New York City Mayor Bill de Blasio recently signed into law two bills that limit the information employers can rely on in making employment decisions. On May 6, 2015, Mayor Bill de Blasio signed into law a bill that prohibits employers, labor organizations, and employment agencies from discriminating against an applicant or employee based on their credit history, and on June 29, 2015, he signed into law the Fair Chance Act, the latest “ban the box” law that seeks to prevent employers from discriminating against job applicants based on a record of prior arrests or criminal convictions.

The credit history law prevents employers from inquiring or considering an employee’s or job applicant’s consumer credit history for employment purposes. The New York City Council passed the law on April 16, 2015 and the law, which amended the City’s Human Rights Law, takes effect September 3, 2015. The Fair Chance Act delays the stage of hiring at which employers may inquire about an applicant’s criminal history, and specifically prohibits employers from inquiring about an applicant’s criminal record before making a conditional offer of employment. Under the Act, an employer may only consider criminal history under a specifically-prescribed process and must provide a written report of its conclusions to the applicant. The New York City Council passed the Act on June 10, 2015, and the Act takes effect September 27, 2015. Employers should take note of both new laws to ensure that their background check policies and procedures are in full compliance with them.

Consumer Credit History

The credit history law, Intro. 261-A, makes it an unlawful discriminatory practice for an employer, labor organization, or employment agency to use an employee’s or applicant’s consumer credit history for employment purposes or to otherwise discriminate against an employee or applicant with respect to hiring, compensation, or the terms, conditions or privileges of employment based on the employee’s or applicant’s consumer credit history.1 The law defines “consumer credit history” as “an individual’s credit worthiness, credit standing, credit capacity, or payment history, as indicated by (a) a consumer credit report;2 (b) credit score; or (c) information an employer obtains directly from the individual regarding (1) details about credit accounts, including the individual’s number of credit accounts, late or missed payments, charged-off debts, items in collections, credit limit, prior credit report inquiries, or (2) bankruptcies, judgments or liens.”3

The law does not apply to employers required by state or federal law to use individual consumer credit histories for employment purposes or self-regulatory organizations as defined by the Securities Exchange Act of 1934.4 The law also provides numerous exceptions, including for people employed or applying for certain positions subject to investigation by the Department of Investigation; law enforcement; and employees who are required to be bonded under local, state, or federal law.5 Furthermore, the law excludes positions requiring security clearance under federal or state law; positions that are non-clerical and involve regular access to trade secrets, intelligence information, or national security information; positions with regular duties allowing an employee to modify digital security systems designed to prevent the unauthorized use of the employer’s or client’s networks or databases; and positions with (i) signatory authority over third party funds or assets of $10,000 or more, or (ii) authority to enter into financial agreements of $10,000 or more on behalf of the employer.6

[I]t [is] an unlawful discriminatory practice for an employer … to use an employee’s or applicant’s consumer credit history for employment purposes or to otherwise discriminate against an employee or applicant … based on [their] consumer credit history.

Since the law is an amendment to the New York City Human Rights Law, aggrieved individuals will have the same rights and remedies under the Human Rights Law. Specifically, individuals may file a complaint of discrimination with the New York City Commission on Human Rights or file an action in court for remedies such as compensatory or punitive damages, back pay, and attorneys’ fees and costs. The credit history law also directs the Commission on Human Rights to request from employers information about their use of the law’s exemptions and to report to the New York City Council, within two years of the effective date of the law, the results of their requests and any relevant feedback that arises from them. What information the Commission will request and how it will make such requests is not clear.

The Fair Chance Act

With the passage of the Fair Chance Act, New York City joins the ranks of more than 100 cities, including Baltimore, Philadelphia, San Francisco, Seattle, and Washington D.C. and 17 states, including California, Connecticut, Illinois, New Jersey, and Massachusetts to pass ban the box bills.7 In 2011, former Mayor of New York City Michael Bloomberg issued Executive Order No. 151, which banned City agencies from inquiring about prior criminal convictions until after an applicant’s first interview. The Fair Chance Act extends this concept to private employers by amending New York City Human Rights Law.8 Most significantly, the Act articulates three types of employer action that constitute unlawful discriminatory practices.

Criminal Conviction

First, the Act makes it unlawful for an employer to deny employment or to act adversely to any person because he or she has been convicted of one or more criminal offenses.9 The Act further prohibits an employer from denying employment or acting adversely to any person by reason of a finding of a lack of “good moral character” that is based on the applicant (1) having been convicted of one or more criminal offenses regardless of when such conviction occurred10 or (2) having received a final judgment of guilt for a felony more than ten years ago and a misdemeanor more than five years ago.11

Second, the Act makes it an unlawful discriminatory practice for an employer to inquire or make a statement12 about an applicant’s arrest or conviction record before the applicant has been deemed otherwise qualified and extended a conditional offer of employment (except where specifically required by statute). After inquiring about the applicant’s arrest or conviction record, but before taking any adverse employment action based on that inquiry, an employer must (1) provide a written copy of the inquiry to the applicant, (2) perform an analysis of the applicant under Article 23-A of the New York Correction Law and provide a written copy of that analysis to the applicant, and (3) allow the applicant a reasonable time period (of no less than seven business days) to respond after having received all materials. During that seven-day period, the employer must hold the position open for the applicant, but need not wait for a response after that time has passed.

The Fair Chance Act delays the stage of hiring at which employers may inquire about an applicant’s criminal history and specifically prohibits employers from inquiring about an applicant’s criminal record before making a conditional offer of employment.

With respect to the analysis required under New York Correction Law, Article 23-A establishes exceptions for employers acting adversely to applicants previously convicted of one or more criminal offenses where (1) there is a direct relationship between one or more of those offenses and the specific license or employment at issue and (2) the granting or continuation of the license would involve an unreasonable risk to property or to the safety or welfare of specific individuals or the general public. Article 23-A also provides private employers with factors for consideration in making such determinations. They include: 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 relating to the license or employment; the bearing, if any, the offense or offenses will have on the ability to perform those duties; the time that has elapsed since the occurrence of the offense or offenses; the age of the person at the time of the offense or offenses; the seriousness of the offense or offenses; any information produced by an applicant with regard to rehabilitation or good conduct; and the legitimate interest of the employer in protecting property or the welfare of others. Any employer who fails to comply with the  procedures in this part of the Act will be liable to the aggrieved applicant for damages of at least $1,000 and will be presumed, unless shown by clear and convincing evidence otherwise, to have engaged in an unlawful discriminatory practice.

Arrest Record

Lastly, the Act makes it an unlawful discriminatory practice for an employer to make an inquiry about or to act adversely upon any arrest or criminal accusation not then pending against the applicant and that followed with a favorable termination of that criminal action or proceeding.

Practice Pointers for Employers

Given New York City’s recent initiatives to restrict employers’ requests for and use of employees’ and applicants’ credit and criminal history, there are several steps employers can take to ensure their compliance with New York City law, including:

  • Review employment application forms and remove any requirements that an applicant disclose criminal history or “check the box” indicating whether he or she has prior convictions;
  • Review hiring processes and identify what stage, if any, candidates are required to disclose criminal history to ascertain that such inquiries do not occur before a conditional offer of employment is extended;
  • Train Human Resources personnel and other employees who conduct interviews on the applicable Fair Chance Act requirements, including when to ask applicants about any criminal history;
  • Review job postings for language regarding criminal convictions and ensure postings do not state that the company will not consider anyone who has been convicted of a crime;
  • Carefully review the exceptions under the credit history law to determine which positions of employment may still be subject to credit checks; and
  • For employers who may still rely on consumer credit history under New York City law, make sure to comply with various related requirements under federal and state Fair Credit Reporting Acts.

With respect to the Fair Chance Act, employers may also consider conducting compliance interviews only after a conditional job offer has been extended. While employers can still conduct interviews prior to the extension of a conditional job offer in light of the Fair Chance Act, the Act would preclude any inquiries about criminal history at that stage. In view of this, it may be more productive if the compliance interview took place after a conditional job offer has been extended.

Lastly, employers that operate multistate businesses may also consider the following:

  • Determine if any state and city credit history or ban-the-box laws apply beyond New York City and/ or State;
  • Consider the cost of continuously monitoring each state and city laws and the cost of compliance; and
  • Consider revising form employment applications nation-wide.