As we previously advised, the City of New York amended its Fair Chance Act (“FCA”)—also known as the “ban the box” law—which limits the types of inquiries employers can make regarding criminal history during the hiring process and restricts when an employer can first seek criminal background information. Those amendments, which add new protections for job seekers whose histories include certain “non-convictions,” such as unsealed violations and unsealed non-criminal offenses, as well as for current employees facing pending criminal charges, take effect on July 29, 2021.
On July 15, 2021, the New York City Commission on Human Rights (“NYCCHR”) released detailed legal enforcement guidance (“Guidance”) to help employers comply with the expanded law. The Guidance represents the NYCCHR’s interpretation of the FCA and the amendments thereto. It is important for New York City employers in the private and public sectors to be familiar with and understand the FCA’s new rules.
SUMMARY OF CHANGES (KEY CONCEPTS):
- A Two-Step Background Check During Hiring: Employers that screen applicants’ backgrounds must now delay any investigation into the applicant’s criminal history until after other parts of the screening (e.g., reference checks, credit checks, drug screens, and confirmation of educational and employment history—collectively, “Other Background Information”) have occurred, and may conduct investigations of criminal backgrounds only on those applicants to whom a conditional offer of employment has been extended. This Advisory will refer to this two-part procedure as the “Bifurcated Screening Process,” which is explained more fully below.
- A More Complex “Fair Chance Process”: If an individual’s criminal record is the basis for a potential adverse employment action—whether for an applicant or a current employee—employers must implement a “Fair Chance Process” prior to making a final determination, using the NYCCHR’s new Fair Chance Notice. This notice includes distinct relevant factors for consideration under various sets of circumstances:
- If an employer is considering revoking its conditional offer to a candidate with one or more pre-employment convictions, the employer must analyze the situation using a “Fair Chance Analysis,” which contemplates “Article 23-A Factors,” and
- If an employer is considering taking an adverse action against a candidate or current employee with a pending criminal case OR a current employee with a conviction, the employer must analyze the situation using a Fair Chance Analysis that contemplates “NYC Fair Chance Factors” (which are similar, but not identical, to Article 23-A Factors).
- “Complete Protection” for Non-Convictions: The Guidance also reminds employers that there are certain criminal-related matters that can never be considered (at any time) during the hiring process. These matters include unsealed violations and unsealed non-criminal offenses, as mentioned above, as well as several other categories of criminal history, including, but not limited to, youthful offender adjudications, adjournments in contemplation of dismissal (unless the order to adjourn in contemplation of dismissal is revoked and the case is restored to the calendar for further prosecution), and sealed cases.
THE BIFURCATED SCREENING PROCESS
Why? The Rationale for Piecemeal Background Reviews
The NYCCHR has taken the position that, prior to making a conditional job offer, employers must complete their assessment of all aspects of a candidate’s qualifications, including any Other Background Information, except for a medical examination and any review of information about, or potentially related to, a candidate’s criminal record, including driving records.
The NYCCHR explains that the need for this bifurcation is based on the concern that employers often revoke job offers as soon as they receive a background report containing any criminal information, blaming the revocation on factors other than the candidate’s criminal conviction history, without regard for the principles of the FCA.
The NYCCHR believes that bifurcation will isolate criminal information from any other information that might inform an employer’s decision during pre-employment screening, and if an employer revokes an offer after a conditional offer, it will only be because of the candidate’s criminal history. Accordingly, employers are now required to consider all Other Background Information before making a conditional offer, and to defer any criminal background checks until after such a conditional offer is made.
How? Steps NYC Employers Should Take to Ensure Compliance
- The Pre-Offer Stage: Preliminary (Non-Criminal) Screening
- Vet Your Candidate: It is important for hiring managers to document their review of candidates’ non-criminal history—i.e., their Other Background Information—prior to extending a conditional job offer. Note that the NYCCHR advises that employers should not review an applicant’s driving records prior to making a conditional job offer, since they can contain references to criminal records.
- Reliance on Third-Party Agencies: To the extent an employer uses a third-party consumer reporting agency (a background check firm) to obtain or review an individual’s references and/or education and employment history, prior to making a conditional offer of employment, an employer must:
- disclose its intent to perform such a check to the individual;
- obtain the individual’s authorization (in writing); and
- evaluate any report received, excluding any information related to a criminal history.
- Disclose, Don’t Deter: When obtaining authorization to procure background information, employers must not indicate that a criminal background check will occur, either at this stage or at any later stage in the process. Indeed, the NYCCHR recommends not even using the term “background check” at this time, since the term is often associated with screening for criminal history, and can deter some qualified applicants from proceeding with the hiring process. Rather, the NYCCHR recommends using the terms set forth in the federal Fair Credit Reporting Act (“FCRA”)—“consumer report” and/or “investigative consumer report”—when obtaining authorization to perform these checks prior to making a conditional offer.
- Review Records in Stages: The NYCCHR recommends that employers relying on a consumer reporting agency to review Other Background Information receive two separate reports from the agency:
1st Report: Pre-offer, includes all non-criminal information—i.e., Other Background Information. Any decision to stop considering a candidate based on the first report should be acted upon prior to moving on with the conditional offer stage. In such case, the employer must follow the “notice of intent to take adverse action”/“adverse action” process required under the federal FCRA.
2nd Report: After conditional offer, including driver’s records and any criminal information.
The NYCCHR recognizes that some consumer reporting agencies may not be able to provide two separate reports (or an employer may wish to receive this information together, in one report). While it is not unlawful for an employer to receive criminal information prior to making a conditional offer, it is unlawful to consider such information at that stage. In a case where criminal information is received prior to a job offer, the burden will be on the employer to prove that it did not consider any such criminal history at the pre-offer stage, if such history affects the employment decision.
- The Conditional Job Offer
- Define the Job: Before making a conditional offer, employers should provide an applicant clearly defined duties and responsibilities for the job. If an employer alters a job’s duties and responsibilities in a manner that serves to disqualify the applicant after making a conditional offer of employment, there is a rebuttable presumption that the employer has done so as a pretextual basis for unlawful discrimination.
- Explain the Conditional Offer: If the employer is going to conduct any criminal background screening of an applicant, then the employer must first present a conditional job offer to the applicant. Such an offer should disclose that it is conditioned upon receipt of acceptable information in a consumer report or investigative consumer report.
- The Post-Offer Screening (Criminal Background Checks)
- Obtain Further History as Needed: As previously noted, authorization for any pre-employment review of criminal records or Other Background Information must be obtained from the applicant. At this stage, employers may ask candidates about criminal history, but not about non-pending arrests, convictions that were sealed or reversed, or other “non-convictions.” Prior to conducting a criminal history check, NYC employers must provide employees with a copy of Article 23-A of the Correction Law and a copy of the Fair Chance Notice. The NYCCHR recommends the following as the appropriately phrased criminal history question that can be asked of applicants:
Have you ever been convicted of a misdemeanor or felony? Answer “NO” if you received an adjournment in contemplation of dismissal (“ACD”) that has not been revoked and restored to the calendar for further prosecution or if your conviction: (a) was sealed, expunged, or reversed on appeal; (b) was for a violation, infraction, or other petty offense such as “disorderly conduct;” (c) resulted in a youthful offender or juvenile delinquency finding; or (d) if you withdrew your plea after completing a court program and were not convicted of a misdemeanor or felony.
- If Negative History Is Revealed: Employers that screen job candidates’ criminal histories after making a conditional offer of employment are permitted to revoke the offer only after completing the Fair Chance Process. Employment may be denied after a review of criminal history and/or driver’s record only for limited reasons set forth under the law, namely, if the post-conditional offer review:
- reveals a direct conflict between the candidate’s history (or pending case) and the specific nature of the prospective job, or
- presents information showing that employing the candidate would involve an unreasonable risk to property or to the safety and welfare of specific individuals or the general public.
As a reminder, employers using a third-party consumer reporting agency must follow the “notice of intent to take adverse action”/“adverse action” process required under the federal FCRA. Further, if a review of potential criminal history causes an employer to reconsider the conditional offer, before making a final determination, the employer must follow the Fair Chance Process (described below).
THE FAIR CHANCE PROCESS
If a criminal background check reveals any information, such as a conviction history or pending case(s), causing the employer to consider rescinding the conditional job offer, then the employer must follow the Fair Chance Process with an evaluation using the relevant Fair Chance Factors.
An employer may rescind a conditional offer, or take other adverse action, only if a Fair Chance Analysis reasonably leads an employer to conclude that the individual’s criminal record either has a direct relationship to the job or poses an unreasonable risk to people or property. The Fair Chance Process requires these additional steps before taking any adverse action:
- Providing a written copy of any inquiries made or reports received about the candidate’s criminal history,
- Sharing a written copy of the employer’s analysis of the Fair Chance Factors (see below) using the Fair Chance Notice (or a similar document describing the relevant factors and the employer’s detailed explanations of conclusions drawn), and
- Providing the candidate with at least five business days to respond to the employer’s concerns.
Employers should note that this Fair Chance Process is not limited to the hiring process but is also required if an employer learns that a current employee has a criminal record, causing the employer to consider termination or discipline of that employee.
The Fair Chance Factors
Employers must assume that candidates or employees with criminal records pose no risk, and then consider each of the appropriate Fair Chance Factors, depending on whether (i) the concern has arisen on the basis of (x) a prior conviction or (y) a pending case, and (ii) the criminal conduct occurred (x) pre-employment or (y) post-employment.
Article 23-A Factors: Relevant to Pre-Employment Conviction History
- New York State public policy, encouraging licensure and employment of persons previously convicted of one or more criminal offenses.
- Specific duties and responsibilities necessarily related to the job.
- What bearing, if any, the criminal offense(s) for which the person was previously convicted will have on the person’s fitness or ability to perform any of the job’s duties or responsibilities.
- How much time has elapsed since the occurrence of the criminal offense(s) (not the time since arrest or conviction).
- How old the person was at the time of occurrence of the criminal offense(s) (not their age at arrest or conviction).
- The seriousness of the offense(s).
- Any information regarding the person’s rehabilitation or good conduct.
- The legitimate interest of the employer in protecting property and the safety and welfare of specific individuals or the general public.
- Whether the person has a certificate of relief from disabilities or for good conduct, which creates a presumption of rehabilitation.
NYC Fair Chance Factors: Relevant to Pending Criminal Cases (Either Pre-Employment or Post-Employment) and Post-Employment Convictions
- The New York City policy to overcome stigma toward, and unnecessary exclusion from, employment of persons with criminal justice involvement.
- Specific duties and responsibilities necessarily related to the job.
- What bearing, if any, the criminal offense(s) for which the candidate or employee was convicted (or that are alleged in the case of pending arrests or criminal accusations) will have on the person’s fitness or ability to perform any of the job’s duties or responsibilities.
- Whether the person was 25 years of age or younger at the time of occurrence of the criminal offense(s) for which the person was convicted, or that are alleged in the case of pending arrests or criminal accusations, which shall serve as a mitigating factor.
- The seriousness of such offense(s).
- The legitimate interest of the employer in protecting property and the safety and welfare of specific individuals or the general public.
- Any additional information regarding the person’s rehabilitation or good conduct, including, but not limited to, history of positive performance and conduct on the job or in the community.
Intentional Misrepresentations of Pending Cases or Conviction Histories
The FCA continues to permit employers to take adverse action against applicants or employees who intentionally misrepresent their criminal history, but the law now requires the employer to:
- provide the applicant or employee with the documents or other materials that support the employer’s claim of intentional misrepresentation, and
- permit the individual a “reasonable” amount of time (at least five business days, based on the Guidance) to respond prior to the employer’s taking adverse action.
If the applicant or employee credibly demonstrates that the misrepresentation was unintentional or the information provided was not a misrepresentation, the employer is required to perform the Fair Chance Process before taking any adverse action. Employers should note that if they wish to rely on a discrepancy (such as between the individual’s self-disclosure and the results of the background check) as the basis for adverse action against an applicant or employee, the burden is on the employer to credibly demonstrate that any such discrepancy is attributable to an intentional misrepresentation.
What New York City Employers Should Do Now
- Carefully review the updated Guidance, as the changes to the FCA take effect on July 29, 2021.
- Consider whether criminal background checks are necessary for every position. The Guidance encourages employers to consider “opting not to conduct criminal background checks on job applicants and employees, unless required by law.”
- Review and update, as necessary, any hiring policy manuals, standard disclosure and/or authorization forms, and wording used in any correspondence with prospective employees or candidates, including job postings and notices, as well as offer letters, to ensure that they comply with FCA requirements. This may include creating a new communication for obtaining authorization to perform the first part of the Bifurcated Screening Process in order to obtain Other Background Information.
- Train and advise all management and human resources personnel responsible for hiring, firing, and/or employee discipline on the FCA’s principles and processes and the resultant changes to your internal procedures.
- Determine whether vendors engaged to conduct pre-employment screenings are aware of (and in compliance with) the new recommendation to bifurcate the background check process; evaluate whether there may be new costs associated with compliant background checks.
- If you are a multi-jurisdictional employer, although many employers seek to keep HR processes consistent from jurisdiction to jurisdiction, decide whether it may make sense to use this new manner of background checking in New York City only.
- Ensure that questionnaires and disclosure forms used in connection with post-conditional offer inquiries about an applicant’s criminal history, particularly those prepared and supplied by third-party consumer reporting agencies or other vendors engaged to conduct background checks, clearly convey the scope of information being requested.
 Certain exceptions apply wherein the Fair Chance Act does not preclude criminal conviction inquiries. For example, an employer prohibited by local, state, or federal law from hiring people with certain convictions may claim an exemption. Further, employers in the financial services industry are exempt from the Fair Chance Process to the extent that it conflicts with industry-specific rules and regulations promulgated by a self-regulatory organization (“SRO”). This exemption, however, only applies to those positions regulated by SROs.
 Employers cannot consider “non-convictions” under the FCA. Non-convictions include, but are not limited to: (i) cases that resolved in a conviction for a non-criminal offense (as that term is defined by the law of another state), and (ii) convictions for the following non-exhaustive list of violations: trespass, disorderly conduct, failing to respond to an appearance ticket, loitering, harassment in the second degree, disorderly behavior, and loitering for the purposes of engaging in a prostitution offense.
 Note that credit checks can be performed only under limited circumstances in New York City, pursuant to the Stop Credit Discrimination in Employment Act (“SCDEA”). See here and here for additional information about the SCDEA and the exemptions thereunder. Note that in connection with performing a credit check, an employer must identify the exemption under which the credit check is permissible, and must comply with the other requirements under the SCDEA.
 New York City banned pre-employment testing for marijuana and THC in 2019, as we reported here, and recently enacted state laws legalizing recreational marijuana include protections for employees who use cannabis while off duty, as we explained here.
 Article 23-A of the New York State Correction Law prohibits employers from unfairly discriminating against persons convicted of one or more criminal offenses and requires employers to evaluate qualified job seekers and current employees with conviction histories fairly and on a case-by-case basis. The statute lists eight factors that employers must consider concerning an employee’s or prospective employee’s previous criminal conviction, at Correct. Law § 753. Certificates of Relief from Disabilities pursuant to § 701 or for Good Conduct pursuant to § 703-a are also to be considered among the factors.
 The NYCCHR has taken the position that, “[b]ecause it is often impracticable to separate criminal and non-criminal information contained in a driving abstract,” a candidate’s driving record can be reviewed along with the candidate’s criminal history, and need not be reviewed prior. See Guidance, at page 14.
 To the extent an employer performs the reference and educational checks itself, without utilizing the services of a third-party consumer reporting agency, it must perform these tasks and make any related decisions prior to making the conditional offer.
 The federal Fair Credit Reporting Act (“FCRA”) (15 USC §§1681 et seq.) and the New York State Fair Credit Reporting Act (NY GBL §§ 380 et seq.) require employers using a third-party consumer reporting agency to procure a background check on an individual to provide the individual with a disclosure and authorization form, and to obtain written authorization for the background check prior to its initiation.
 Federal guidance is available here.
 In such circumstances, NYCHRL does not prohibit employers from placing employees on paid or unpaid leave for a reasonable amount of time during the pendency of the Fair Chance Process. See page 21 of the Guidance.