Since the New York City Fair Chance Act (FCA) went into effect in 2017, employers have been prohibited from referring to criminal history in job postings, employment applications, and interviews.
"The Fair Chance Act makes it illegal for most employers in New York City to ask about the criminal record of job applicants before making a job offer. This means job ads, applications, and interview questions cannot include inquiries into an applicant's criminal record."
So here's an important question: why is this still happening every day?
The terrible truth is that in most cases, employers are getting no assistance from their screening providers with initiating the criminal history inquiry process in a compliant manner.
What's worse, many background check providers are facilitating violations of the law by fulfilling orders without first obtaining confirmation that the applicant received a conditional offer of employment. Not to mention many are sending out adverse action letters on their clients' behalf without insuring proper execution of the fair chance process.
Unfortunately, many background screening providers haven't felt the need to go the "extra" mile, so to speak, and assist their clients with keeping their background check policies and procedures in compliance with employment law. These providers likely figured they didn't need to do these things, because the buck stopped with their client, not them.
But an opinion issued by the New York State Court of Appeals (the state's highest court) in May 2017 held that even an out-of-state non-employer can be liable for aiding and abetting an employer's impermissible discrimination in violation of NY employment law. (Griffin v. Sirva, Inc.)
In particular, the court determined that liability as an aider and abettor extends to any persons, citing its decision over 40 years ago in a case extending such liability to a newspaper that merely posted an employer's facially discriminatory job advertisements.
After the Griffin case, any background check company that still isn't working with its clients to assure compliance with local EEO law is just not doing their job.
If your company has at least four employees in the city of New York (including all five boroughs), you should carefully think about and answer the following questions:
- Has your background check provider told you it's unlawful to include statements such as "background check required" or "must pass background check" in your job postings and employment applications?
- Or that it's illegal to include consent to a background check in an employment application?
- Or that it's illegal to seek any criminal history information in the job application, even if you include a disclaimer that NYC applicants should not answer criminal history questions?
- Or that you can't lawfully initiate a background check order in your provider's system (or even send a link to your applicant to authorize the check) unless you have already made that applicant a conditional offer of employment and certified your EEO law compliance to your provider?
- Or that you or your provider must send a copy of Article 23-A to the applicant at the time they authorize the background check and again when a completed report includes a criminal record, regardless of whether or not you deny employment?
- And does your provider send out adverse action letters on your behalf that meet the requirements of the fair chance process, ensuring you hold the position open for three days after the candidate's receipt of the pre-adverse action notification and enclosing with that letter yet another copy of Article 23-A and the completed fair chance form/analysis performed to individually assess the candidate's criminal history?
If your answer to any of the above questions is NO (and you aren't on the short list of exempt employers who are required by law to conduct background screens), your provider is doing you a huge disservice. They are doing the bare minimum—sitting back and watching you violate city, state, and federal law while also putting themselves at risk of violating New York law by aiding and abetting criminal history discrimination.
What does that mean for you? Let's look at the position some large and small city employers have found themselves in.
In September 2018, the Barclays Center settled a proposed class action in New York federal court—one of the first class action lawsuits brought under the Fair Chance Act.
Job applicants alleged that the Brooklyn-based sports center and its food and beverage partner, Levy Restaurants, used discriminatory policies and practices to deny positions to applicants with criminal history. The settlement offered various relief to proposed class members, including hiring denied applicants, paying awards of $2350 per applicant (for those who no longer sought employment), and providing $5,000 in funding for a non-profit providing assistance to people with criminal histories re-entering the workforce. The Barclays Center and Levy also agreed to pay the plaintiffs $165,000 in attorney's fees, plus the costs of administering the settlement.
In addition to private lawsuits, you also have agency enforcement action to worry about.
The New York City Commission on Human Rights has the authority to assess civil fines and obtain cash settlements for individuals aggrieved by violations of the NYC Human Rights Law, including the Fair Chance Act.
With regard to NYC ban-the-box, the penalty for violations is up to $150,000 per violation and $250,000 per willful violation. And for employers and background screening companies alike, even strong limitation of liability and indemnification clauses in contracts can't protect against an EEOC charge or an enforcement action from a state or city agency.
Below are just a few of the numerous NYC businesses that have recently been subjected to enforcement action:
- In January 2019, com paid $7500 in civil penalties and agreed to train its NYC workforce after impermissibly publishing job ads stating that a criminal background check would be required. This was determined to be a per se violation of the FCA, even though the Law Enforcement Bureau's investigation showed that the company lawfully waited to initiate the background check order until after extending a conditional offer of employment and actually hired all applicants with criminal records.
- In December 2018, cybersecurity firm Varonis Systems, Inc., settled a FCA criminal conviction history discrimination case for $65,000 and was ordered to update its policies and train its New York City-based employees on the Fair Chance Act.
- That same month, Triangle Services Inc. agreed to pay $20,000 in damages and $10,000 in civil penalties for violations of the Fair Chance Act, including a per se violation contained in its employment application.
- In 2017, Yelp, Inc. paid $30,000 in damages to settle a complaint for Fair Chance Act violation. As part of the conciliation agreement, the San Francisco-based business was also required to revise and update its internal policies regarding applicants with criminal conviction records and formally commit to "ban-the-box" at all of its offices nationwide.
Don't be the next company on this list! It's time to weigh the risks of continuing to use a provider who's giving you biased background checks. Good Egg can help.
We live and breathe compliance. When you choose Good Egg, you'll have a dedicated account manager who'll quickly understand your company's specific hiring challenges and goals along with the compliance issues that accompany them. Everything we do is proactive—we alert you when laws and regulations change and then we provide solutions that will keep your organization compliant.
The best way to experience our incredible platform and excellent customer service is by setting up a demo. Let's chat and keep your company out of legal hot water!
