New NYC Law Requires Two-Step Background Checks and Expands List of Pre-Adverse Action Factors

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The New York City Fair Chance Act (FCA) amendments expand protections for individuals with a criminal record and impose new obligations on employers that conduct background checks. The changes take effect July 29, 2021.

The amendments require most background checks to be conducted in two steps,[1] provide “complete protection” for non-convictions and add specific FCA factors that must be evaluated for pending criminal charges.

Two-Step Background Check Requirement

Under the amended law, a criminal background check can only be run after a “conditional offer” is made. A “conditional offer” is defined as an offer that can only be revoked based on:

  • The results of a criminal background check.
  • The results of a medical examination.
  • Other information an employer could not have reasonably known in advance.

That means employers in NYC must conduct preemployment background checks in two phases:

(1) If criminal background checks are to be run at all, the employer must conduct all noncriminal checks – such as employment history, education and references – before a conditional offer is made.

(2) After a conditional offer is made, criminal history can be checked. Because motor vehicle records often reveal criminal activity, driving records can be checked in this second step.

This two-step process is required because once a conditional offer is made, it is now unlawful to revoke that offer based on noncriminal information that could have been obtained before the conditional offer was made.

Guidance published earlier this month confirms that this two-step approach is mandated: “Employers cannot circumvent the requirements of the NYCHRL [New York City Human Rights Law] by calling an offer ‘conditional’ before they have assessed all other employment qualification factors (e.g., academic records or references) aside from criminal history and medical information.”

The law creates a limited exception for positions where a criminal background check is required under federal, state or local law or by a self-regulated organization. Examples include certain positions in the financial and insurance industries.

If relying on a third-party background check company, employers should request separate reports for noncriminal information and criminal history. If receiving two separate reports is not possible, employers are required to establish a system to separate the criminal history from the noncriminal information contained in a single report and ensure that the criminal history is only available to the decision-makers after a conditional offer is made.

The new guidance also warns: “In general, employers are not permitted to make unsolicited neutral statements about criminal background checks before a conditional offer, including statements noting the employer’s compliance with laws protecting applicants with criminal histories (such as ‘Applicants’ criminal history will be considered consistent with the requirements of the New York City Fair Chance Act.’).”

This warning, in combination with the narrow definition of a conditional offer, may require a change to the disclosure and consent forms, and two sets of forms (pre-offer and post-offer) may be advisable, even if cumbersome.

Complete Protection

The amendments also “completely protect” non-convictions, and employers are generally prohibited from asking about, implying an employment limitation on or basing an adverse employment action on non-convictions. The guidance provides a nonexhaustive list of non-convictions that may not be considered, such as:

  • Cases where no criminal charge was brought or the prosecutor declined to prosecute following an arrest.
  • Criminal charges that were resolved in favor of the individual, including where 1) all charges were dismissed, where the individual was acquitted on all charges, or 2) where the verdict was set aside or the judgment was vacated by the court and no new trial was ordered, nor is any appeal by the prosecution pending.
  • Cases that were adjourned 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).
  • Cases where the person is found to be a youthful (juvenile) offender.
  • Convictions that have been sealed.
  • Cases that resolved in a conviction for an act defined by New York law as a violation, rather than a misdemeanor or felony, even if not sealed, including but not limited to trespass, disorderly conduct, failing to respond to an appearance ticket, loitering, harassment in the second degree, disorderly behavior and loitering for the purpose of engaging in a prostitution offense.
  • Cases that resulted in a conviction for a noncriminal offense under the laws of another state.

Pre-Adverse Action ‘Fair Chance Factors’ for Pending Charges

The amendments also impose new pre-adverse action requirements. New York Correction Law Article 23-A already lists factors that must be considered throughout New York state before taking adverse action based on a “previous criminal conviction.” The amendments set forth a list of similar factors that must be considered in New York City before taking adverse action based on pending charges.

The Fair Chance Factors that NYC employers must consider for pending charges are:

  • The policy of the city, as expressed in this chapter, to overcome stigma toward and unnecessary exclusion of persons with criminal justice involvement in the areas of licensure and employment.
  • The specific duties and responsibilities necessarily related to the employment held by the person.
  • The bearing, if any, of the criminal offense or offenses for which the applicant or employee was convicted, or that are alleged in the cases of pending arrests or criminal accusations, on the applicant’s or employee’s fitness or ability to perform one or more such duties or responsibilities.
  • Whether the person was 25 years of age or younger at the time of the occurrence of the criminal offense or offenses for which the person was convicted, or that are alleged in the cases of pending arrests or criminal accusations.
  • The seriousness of such offense or offenses.
  • The legitimate interest of the public agency or private employer in protecting property and the safety and welfare of specific individuals or the general public.
  • Any additional information produced by the applicant or employee, or produced on their behalf, in regard to their rehabilitation or good conduct, including a history of positive performance and conduct on the job or in the community, or any other evidence of good conduct.

Prior conviction history must still be analyzed using the Article 23-A factors, and if an individual has both a prior conviction history and pending charges, the employer must separately analyze each under the applicable set of factors.

Conclusion

In light of these changes, employers should update their background check and screening procedures as well as their forms and notices to ensure compliance with the FCA amendments.

[1] Though some amendments to the FCA also apply to criminal convictions of current employees arising during employment, we do not address these changes here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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