NY, NY: If You Can Hire There, You Can Hire Anywhere (Part I, The Fair Chance Act)

Angela Preston

New York City

I love New York. So do lots of other people who are clamoring to work in the Big Apple, where employment rose by 91,400 in the past year. The city has two brand new background screening laws that are about to shake up the status quo for employers. If you hire, recruit, or screen prospective candidates or employees in New York City, listen up.  Things are about to get complicated.

The two laws are the Stop Credit Discrimination in Employment Act (SCDEA) which went into effect on September 3, 2015 and the Fair Chance Act (FCA), which deals with criminal history and takes effect on October 27, 2015.  Today we’re tackling the FCA—look for Part II on the SCDEA tomorrow.

Part I.  The Fair Chance Act: Giving Ex-Offenders a Second Act

In a nutshell, here is what you need to know about New York’s Fair Chance Act. The Fair Chance Act is one of the many “Ban the Box” laws that we have seen pop up to delay criminal background screening to allow candidates an opportunity to interview and be considered for jobs before potential elimination by a background check. Under the Fair Chance Act, New York City employers are prohibited from inquiring or obtaining any statement about an applicant’s criminal background until after a conditional offer of employment has been made.  For purposes of the Act, “any statement” means a statement communicated in writing or otherwise to the applicant for purposes of obtaining criminal background information regarding: (i) an arrest record; (ii) a conviction record; or (iii) a criminal background check.

When the law goes into effect on October 27th, an employer will be able to rescind an offer after a criminal background check, but not before (“before taking any adverse employment action based on such inquiry”) the employer gives notice, an explanation and engages in “an interactive discussion, considering the employer’s requirements and the applicant’s evidence of good conduct.”

To be clear, the law creates a new pre-adverse notice requirement that is in addition to the existing Fair Credit Reporting Act pre-adverse notice (more information on the FCRA adverse action notice process can be found here). The biggest distinction with the New York law is that under the Fair Credit Reporting Act, pre-adverse notice does not require an analysis nor written notice of that analysis.

And unlike enforcement under the FCRA, NYC’s background check law applies whether or not the background check is conducted by a third-party vendor.  In other words, if you do an in-house search and your HR person digs up court records or other information on an applicant’s credit or criminal history, the pre-adverse notices and other aspects of the check must comply with NYC law.  The New York law also applies to information on credit and conviction history gathered through reference checks.

How it Works: A Step by Step Walk-Through

Let’s take a walk through the criminal background process under the NYC FCA.

  1. After (and only after) a conditional offer has been made, an employer can obtain consent (authorization and disclosure) to run a criminal background check (obtain a “consumer report”).
  2. After running the background check, if the employer conducts an analysis and adverse action is warranted under New York Corrections Law 23-A, the employer can proceed with taking adverse action based on the information.
  3. Before an employer takes adverse action (e.g. rescind a job offer), the employer is obligated to provide the applicant with: (1) a copy of the New York Corrections Law, Article 23-A; (2) a copy of the document on which the decision was based (the consumer report); and (3) a copy of the employer’s written analysis conducted to make this determination.
  4. The written analysis should include the decision maker’s consideration of the factors listed in Article 23-A and its determination as to whether the criminal history is directly related to the position sought or otherwise poses an unreasonable risk as delineated in 23-A.
  5. The employer must then hold the job opportunity open for a reasonable amount of time, but not less than three business days, so that the applicant can respond with additional or mitigating information.
  6. If a criminal record is discovered or disclosed post conditional hire and the employer learns through a background check that the candidate failed to disclose a conviction, the employer must follow the Fair Chance Act process and give the candidate a copy of the background check and notice of intent to take adverse action even if the reason for the adverse action is dishonesty/failure to disclose.

Clear as Mud?

In recent weeks, The New York City Commission on Human Rights (NYCCHR) has made some public appearances to try to clarify the FCA. It has stated that the law prohibits reference to criminal history anywhere in a job advertisement, application, or at any other stage in the hiring process prior to a conditional offer of employment.  Seyfarth Shaw’s employment law blog published the following additional clarifications from the NYCCHR:

  • The three business day time frame will run from the date the applicant receives his or her consumer report and the employer’s analysis.
  • The Commission will consider it to be a violation of the law should a job advertisement or application reference, even generally, that a criminal background check will be conducted — even if the advertisement or application refrains from stating any blanket prohibitions such as “no felonies.” However, advertisements that state “reference checks will be conducted” would be considered lawful. It is still permissible to use reference checks and public resources, as long the intent of the check is not to discover an applicant’s credit score or criminal background. Thus, simply searching an “applicant’s name” in Google or LinkedIn would be permissible, however, searching “[Applicant’s Name] criminal background” would be impermissible.
  • Should an applicant inquire about a criminal background check during the interview process, the proper response to the applicant is simply that the Company will decide whether to conduct a background check after a conditional offer.
  • The employer does not lose its right to take adverse action against an applicant who misrepresents his or her criminal history, so long as it does not ask the applicant about criminal history until after a conditional offer of employment is given.
  • Temporary staffing agencies need not conduct the Article 23-A analysis for each temporary position — only when making the initial decision to place the applicant in its pool of available temporary employees. However, staffing agencies are not permitted to accommodate client requests for “no felons,” or other preferences with respect to criminal background, unless that limitation is required by state or federal law, and doing so may result in aiding and abetting liability under the statute.

Dos and Don’ts for New York City FCA compliance:

  1. Do review criminal background screening policies for candidates who reside in New York and all New York-based positions.
  2. Don’t obtain background check authorizations and disclosures for jobs based in New York or for New York based candidates until AFTER a conditional offer of employment has been made.
  3. Do check your ATS work flow or web-based candidate portal system to make sure consent forms are not being obtained before a conditional offer has been made and to cease any auto-adverse processes in New York.
  4. Don’t advertise that a criminal check is a requirement of a job based in New York. This is a bad practice anywhere, but it’s about to be illegal in New York City.
  5. Do update your adverse action practices in New York to include a pre-adverse form that will explain the 23-A analysis and reasons for withdrawing conditional offers based on information in the background report.
  6. Do consider how all of this syncs up with you individualized assessment process under the EEOC criminal background guidance.
  7. Do make sure that you include copies of all required forms under the new law, including the analysis, a 23-A form, and a copy of the report along with your pre-adverse notice in New York.

Finally, DON’T despair–but DO consult with your legal counsel for legal advice and get with your background screening partner to update forms and processes prior to the October 27th effective date! 

Check back tomorrow for Part II of I Love New York, when we’ll talk about the Stop Credit Discrimination in Employment Act (SCDEA) which went into effect on September 3, 2015. We’ll review the recent guidance published by The New York City Commission on Human Rights (NYCCHR) and give you the scoop on what you need to know to be in compliance.

Angela Preston
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Angela Preston

Vice President of Compliance & General Counsel at EmployeeScreenIQ
Angela Preston has more than 20 years as a licensed attorney and over 10 years in the background screening area. She serves on the Board of Directors of the National Association of Professional Background Screeners (NAPBS), is a member of the NAPBS Background Screening Credentialing Council (BSCC), and is actively involved in the Society for Human Resource Management (SHRM) and ASIS International. Angela is also a member of the Ohio State and Columbus Bar Associations. Angela has direct oversight and management of compliance programs, and will provide guidance in complex legal matters including state and federal legislation, EEO law, client education, adjudication, pre/adverse action process, NAPBS Accreditation and client and vendor contract management.
Angela Preston
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