If the chaos of COVID wiped out all your memory regarding recent employment law changes, a short history lesson is probably in order. Nationally, a number of cities, states, counties, and municipalities decided to change their local ordinances on several employment matters because they felt that the state and national governments were moving too slowly. Many municipalities passed ordinances involving minimum wage, paid leave, and “Ban the Box” -- the “box” being a checkbox at the early job application stages as to whether a prospective employee has a criminal record.
In an effort to avoid a patchwork of laws and regulations which could negatively impact employer planning, in 2017 Iowa adopted a statute that prohibits cities from enacting any rules which create “terms or conditions of employment that exceed or conflict with the requirements of federal or state law relating to a minimum or living wage rate, any form of employment leave, hiring practices, employment benefits, scheduling practices, or other terms or conditions of employment.”
Move forward a couple of years to 2019. Waterloo, at the request of its Human Rights Commission, enacted a Ban the Box ordinance. The original versions of the Waterloo statute either forgot or ignored the federal and state statutes requiring background checks such as those used in healthcare (SING process) and some other industries.
After being contacted by a number of trade groups, Waterloo amended a portion of its proposed ordinance to account for these state and federal laws. The amended ordinance moved forward. More detail on the ordinance is available in our 2019 article. It was promptly challenged by the Iowa Association of Business and Industry and that brings us to the Iowa Supreme Court decision.
The court draws a distinction between the timing of the inquiry, when you can ask an applicant about prior criminal history, and how employers would use that information. The court finds that the city can regulate the “when” unless preempted specifically by other state and federal laws such as in healthcare, but not “whether an employer can consider an employee’s criminal history at all.”
Waterloo Ordinance 5522 specifically provided that “it shall be an unlawful, discriminatory or due practice for an employer to include a criminal record inquiry on any application.” It further prohibited:
- inquiries about convictions, arrests, or pending criminal charges during the application process until a conditional offer of employment had been made
- declining to hire an applicant based solely on an applicant’s record of arrest or pending criminal charges that had not resulted in conviction
- making hiring decisions based on erased or expunged records
- making “an adverse hiring decision based on applicant’s criminal record without a legitimate business reason.”
The Iowa Supreme Court found that subsections 2, 3, and 4 all of which relate to how an employer may use arrests, pending criminal charges or convictions, were terms or conditions of employment and are therefore nullified.
However, the court left intact when an employer can begin this inquiry, specifically after a conditional offer of employment has been made.
From a practical standpoint, it should be noted that many employers do not perform background checks or similar inquiries until after an offer of employment has been made simply to save costs, but the decision also prohibits even early verbal inquiries or the inclusion of “the box” on applications. Remember, this is a city ordinance and limited to Waterloo, Iowa.
In 2019, the legislature passed Iowa Code 671A which relates to the concern of negligent hiring and indicates that an employer shall not be held liable if issues occur with an employee who has a criminal background. There are certain limited exemptions such as in cases where the employee had previously been convicted of murder or certain sex offenses.
A recent Iowa Supreme Court case involving negligent credentialing (explained in our May 2021 article) emphasizes certain employers’ liability to continually monitor performance such as in the medical provider realm.
The big picture
Efforts at fully banning the box and minimizing the use of criminal records in making hiring decisions will remain ongoing. Further, the tight labor market and inability to hire qualified employees is likely to change how employers view certain types of convictions.
However, for many industries such as healthcare, banking/finance, and childcare, the utilization of criminal inquiries and histories will remain critically important due to state and federal law requirements.
In compliance with EEOC guidance, employers nationwide assess applicants carefully - whether charges/convictions are recent, the level of potential violence, and how those convictions might impact the ability to do the job. There is no clear framework for most industries on how to implement this assessment. Multiple states prohibit decisions based on charges rather than convictions and these issues are likely to become more confusing for employers as states continue to propound various approaches.
If you are not a highly regulated industry where state and federal law require very specific inquiries into criminal records, you should coordinate with your employment attorney to assess your applicant and background check policies.