New York City Amends Fair Chance Act, Further Limiting NYC Employers’ Ability to Consider Criminal History of Applicants and Employees

In addition to navigating compliance with the technical requirements of the federal and New York State Fair Credit Reporting Acts, New York City employers have long wrestled with state and city laws regulating the extent to which they can inquire about and consider the criminal history of their employees and job applicants. New York City recently enacted amendments to the NYC Fair Chance Act that will further restrict employers’ ability to consider the criminal history of applicants and employees when making employment decisions.  This alert summarizes these new requirements, which will go into effect this summer.

Existing Requirements

The NYC Fair Chance Act prohibits employers from asking applicants about their criminal history or running a criminal background check until after the employer extends a conditional offer of employment (the “Conditional Offer Requirement”). In addition, the Fair Chance Act prohibits employers from denying employment due to an applicant’s conviction history until the employer has completed a specific “Fair Chance Process”. The Fair Chance Process has three steps: The employer must (1) provide the applicant with the information about his or her criminal history that the employer is considering; (2) perform an analysis of the applicant’s criminal history using eight statutorily enumerated factors and provide the analysis and rationale for the adverse decision to the applicant; and (3) allow the applicant at least 3 business days to respond to the employer’s concerns while the employer holds the position open.

New Requirements

The amendments to the Fair Chance Act expand the existing requirements in a number of ways. Following is a summary of the expansions to the law that will most significantly impact NYC employers: 

Application of Conditional Offer Requirement to Current Employees

Until now, the extent to which the Conditional Offer Requirement applied to current employees has been unclear. However, under the amended law, if a current employee is applying for a promotion or transfer, the employer cannot ask the current employee about their criminal history or run a criminal background check until a conditional offer of promotion or transfer is made.  Notably, neither the current nor the amended law appear to restrict an employer’s ability to run a criminal background check on current employees who are not applying for transfer or promotion, at any time, assuming the authorization and consent requirements under state and federal law are met.

The amendments also provide a more fulsome definition of “conditional offer of employment”: A conditional offer of employment is defined as an offer of employment, promotion, or transfer which may only be revoked based on one of the following: (1) the results of a criminal background check conducted in accordance with the Fair Chance Act, (2) the results of a medical exam as permitted by the U.S. Americans with Disabilities Act, or (3) other information the employer could not have reasonably known before making the conditional offer if the employer can show that, based on the information, it would not have made the offer regardless of the results of the criminal background check.

As a result, employers should continue not to ask about criminal history or request a background check until after a conditional offer of employment has been made.

Expansion of Fair Chance Process to Current Employees

Currently, employers are only required to complete the Fair Chance Process for applicants; while the regulations have contemplated that it also applies to current employees in certain circumstances, the Fair Chance Act did not explicitly require that the Fair Chance Process be applied when evaluating the criminal history of current employees. However, under the amended Fair Chance Act, it is clear that employers are required to complete the Fair Chance Process before taking any adverse employment action against a current employee due to their criminal history. Unlike the Conditional Offer Requirement, the directive to complete the Fair Chance Process applies to all current employees, regardless of whether they have applied for promotion or transfer, if the employer wants to take adverse action after learning about the criminal history of an employee.

The practical implications of applying the Fair Chance Process to current employees is amplified by the expansion of incidents which would trigger the Fair Chance Process. Under the current law, employers are only prohibited from taking adverse action against an employee or applicant due to convictions that preceded their employment or application for employment; they are not prohibited from taking adverse action based on (1) convictions that occur during employment or (2) pending arrests that preceded employment or originate during employment. However, under the amended law, employers are required to follow the Fair Chance Process prior to taking any adverse action against an employee because the employee was convicted of a criminal offense during employment or arrested during employment. Employers must also follow the Fair Chance Process prior to taking any adverse action against an applicant because they have a pending arrest when they apply for employment.

Additional Types of Criminal History Employers Cannot Inquire About

The Fair Chance Act already prohibits employers from asking about (or making employment decisions based on) non-pending arrests that were (1) resolved in favor of the applicant or employee; (2) adjourned in contemplation of dismissal; (3) resolved by a youthful offender adjudication; or (4) sealed.

The amendments add two more types of convictions that employers may neither inquire about nor consider when making employment decisions: (1) convictions for “violations” under NYS law (e.g., offenses where the maximum sentence is 15 days imprisonment) and (2) convictions for non-criminal offenses as defined by the law of another state.  Employers cannot inquire into these two categories even if the conviction has not been sealed. 

Modifications to the Fair Chance Process

The new amendments also modify the steps of the Fair Chance Process. Currently, employers must (1) provide the applicant with all information about the applicant’s criminal history that the employer is considering, (2) perform an analysis of their criminal history using the eight factors listed in Article 23-A of the NYS Correction Law (the “Fair Chance Factors”, discussed below) and provide that analysis and reasons for the adverse action to the applicant, and (3) allow the applicant at least 3 business days to respond to the employer’s concerns while holding the position open.

Under the amended Fair Chance Act, employers must also affirmatively request information from the applicant or employee relating to the Fair Chance Factors before the employer performs the analysis of those factors. In addition, the employer must provide the applicant or employee with at least 5 business days (an increase from the 3 business days previously required) to respond to the employer’s concerns once the analysis is complete. In the case of a current employee, the amended Fair Chance Act suggests that the employer may place the employee on unpaid leave for a reasonable time while analyzing the Fair Chance Factors and engaging in the Fair Chance Process.

Alternate Fair Chance Factors

Currently, when employers engage in the Fair Chance Process, they must evaluate criminal history based on the eight factors in Article 23-A of the New York Correction Law. These factors include the age of the individual at the time the criminal offense occurred, the seriousness of the offense, and the relationship between the crime and the role the individual is applying for, among other considerations. Employers must continue to use the factors listed in Article 23-A when analyzing convictions that preceded employment and non-pending arrests.

However, the new amendments create an alternative set of similar factors that employers must consider when analyzing (1) convictions that occurred during employment, (2) arrests pending when an individual applies for employment, and (3) arrests that occurred during employment:

1. The policy of NYC to overcome stigma toward and unnecessary exclusion of persons with criminal justice involvement in employment;

2.  The specific duties and responsibilities necessarily related to the employment held by the person;

3. 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;

4. 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; 

5. The seriousness of such offense or offenses;

6. The legitimate interest of the employer in protecting property and the safety and welfare of specific individuals or the general public; and

7. Any additional information produced by the applicant or employee, or produced on their behalf, in regards to their rehabilitation or good conduct, including history of positive performance and conduct on the job or in the community, or any other evidence of good conduct.

In addition, an employer is only permitted to take adverse action due to a conviction that occurred during employment or a pending arrest if, after considering these factors, the employer determines that either (1) there is a direct relationship between the conviction or alleged wrongdoing and the employment sought or held by the person or (2) the granting or continuation of employment would involve an unreasonable risk to property or to the safety or welfare of specific individuals or the general public.

Intentional Misrepresentations

The new amendments clarify an employer’s options when an applicant or employee intentionally misrepresents their criminal history: An employer is permitted to take adverse action against an applicant or employee who is found to have made intentional misrepresentations regarding their arrest or conviction history as long as the employer provides the applicant or employee with a copy of the documents evidencing that they intentionally misrepresented their criminal history. The employer must also give the employee or applicant a reasonable amount of time to respond prior to taking adverse action.   The amended Fair Chance Act does not specify what constitutes a “reasonable time”.  Notably, the amended Fair Chance Act is clear that employers cannot take adverse action if the information that was not disclosed was information that an individual may not be required to divulge as a matter of law.  Therefore, employers should exercise caution and consult with counsel before relying on this provision. 

The new amendments to the NYC Fair Chance Act take effect on July 29, 2021. Employers should review their policies and procedures regarding the consideration of criminal history in employment decisions for compliance with the new amendments. If you have any questions regarding compliance with the new requirements, or require assistance amending your policies and procedures, please contact Amanda M. Baker at abaker@fglawllc.com, or any attorney at the Firm.

DISCLAIMER: This alert is provided to clients and friends of the firm for informational purposes only and the distribution of this alert is not intended to, and does not, establish an attorney-client relationship. This alert also does not provide or offer legal advice or opinions on any specific factual situations or matters. This communication may be considered Attorney Advertising. Prior results do not guarantee a similar outcome.