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October, 2021

NYC Employers: Have You Bifurcated Your Background Check Process?

By Tracey I. Levy and Kaitlin Flores

New York City employers who conduct criminal history checks of employees need to take note of recent amendments to the NYC Fair Chance Act that took effect in late July 2021.  Most significantly, except in limited circumstances where employers are legally required to conduct criminal background checks as a condition of employment, the Fair Chance Act amendments now require employers to adopt a bifurcated process based on the type of prior history being reviewed.  Education and employment history, and any other legally-permissible checks that do not reference criminal history, must be completed before extending to the candidate a conditional offer of employment.  Once cleared, the employer can then offer the candidate employment that is conditioned on a criminal history check.  Only after extending a conditional offer can the employer actually conduct a review of a candidate’s criminal history.

This bifurcated process is dictated by a provision in the amendments to the Fair Chance Act that states a conditional offer of employment may only be rescinded if 1) the results of a criminal background in accordance with the FCA as amended warrant rescission, 2) the results of a legally-permissible medical examination warrant rescission, or 3) the employer discovers other information that it could not have reasonably known previously and that information would have independently warranted rescission.  Education and employment history that could have been ascertained at an earlier point may not be used as a reason for rescinding a conditional offer of employment, and hence employers are left with this new bifurcated process.

Another significant change to the FCA was the extension of the FCA’s protections beyond criminal history of job applicants to also include 1) an applicant’s open, pending criminal arrests and charges and 2) the criminal record of current employees.  In both contexts, employers must now analyze the relevance, severity, and implications of the criminal history utilizing a series of “Fair Chance Act Factors” that are similar to the factors required to be analyzed in regard to the conviction history of job applicants under N.Y. Correction Law Article 23-A.  As a reminder, even before the recent amendments, the FCA has required employers to explain to the applicant in writing the information obtained in the background check process and the Fair Chance Act Factors on which the employer relied.  Applicants must then be provided an opportunity to respond before any employment decision can be made, and the FCA amendments extend to five days (formerly three days) the applicant’s window to respond.

Another FCA amendment was a clarification that certain types of criminal history should be considered “non-convictions” and therefore cannot be considered at all as part of the background check process.  The category of non-convictions includes convictions that result solely in a “violation,” records that are sealed, juvenile convictions, and dismissed, vacated, or acquitted charges.

Legal Enforcement Guidance on the Fair Chance Act, issued by the NYC Commission on Human Rights, further advises employers that they cannot include even neutral statements like “background checks required” or “applicants’ criminal history will be considered consistent with the requirements of the New York City Fair Chance Act” in their job ads or at any point before making a conditional offer.  Rather, the guidance states that an employer can advise an applicant that its process will include a criminal background check only in response to a specific inquiry by the applicant.  To comply with disclosure obligations under the federal Fair Credit Reporting Act, the NYC guidance encourages employers to use terms like “consumer report” or “investigative consumer report” rather than “background check” in its authorization notice.

The amendments to the FCA and the enforcement guidance from the New York City Commission on Human Rights are very much intended to discourage employers from using criminal history as a basis for employment decisions.  Most background check vendors have shifted their processes to comply with the new bifurcated process mandated by the FCA.  Those New York City employers that continue to conduct background checks that include consideration of criminal history should consult with legal counsel whether they fall within an exception to the FCA amendments and, to the extent they do not, confirm that they are adhering to the new New York City requirements.

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