Back in 2015, New York City joined the “Ban the Box” bandwagon and passed a law that delays when criminal background checks can be run on most Big Apple job applicants. Specifically, the Fair Chance Act (FCA) prohibits NYC employers from inquiring about a job applicant’s criminal conviction history until after a conditional offer of employment is extended and requires that employers undertake a multi-step process if they want to rescind a job offer based on the results of a criminal history inquiry.

Against this backdrop, on January 10, 2021, the New York City Council passed important amendments to the FCA, which amendments went into effect July 29, 2021. As detailed below, the amendments significantly expand the scope of the FCA and impose additional affirmative obligations on New York City employers.

Mandatory two-step background check process

Arguably the most important aspect of the recent FCA amendment is that it now requires NYC employers to utilize a two-step background check process. Specifically, the amended law requires that an employer first receive and evaluate an applicant’s non-criminal information (e.g., educational background and employment references). This must occur prior to the employer extending a conditional offer of employment. Then, following a determination by the employer that the non-criminal information poses no issues to hiring the candidate – and only after this first step has taken place – may a Big Apple business extend a conditional job offer and request, receive, and evaluate the applicant’s criminal history. In other words, employers must now complete the non-criminal portion of their background check process – and confirm that it poses no impediments to hiring – before extending a conditional job offer and launching the criminal history inquiry.

The New York City Commission on Human Rights’ updated guidance on this point emphasizes that employers should omit mention of a criminal background check when seeking an applicant’s authorization for an employment-related background check prior to a conditional offer (presumably to help differentiate between the two steps). The guidance also encourages employers to use terms such as “consumer report” or “investigative consumer report” rather than “background check” in an authorization notice used prior to a conditional offer.

That being said, employers may still consider non-criminal information after a conditional offer is extended, so long as the employer can show that (i) it could not have reasonably known the information before the conditional offer and (ii) regardless of the results of the criminal background check, the employer would not have made the offer if it had known the information before the offer was extended.

Expanded scope of the FCA

In addition to requiring a two-step background check process, the individuals and subject matter protected by the FCA have been expanded in the following ways:

  • Expansion to contractors and freelancers – In alignment with recent changes to the New York City Human Rights Law, the FCA now covers independent contractors and freelancers.
  • Extension to pending arrests and other criminal accusations – Previously, the FCA applied only to conviction history. Now, NYC employers must engage in the FCA process when seeking to take an adverse action based on, in addition to convictions, a pending arrest, previous arrest, or other criminal accusation. This includes with respect to applicants, as well as when seeking to rescind a promotion or transfer or terminate the employment of a current employee based upon pending criminal charges or convictions. A non-exhaustive list of examples of non-convictions can be found in the New York City Commission on Human Rights’ recently-updated FCA guidance.

Updates to the fair chance process

Further, the amended FCA has introduced several important changes to the so-called “fair chance process” – i.e. the process in which an employer must engage with an applicant when it is considering revoking a conditional offer of employment based upon information contained in a background check report. This includes the following changes:

  • Affirmative obligation to solicit fair chance factor information – The prior iteration of the FCA required employers to solicit evidence of rehabilitation and good conduct as part of the “fair chance process.” Now, employers must affirmatively seek any information relevant to the applicable fair chance factors.
  • Revised fair chance factors – The amended FCA includes a new list of relevant factors to be considered during the “fair chance process,” including the City’s policy to overcome stigma toward and unnecessary exclusion of persons with criminal justice involvement in employment.
  • Enlargement of time for applicant to respond to pre-adverse action notice – Under the prior FCA, employers were required to hold a position open for a “reasonable time” (i.e. no less than three business days after providing the applicant with a written assessment of the fair chance factors). Now, under the revised FCA, employers must wait five business days. This aligns the FCA more closely with the federal Fair Credit Reporting Act in terms of timing considerations.
  • Use of unpaid leave during employee-related fair chance process – Given that the FCA now pertains to both applicants and employees, employers may – but are not required to – place employees on unpaid leave for a “reasonable” amount of time when conducting the “fair chance process.”
  • Acting on international misrepresentations – The FCA does not protect applicants or employees who make intentional misrepresentations about their conviction history or pending cases. However, it now requires that employers provide a copy of the documents that formed the basis of the determination that an intentional misrepresentation was made and provide a “reasonable” time to respond. If the individual demonstrates that the information was not misrepresented or that a misrepresentation was unintentional, then an employer must engage in the “fair chance process” before taking an adverse action.

Recommended next steps for employers

New York City employers and their human resources personnel should immediately familiarize themselves with these new changes, as well as the NYCCHR’s updated guidance. In addition, they should review their application, offer, and onboarding processes – as well as any template pre-adverse or adverse action notices – and make any necessary changes to ensure compliance with the amended FCA. Further, they should speak with their background check vendors to make sure that they are complying with the law’s new requirements, including but not limited to the two-step background check process for non-criminal and criminal related inquiries.