history discrimination if it disqualifies a candidate with criminal history at the first stage.i
The Commission does acknowledge that some employers may not be able to perform the background check in two steps, and explains that in such a case employers should establish a system to segregate the non-criminal information from the criminal information for purposes of evaluation by decision makers to ensure criminal information is only available post conditional offer. The guidance clearly places the legal burden on employers to proving that the criminal information was segregated and not made available to hiring managers until post-conditional offer.
The Commission also recognizes that with some information, notably motor vehicle reports, it may not be possible to separate criminal and non-criminal information, and as such a motor vehicle report should not be requested until the second part of the background check, after the conditional offer. However, the commission takes a position that other types of non-criminal information generally is readily available and can be obtained by employers using reasonable due diligence.
In addition, the Guidance states that employers cannot make statements related to criminal history in job postings and recruitment materials, and when seeking authorization, they should use terms such as “consumer report” or “investigative consumer report” rather than “background check” or “criminal background check” prior to a conditional offer.
Based on this guidance, employers need to evaluate the sequence of screening, consider breaking down the screening for NYC applicants into two parts, with an initial phase of screening consisting of non-criminal components, and after a conditional offer has been made, conduct a second screening for criminal history (and motor vehicle reports if applicable) . Employers should also revisit their consent forms for each phase based on the Guidance and consider having two candidate consent forms, omitting any reference to criminal history in the consent for the first, non-criminal part of the check.
In addition, based on the Guidance employers should refrain from conducting any criminal history questionnaires or criminal self- disclosures until after the first, non-criminal phase of the check is completed, and after the conditional offer of employment.
Evaluating and Withdrawing an Offer Under the FCA Analysis
If an employer is considering withdrawing a conditional offer of employment based on a criminal background check, it should gather the information necessary to assess each of the relevant fair chance factors, for example by requesting evidence of rehabilitation or good conduct from the candidate and confirming the applicant’s date of birth as relevant to consideration of the person’s age when the alleged or convicted crime occurred. The Guidance provides the list of specific Article 23-A factors that employers should use in considering conviction history, as well as the list of specific factors employers should use when considering pending cases and provides a newly revised model form for employers to use. Employers can create their own form so long as the material substance of the employer’s form is the same.
The Guidance states that an employer cannot deny employment based on an applicant’s conviction history or pending case unless, after conducting an analysis of the relevant fair chance factors, it properly determines that there is a direct relationship between the applicant’s conviction history or pending case and the prospective job; or shows that employing the applicant “would involve an unreasonable risk to property or to the safety or welfare of specific individuals or the general public.”
The Guidance explains that if an employer has evaluated the applicant following the relevant factors and wishes to withdraw an offer, it must:
- Disclose to the applicant a written copy of any inquiry it conducted into the applicant’s criminal history (including every piece of information including the copy of the consumer report from the background screening company if applicable)
- Share with the applicant a written copy of its Fair Chance Analysis; and
- Allow the applicant a reasonable period of at least five business days from receipt of the inquiry and analysis to respond to the employer’s concerns.
The Commission has provided an updated FCA form to encompass the amendments which is available here. Note that the FCA applies to both applicants and employees, and employers cannot permanently place someone else in the position while the FCA process is going on. The Commission says that an employee can be placed on unpaid leave for a reasonable period of time. Any delay beyond 5 business days from when the employee receives the Fair Chance Notice (i.e., the time frame for the employee to respond) is considered unreasonable and may be deemed adverse action.
The Guidance provides exemptions for legally mandated background checks but points out that even where a background check is required, the employer is still required to follow the Fair Chance Act.
In such cases an employer can conduct a criminal background check prior to the conditional offer and can disqualify an applicant based on a conviction that is subject to a legally-mandated exclusion as long as the employer provides the job applicant of copies of any information the employer relied upon and the legal citation for the exclusion.
The commission recommends logging all exemptions with documentation.
Employers need to be prepared for vigorous enforcement of the Fair Chance Act. The amount of a civil penalty will be guided by the following: (1) the severity of the particular violation; (2) the existence of previous or contemporaneous violations; (3) the employer’s size, considering both the total number of employees and revenue; and (4) whether or not the employer knew or should have known about the law.
The Guidance also covers a number of additional topics such as:
- Protections from non-convictions (and definition of what offenses are non-convictions)
- Solicitations and advertisements
- Inadvertent disclosures of criminal information
- Assessment factors, when to use 23-A factors and when to use FCA factors
- Action allowed on intentional misrepresentations
- Temporary help firms and the timing of conditional offer and the FCA process prior to being placed in the labor pool, and additional FCA process upon placement
Employers who hire NYC applicants are encouraged to read the Guidance in its entirety and reach out to their counsel for advice. Employers need to consider a two-step background screening process for NYC applicants, as well as the forms and language used throughout the process, including forms and documents provided by third parties and through integrations. New York City employers should review their background screening policies and consult with their legal counsel and screening firms in order to determine their next steps. Sterling clients with questions about modifications to their account set up should contact their account representative for information on account options.
Sterling is not a law firm. This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.