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July 30, 2021

Stroock Client Alert

By: Howard S. Lavin, Elizabeth E. DiMichele, GraceAnn Caramico

With the recent amendments to the New York City Fair Chance Act (the Act) becoming effective on July 29, 2021, the New York City Commission on Human Rights (the Commission) recently issued its Legal Enforcement Guidance on the Fair Chance Act and Employment Discrimination on the Basis of Criminal History (the Guidance).  Generally, the Act prohibits employers, labor organizations, and employment agencies from inquiring about or considering the criminal history of applicants prior to making a conditional offer of employment, and regulates when and how an employer may withdraw a conditional offer based on an applicant’s prior convictions.  As summarized below, the recent amendments significantly expand those protections and further limit the extent to which an employer can obtain and consider conviction history in making employment determinations for applicants for a position, including independent contractors, as well as current employees and independent contractors (collectively, Applicants).  

Background Investigations Must Be Completed in Two Distinct Phases

Prior to the recent amendments, the Act prohibited employers from making an inquiry about an Applicant’s criminal history until making a conditional offer of employment, unless an exemption applied.  The amendments create an additional hurdle that employers must clear before conducting a criminal background check, and likely will require employers to revise their hiring procedures.  Going forward, the Act requires employers to consider all non-criminal background information before making the conditional offer of employment.  Only when an employer has “favorably evaluated the candidate’s non-criminal information” may the employer proceed to receive and evaluate any criminal information.  

The Guidance clarifies that a conditional offer of employment is an offer of employment, promotion or transfer that can only be revoked based on:

  • The results of a criminal background check conducted in accordance with applicable law;
  • The results of a medical exam, to the extent permitted by applicable law; or
  • “Other information the employer could not have reasonably known before the conditional offer if the employer can show as an affirmative defense that, based on the information, it would not have made the offer regardless of the results of the criminal background check.”

The Guidance advises that employers relying on third-party vendors – consumer reporting agencies, commonly referred to as background check companies – should receive two separate reports:  (1) a non-criminal report (excluding driving records, which may contain references to criminal convictions that cannot be separated out) prior to making a conditional offer, and, if a conditional offer is made thereafter, (2) a criminal record report.  If the vendor cannot provide two separate reports or obtaining separate reports is otherwise not feasible, the Guidance requires employers to establish a system to segregate criminal history information and ensure that no decisionmaker has access to it prior to making a conditional offer of employment.  Under these circumstances, the employer bears the burden of proving that the decisionmaker did not have access to the criminal history information.  

The Commission reasons that this two-step process furthers the Act’s goal to ensure that candidates are considered for a position based upon their qualifications before any criminal history is taken into account, and frustrates potential subterfuge by employers that withdraw an offer based upon an Applicant’s criminal history, while pointing to some other factor as the reason for disqualifying the Applicant.  The Guidance also states that the bifurcated process protects employers from liability for discrimination based on an Applicant’s criminal history if he or she is disqualified before the employer receives any criminal history information and no conditional offer is made.  

Employers who consider and withdraw a conditional offer based upon non-criminal history information can avoid liability under the Act only if they can establish as an affirmative defense, by a preponderance of the evidence, that (1) they could not have reasonably known the information before the conditional offer was made, and (2) they would not have made the offer if the information was known before it was made, regardless of the results of the criminal background check.  Further, if an employer changes the job description for the open position in a way that disqualifies the Applicant after the conditional offer is made, there is a rebuttable presumption that the change is a pretext for unlawful discrimination.

The Updated Fair Chance Process

The Fair Chance Process must be followed when an employer elects to withdraw a conditional offer based on a pending case or conviction history.  The key steps are summarized below and include, without limitation, requesting information from the Applicant to conduct the Fair Chance Analysis, and performing the Fair Chance Analysis and providing the Applicant with appropriate notice and documentation, and allowing the Applicant to respond.  

Fair Chance Analysis

An employer may lawfully withdraw a conditional offer of employment based upon an Applicant’s conviction history or pending cases, only if, after analysis of the Article 23-Factors and/or the Fair Chance Factors, as applicable, described below (the Fair Chance Analysis), it properly makes a determination that:

1.    There is a direct relationship between the Applicant’s conviction history or pending case and the prospective job; or
2.    Employing the Applicant would involve an unreasonable risk to property or to the safety or welfare of specific individuals or the general public.

Even if there is a direct relationship between the Applicant’s criminal record and the position – that is, a direct connection between the specific nature of the conduct and the specific nature of the job – the employer must consider whether the risks have been mitigated.  To make this determination, employers must analyze the factors set forth in Article 23-A of the Penal Code (Article 23-A Factors) with respect to prior convictions and the similar fair chance factors set forth in the Act (the Fair Chance Factors) with respect to pending cases.  

The Article 23-A Factors applicable to pre-employment conviction history are:

  • The public policy of New York State to encourage the licensure and employment of persons previously convicted of one or more criminal offenses.
  • The specific duties and responsibilities necessarily related to the employment sought or held by the person.
  • The bearing, if any, the criminal offense or offenses for which the person was previously convicted will have on the person’s fitness or ability to perform one or more such duties or responsibilities.
  • The time which has elapsed since the occurrence of the criminal offense or offenses (not the time since arrest or conviction).
  • The age of the person at the time of occurrence of the criminal offense or offenses (not the age at arrest or conviction).
  • The seriousness of the offense or offenses. 
  • Any information produced by the person, or produced on the person’s behalf, in regard to their 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 or relief from disabilities or good conduct, which create a presumption of rehabilitation. 

The NYC Fair Chance Factors applicable to pending cases and convictions that occur during a person’s employment are:

  • The policy of New York City to overcome stigma toward and unnecessary exclusion from employment of persons with criminal justice involvement;
  • 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 case of pending arrests or criminal accusations, on the applicant 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 occurrence of the criminal offense or offenses 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 or offenses;
  • The legitimate interest of the employer in protecting property and the safety and welfare of specific individuals or the general public; and
  • Any additional information produced by the applicant or employee, or produced on their behalf, in regards to their rehabilitation or good conduct, including but not limited to history of positive performance and conduct on the job or in the community.

Disclosure, Notice and Communication under the Fair Chance Analysis

If, after completing the Fair Chance Analysis, an employer decides to withdraw a conditional offer based upon an Applicant’s criminal history, the employer must first:

  • Disclose to the Applicant a written copy of any inquiry it conducted into the Applicant’s criminal history – for example, by providing a copy of the consumer report or investigative consumer report;

  • Share with the Applicant a written copy of its Fair Chance Analysis, either using the Fair Chance Factor Notice form (the Notice) published by the Commission https://www1.nyc.gov/assets/cchr/downloads/pdf/FairChance_Form23-A_distributed.pdf or the employer’s own form, which must reflect the material substance concerning the specific factors in the Commission’s Notice, including examples of evidence of good conduct or rehabilitation that would be relevant to the employer’s analysis; and
  • Allow the Applicant a reasonable period of at least five (5) business days from receipt of the inquiry and analysis to respond to the employer’s concerns, provide additional information about any of the Article-23A Factors and/or Fair Chance Factors, as applicable, and have an opportunity to address any errors in the report.

 Thereafter, if the employer decides not to hire the Applicant, the decision must be provided to the Applicant in writing within a reasonable period of time.

The foregoing Fair Chance Process also must be followed when taking an adverse employment action against a current employee.  Employers may place current employees on unpaid leave for a reasonable period while completing the Fair Chance Process, although the employee must be permitted to use any accrued paid leave otherwise available to them.

Complete Prohibition on Consideration of Non-Convictions

Unless required or permitted by applicable law, the Act prohibits employers from inquiring about, suggesting an employment limitation related to, or taking an adverse employment action based upon certain criminal history information that qualifies as a “non-conviction” under the Act.  Non-convictions include, but are not limited to, criminal actions that have been adjourned in contemplation of dismissal, unless the order is revoked and the case is restored to the calendar for further prosecution; criminal actions that are not currently pending and were concluded in favor of the individual; youthful offender adjudications, whether or not sealed or marked confidential; violations; non-criminal offenses; and sealed convictions.  

Review

When reviewing and likely revising their hiring processes and forms to comply with the Act, as amended, employers should keep in mind:

  • Before a conditional offer is made, employers are to focus on the Applicant’s qualifications and are prohibited from seeking or considering criminal history information.
    •          Job postings solicitations, application forms, advertisements and the like may not reference criminal history in a manner that may deter an individual with a criminal history from applying, including stating that a criminal history check will be conducted or that criminal history will be considered in accordance with the Act.  Postings may encourage individuals with criminal convictions to apply. 
    •          Employers may not inquire about criminal history during the interview process or disqualify an Applicant who refuses to answer an unlawful question.
    •          If an Applicant volunteers information about his or her criminal history, the interviewer may not pursue further information.  In such a circumstance, the interviewer is advised to inform the Applicant that criminal history will only be considered if a conditional offer is made and to move to a different topic.

  • Confirm that the job description for the open position is complete and accurate to avoid the inference that a change made after the conditional offer that disqualifies the Applicant was done for discriminatory reasons. 
  • Provide disclosure and secure the Applicant’s written authorization to obtain non-criminal background information from any third-party background check company.  Do not indicate that a criminal background check will be conducted at any time.  To avoid deterring individuals from applying, the Guidance recommends using the terms “consumer report” or “investigative consumer report” at this stage, as many associate the phrase “background check” with criminal history
  • Thoroughly review the Applicant’s non-criminal background information, including employment and educational history and any other information that is reasonably available and that would affect the hiring decision.  An employer may not be able to rely on any such negative information to withdraw a conditional offer following receipt of criminal history, as the Commission presumes that any non-criminal negative information known to the employer prior to making a conditional offer is not a legitimate reason to withdraw the offer after receiving criminal history.
  • Any conditional offer of employment should clearly explain that it is conditioned upon receipt of a satisfactory consumer report or investigative consumer report.
  • Before conducting a criminal background check into permissible criminal history information (like certain pending cases and felony or misdemeanor convictions), additional disclosures must be made and further written authorizations must be obtained.
  • If using a background check company to prepare consumer reports or investigative consumer reports, review the procedures for obtaining background information and providing reports in two phases and review any documents provided by the background check company to confirm they comply with the new requirements of the Act.
  • Train employees involved in the hiring process regarding the Act.

Going Forward 

The amendments to the Act are significant and the Guidance is detailed.  Employers are encouraged to review them carefully and update their hiring processes accordingly.  Among other things, employers should promptly contact their consumer reporting agency vendors to confirm whether or not background check reports can be split between non-criminal and criminal information, and to discuss how to implement this bifurcated background check process.  In addition, employers should review their hiring practices, including job postings, background check authorization forms and offer letters.

 

This Stroock publication offers general information and should not be taken or used as legal advice for specific situations, which depend on the evaluation of precise factual circumstances. Please note that Stroock does not undertake to update its publications after their publication date to reflect subsequent developments. This Stroock publication may contain attorney advertising. Prior results do not guarantee a similar outcome.

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