On July 15, 2021, the New York City Commission on Human Rights (the "NYCCHR" or "Commission") issued its highly anticipated updated Legal Enforcement Guidance on the Fair Chance Act and Employment Discrimination. The 28-page Guidance clarifies and interprets key amendments to the New York City Fair Chance Act (FCA), which take effect on July 29, 2021.¹ These amendments implement, among other things, (1) significant changes to the process by which an employer hiring or employing workers in New York City may take into account the criminal history of an applicant for employment; (2) a new requirement of an individualized assessment process for consideration of pending criminal arrests and charges, and for criminal convictions of current employees, and (3) a strict prohibition on the consideration of various types of "non-convictions" in employment decisions.

All employers considering the criminal history of employment applicants and current employees should be aware of certain key points clarified in the Guidance.

1. Non-criminal History Background Checks Must Be Completed and Cleared Before Criminal History May Be Considered.

Since it initially took effect in October 2015, the FCA has prohibited any inquiry into an applicant's criminal history, including job postings and online applications stating that applicants will be subject to a background check, until after a conditional offer of employment has been made.² One provision of the amendments taking effect on July 29 affects the sequence of review of pre-employment screening information, and potentially presents the greatest compliance challenge for employers and contractors,³ particularly those implementing a national background check process, when considering the relevance of an applicant's criminal history. The FCA, as amended, now explicitly states that a conditional offer of employment may only be rescinded based on:

1. The results of a criminal background check conducted in accordance with the requirements of the FCA;
2. The results of a medical examination when permitted by the Americans with Disabilities Act, as amended; or
3. 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 new information, it would not have made the offer regardless of the results of the criminal background check.⁴

The Guidance makes clear that these narrow grounds for rescission of a conditional offer require employers that review an applicant's criminal history before making a final offer of employment to implement a two-tiered screening process, wherein 1) all non-criminal pre-employment screenings, such as a review of the applicant's employment and educational history, must be completed and passed by the applicant before a conditional offer of employment is made; and thereafter 2) employers may, after a conditional offer of employment, request and review the applicant's criminal history, which may only be considered in compliance with the individualized assessment, notice and consideration requirements of the FCA.

The Guidance addresses certain difficulties faced by employers attempting to comply with the requirement of a two-tiered background check process. The Commission expects employers to work with their consumer reporting agencies (CRAs) to obtain separate non-criminal and criminal background check reports. However, employers whose CRAs are unable to produce two separate reports, "or who otherwise face a substantial impediment to conducting two separate background checks," must use a "system to internally segregate" the criminal record from the non-criminal history to ensure that the decision maker cannot access the criminal history until after the conditional job offer is extended.

Another difficulty inherent in the two-tiered approach is the need for an authorization from the applicant to run an employment-related background check (as required by the Fair Credit Reporting Act [FCRA]) that will review non-criminal history prior to a conditional offer. How can this be done without violating the FCA's prohibition against stating there will be a criminal background check prior to a conditional offer? The Guidance addresses this issue and instructs employers to omit any mention of a criminal background check when seeking an applicant's authorization for a background check prior to a conditional offer. In doing so, the Commission encourages employers to avoid using the term "background check" in an authorization, which is seen as dissuading applicants with criminal histories from pursuing employment, and to instead use terms such as "consumer report" or "investigative consumer report" in an authorization notice used prior to a conditional offer.⁵

Additionally, the Guidance addresses how employers should handle review of an applicant's driving or motor vehicle record. Because driving records may contain both non-criminal and criminal information, the Guidance instructs employers not to review an applicant's driving record until after a conditional offer has been extended. Non-criminal information in the driving report may be treated as information the employer could not have reasonably know before the conditional offer.

The Guidance does not address other basic day-to-day burdens presented by a two-tiered background check review process, such as the substantial time delay that will result from a bifurcated review. For example, verification of an applicant's prior employment is often time-consuming and may be the last information that can be verified, while a criminal history report can be run quickly. Delays caused by the two-tiered process may cause employers to lose candidates who otherwise would be hired and impose burdens on current staff while the extended review process is underway. Additionally, an applicant may not authorize contact with their current employer to verify employment until receiving a conditional offer, as the current employer may be unaware they are considering alternative employment. The Guidance leaves these practical issues unaddressed and subject to future interpretation.

2. Employers Must Apply the FCA Factors When Considering an Applicant's or Current Employee's Pending Criminal Charges or a Current Employee's Convictions During Employment.

Two of the most significant changes taking effect July 29 are the required application of the FCA review, notice and consideration process both to an employer's consideration of open, pending criminal arrests and charges of applicants, and to consideration of the criminal convictions of current employees.⁶ The Guidance clarifies the "NYC Fair Chance Factors" to be applied when considering pending charges against a job applicant and pending charges or convictions against a current employee, and the Commission has posted a modified FCA Notice to account for these additional scenarios.⁷ The NYC Fair Chance Factors to be applied when considering pending criminal charges of applicants or employees, or convictions of current employees, which are a modified version of the N.Y. Correction Law Article 23-A factors, are as follows:

1. The policy of New York City to overcome stigma toward and unnecessary exclusion from employment of persons with "criminal justice involvement";
2. The specific duties and responsibilities necessarily related to the employment held [or applied for] 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, which shall serve as a mitigating factor (emphasis added);⁸
5. The seriousness of the 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, regarding their rehabilitation or good conduct, including but not limited to history of positive performance and conduct on the job or in the community.

An employer can only deny employment based on an applicant's or employee's conviction history or pending case if, after conducting an analysis of the relevant factors, it 1) "determines there is a direct relationship between the applicant's conviction history or pending case and the job"; or 2) shows that employing the applicant "would involve an unreasonable risk to property or to the safety or welfare of specific individuals or the general public."⁹

The Guidance explains that with respect to an applicant's criminal history preceding employment, other than pending arrests or charges, the full Article 23-A factors must still be applied. The seven Fair Chance Factors listed above are to be applied only when considering pending arrests, or charges or convictions occurring during employment. It further notes that if an applicant has both a conviction history and a pending charge, the employer must separately analyze each according to the relevant factors required by the law.

3. "Non-convictions" May Not Be Considered in the Hiring Process or During Employment.

The Guidance provides much needed clarification regarding the new prohibitions on considering, or even inquiring about, "non-convictions," which are characterized as "completely protected." "Non-convictions" are a variety of matters that are essentially either criminal accusations that have been resolved in the applicant's or employee's favor, are convictions for non-criminal violations, or otherwise may never be considered as a basis for adverse action. "Non-convictions" that may not be considered include, but are not limited to:

• 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; or loitering for the purpose of engaging in a prostitution offense; or
• Cases that resulted in a conviction for a non-criminal offense under the laws of another state.

The restrictions against consideration of non-convictions do not prohibit inquiries regarding or consideration of an applicant's driving or motor vehicle record.¹⁰

4. The Time to Respond to the Fair Chance Act Notice is Increased from 3 to 5 Business Days.

The FCA process requires employers to 1) conduct an individualized assessment of the candidate's or employee's criminal history applying the Article 23-A or Fair Chance Factors, as applicable, 2) provide the applicant or employee with the written analysis and any other information considered in the assessment, and 3) provide the individual with an opportunity to respond and provide any other information they wish the employer to consider before making a final employment decision.¹¹ It is important for employers to note that the amendments expand the time for an individual to respond to a Fair Chance Act Notice from three business days to five business days. The Guidance explains that the five business days begin running what an applicant receives both the inquiry and notice and suggests that employers confirm receipt.

The lengthy Guidance also covers several additional topics such as when a "conditional offer" is sufficient to comply with the law, handling misrepresentations by applicants, and handling errors in the background check report.

Implications for Employers

The amendments to the FCA taking effect later this month require prompt consideration by employers considering the criminal history of applicants, contractors and current employees in New York City. Employers should:

• Confer with their CRAs about whether background check reports can be bifurcated between non-criminal and criminal information, and how a two-tiered review process can be implemented.
• Review all documents used in the hiring and screening process, including online job postings, job applications, offer letters, background check disclosure and authorization documents, FCA Notices, and pre-adverse and adverse action notices for compliance with the FCA, as amended.
• Review their background check program policies, procedures and standard operating procedures for compliance with the amendments to the FCA.
• Train all personnel involved in the hiring process for New York City, including recruiters, managers, supervisors and human resources personnel on the requirements of the amended FCA.
• Coordinate the review of pre-employment documents used in the hiring process with policies and procedures governing the consideration of the criminal history of contractors and current employees to ensure they are both consistent and comply with the amended FCA.

Employers should consult employment law counsel versed in the FCA for assistance with these action items to ensure their background check processes comply with the FCA as amended.

Finally, the amendments to the FCA are taking place against the constantly shifting landscape of other new or amended "ban the box" laws,¹² FCRA class actions,¹³ and discrimination claims by the EEOC and private plaintiff's bar.¹⁴ Employers, including contractors and government contractors, should continue to monitor new and impending developments in this area of the law.

Posted: July 27, 2021

¹ See Stephen A. Fuchs, New York City Expands Scope of Its Ban-the-Box Law, Littler Insight (Dec. 16, 2020).

² N.Y.A.C. §8-107(11-a), as amended.

³ As noted in the Guidance, the New York City Human Rights Law was amended in January 2020 to apply its protections to interns, freelancers and independent contractors. N.Y.C. Admin. Code § 8-107(23).

⁴ N.Y.A.C. Admin. Code 8-102, as amended, definition of "Conditional Offer of Employment."

⁵ The Commission notes that the FCRA does not require employers to disclose the specific scope of a consumer report, or to specify that criminal information will be reviewed in the authorization notice.

⁶ The individualized assessment Requirements of New York Correction Law, Article 23-A have long applied to current employees. N.Y. Corr. L. §751.

⁷ The Fair Chance Act Notice was revised effective June 23, 2021, and is available here: https://www1.nyc.gov/assets/cchr/downloads/pdf/FairChance_Form23-A_distributed.pdf.

⁸ This factor has been modified from the existing Article 23-A factor applied to the conviction history of applicants requiring consideration of the age of the applicant at the time of the criminal offense, and eliminates the criteria of how long ago the criminal offense occurred, as that criteria is inapplicable to open, pending charges, or to convictions occurring during employment. The elimination of the time that has passed since the criminal offense as a factor is why there are fewer Fair Chance Factors than under Article 23-A.

⁹ N.Y. Correct. L. §752.

¹⁰ For purposes of the Amendments to FCA, "traffic violations" are excluded from the definition of "violations" in accordance with New York Penal Law §10.00.

¹¹ N.Y.C. Admin Code §8-107(11-a).

¹² See, e.g., Rod M. Fliegel and Garrick Y. Chan, The Dust Hasn't Settled Yet: Employers Must Continue to Be Thoughtful About Criminal Record Screening Policies, Littler Insight (July 6, 2021); Kwabena A. Appenteng and Andrew Gray, Illinois Imposes New Criminal History Check Requirements on Employers, Littler ASAP (Mar. 26, 2021).

¹³ See, e.g. Rod M. Fliegel and Alison S. Hightower, High Alert for California Employers and Employers Nationwide for the Second Wave of FCRA Class Actions, Littler Insight (Oct. 19, 2017).

¹⁴ See Fliegel and Chan, The Dust Hasn't Settled Yet, supra.