On August 11, 2014, New Jersey Governor Chris Christie signed into law the Opportunity to Compete Act (Act) which prohibits private and public employers that employ 15 or more employees from inquiring about an applicant’s criminal history until after the employer has conducted a first interview.

The Act also prohibits employers from posting job advertisements stating that the employer will not consider applicants who have been arrested or convicted of a crime, unless the advertisement seeks applicants for one of the exempt positions set forth in the Act. Exempt positions include employment positions where a criminal history record background check is required by law, rule or regulation, or where an arrest or conviction by the person for one or more crimes or offenses would or may preclude the person from holding such employment. The Act also provides an exception to the rule that criminal background inquiries may not be conducted until after the initial interview -- when an applicant voluntarily discloses any information regarding the applicant’s criminal record during the initial employment application process (i.e., before the first interview), then the employer may inquire further.

The Act was passed by the Legislature and signed by the Governor after considerable compromise. Earlier bills imposed greater obligations on employers and would have provided broader remedies for aggrieved employees. For example, earlier versions of the bill provided a step-by-step process and factors for considering criminal histories, as well as notification forms and procedures an employer would have to follow if it took adverse employment action. This language is not included in the Act as enacted.. The Act specifically preempts any other any ordinance, resolution, law, rule or regulation adopted by the governing body of a county or municipality regarding criminal histories in the employment context. This preemption will impact Newark ordinance no. 12-1630, which prohibits background checks before conditional offers of employment, requires employers to consider specific factors, and offers candidates an opportunity to respond.

It is important to note that, although the Act limits when an employer can request criminal background information, it does not preclude an employer from refusing to hire an applicant for employment based upon the applicant’s criminal record, unless the criminal record or relevant portion thereof has been expunged or erased through executive pardon. Employers should be aware, however, that the EEOC takes the position that use of criminal arrest records to refuse to hire an applicant may constitute discrimination due to the disproportionate percentage of arrests and convictions among members of some protected classifications (in particular, African American and Hispanic males). See EEOC Enforcement Guidelines - Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964, available athttp://www.eeoc.gov/laws/guidance/arrest_conviction.cfm. The EEOC’s position is controversial, and is being challenged in a number of courts around the country. Employers who wish to rely on criminal record information to make hiring decisions should be cautious and consult counsel about actions that may be taken to minimize risk of lawsuits and enforcement actions by the EEOC.

The Opportunity to Compete Act becomes effective on March 1, 2015. Any employer who violates this act will be liable for a civil penalty in an amount not to exceed $1,000 for the first violation, $5,000 for the second violation, and $10,000 for each subsequent violation. Notably, the Act does not establish a private cause of action by an aggrieved person against an employer. New Jersey now joins Massachusetts, Hawaii, Minnesota and Rhode Island as states that have statewide ban the box legislation that covers private employers. Many other cities and counties have enacted similar legislation.