Illinois, New York City, and Philadelphia Revise Background Screening Laws

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This blog was originally published in Forbes on December 30, 2020.

Lawmakers in three jurisdictions recently passed legislation that impacts employers’ screening programs.  Laws restricting consideration of an individual’s criminal history have advanced in Illinois, New York City, and Philadelphia; additionally, Philadelphia’s law concerning the use of credit history in employment decisions was recently amended.

Illinois

Legislation recently passed by the Illinois Legislature limits an employer’s use of criminal records as the basis for employment decisions.  Senate Bill 1480 requires that employers either demonstrate a substantial relationship between the candidate’s criminal history and the employment held or sought or unreasonable risk to “property or to the safety or welfare of specific individuals or the general public” attributed to the candidate’s employment.

To assess a “substantial relationship,” the employer should consider whether the candidate’s job role “offers the opportunity for the same or a similar offense to occur and whether the circumstances leading to the conduct for which the person was convicted will recur in the employment position.”

The bill outlines six factors that employers must consider:

  • The length of time since the conviction;
  • The number of convictions that appear on the conviction record;
  • The nature and severity of the conviction and its relationship to the safety and security of others;
  • The facts or circumstances surrounding the conviction;
  • The age of the employee at the time of the conviction; and
  • Evidence of rehabilitation efforts.

Suppose an employer determines that the conviction record may disqualify the candidate from hire. In that case, the employer must provide written notice to the candidate that identifies the relevant conviction records and the employer’s reasoning for potentially disqualifying the candidate.  The candidate must also be provided with a copy of their criminal conviction report and must be informed the candidate has at least five business days to respond to the employer’s notice and provide evidence to mitigate the employer’s perceived risk in hiring the candidate.

If, based on the candidate’s conviction record, an employer makes a final decision to disqualify the candidate, the employer must notify the candidate in writing of the “disqualifying conviction or convictions that are the basis for the final decision and the employer’s reasoning for the disqualification.” The employer must also identify any “existing procedure” available to the candidate to challenge the employer’s decision and the right to file a complaint with the Illinois Department of Human Rights, created by this Act.

Senate Bill 1480 is expected to be presented to the Governor in February.  If signed by the Governor, the law will likely become effective by June 2021.

New York City

New York City’s Fair Chance Act (“FCA”) has been in place since 2015 and prohibits most employers from inquiring into a candidate’s criminal history until after a conditional offer of employment has been extended.  The New York City Council recently revised the Act to identify the specific circumstances upon which an employer can withdraw a conditional employment offer.  An employer can only revoke an offer based on one of three factors:

  • The results of a criminal background check after the FCA process has been followed,
  • The results of a medical exam permitted by the American with Disabilities Act, or
  • “Other information [that] the employer could not have reasonably known before making the conditional offer if the employer can show as an affirmative defense that, based on the information, it would not have made the offer regardless of the results of the criminal background check.”

The Act now requires that an employer who revokes a conditional offer demonstrates that it would not have made the offer regardless of the candidate’s criminal history.  As a result, employers may consider implementing a two-step ordering process applicable to candidates whose job location is New York City.  The first step would include a screening package consisting of all non-criminal components.  The second step would consist of a screening package that consists exclusively of criminal checks.  Employers would only initiate the second step after the candidate has affirmatively met their hiring criteria based on the first step’s results.

The revised Fair Chance Act also provides numerous additional protections for criminal ex-offenders.

  • Under the amended law, an employer must request information from the candidate for each criminal assessment factor established by New York Corrections Law, Article 23-A.
  • Employers must provide five business days for candidates to respond to the employer’s Article 23-A assessment under the FCA before taking adverse action.
  • Non-criminal offenses and violations cannot be considered as part of the employment process.
  • Employers must now conduct individualized assessments of a candidate or employee’s arrest or pending criminal charges; automatic bars to employment are prohibited.
  • While employed, individuals convicted of a criminal charge are now afforded the review and assessment process prescribed by the city’s Fair Chance Act.
  • Inquiries into and assessing “non-pending” arrests, criminal affairs that are under consideration for dismissal, adjudications disposed as a youthful offender, and sealed offenses are barred.

New York City’s revised Fair Chance Act will become effective on July 29, 2021.

Philadelphia

Philadelphia’s Fair Criminal Records Screening Standards (FCRSS) became effective in 2016.  The ordinance bans all employers in the city from inquiring into a candidate’s criminal history and requesting a criminal background check until a conditional offer of employment is made.

Employers cannot reject a candidate based on a criminal record unless the conviction “bears such relationship to the employment sought that the employer may reasonably conclude that the applicant would present an unacceptable risk to the operation of the business or co-workers or to customers,” and excluding the candidate from employment is “compelled by business necessity.”  If a criminal background check reveals a conviction, the employer must consider:

  • The nature of the offense;
  • The time that has passed since the offense occurred;
  • Its connection to the job that the candidate applied for; and
  • The candidate’s job history, character references, and any evidence of rehabilitation.

If an employer rescinds a conditional offer based in whole or in part on the candidate’s criminal history, the employer must provide the candidate with a written notice, including a copy of the criminal history report relied on for the adverse decision. Employers must allow a candidate ten business days to dispute the accuracy of the criminal history reported, provide an explanation, or submit proof of rehabilitation.

Recent amendments expand the scope of the FCRSS.  Effective April 1, 2021, in addition to candidates for employment, current employees will also be subject to the review and notice processes established by the FCRSS.  The amendments also clarify that the FCRSS also covers independent contractors, transportation network company drivers, rideshare drivers, or other gig economy workers.

The Philadelphia City Council also amended the city’s Fair Practices Ordinance that protects against Unlawful Credit Screening Practices in Employment (UCPE). The UCPE prohibits employers from considering a candidate’s or employee’s credit history “in connection with hiring, discharge, tenure, promotion, discipline or consideration of any other term, condition or privilege of employment with respect to such employee or applicant.”

While the UCPE originally included an express exemption for law enforcement agencies and financial institutions, that exemption no longer applies as of March 21, 2021.  Instead, any organization seeking to assess a worker’s credit history can only do so if the job:

  • Requires an employee to be bonded under city, state, or federal law;
  • Is supervisory or managerial in nature and involves setting the direction or policies of the business;
  • Requires significant financial responsibility to the employer excluding jobs involving retail transactions;
  • Involves access to sensitive financial information related to customers, other employees, or the employer, not including information customarily obtained in the retail setting; or
  • Requires access to “confidential or proprietary information that derives substantial value from secrecy.”

Under the revised UCPE, employers that adversely affect an individual’s employment based on credit history must follow the Federal Fair Credit Reporting Act’s adverse action process.  Employers must provide “a written copy of the information relied, the right to obtain and dispute such information, and such other information as may be required by law.”  Employers are no longer required to identify the specific items of credit history causing the adverse decision nor provide the individual the opportunity to explain the circumstances concerning their credit history.

Considerations for Employers

As ban the box and fair chance hiring laws are passed or revised, employers should be mindful of the timing and scope of criminal history inquiries.  Employers should also ensure that their review processes include assessments of the individual’s criminal history and any applicable notices as required by law.  Solutions, such as Compliance Workbench, may provide employers with the tools necessary to help comply with these laws.   Because laws that restrict an employer’s consideration of an individual’s credit history are not widespread, employers are reminded to review their policies and processes to ensure that they align with all effective laws.

Alonzo Martinez

Alonzo Martinez

Alonzo Martinez is Associate Counsel, Compliance at HireRight. Mr. Martinez is responsible for monitoring and advising on key legislative and regulatory developments globally affecting HireRight’s service delivery. His work is focused on ensuring HireRight’s performance as a consumer reporting agency and data processor complies with relevant legal, regulatory, and data furnisher requirements. Mr. Martinez obtained his Juris Doctorate from the University of Colorado, and is licensed by the Supreme Court of the State of Colorado. He is a member of the Colorado Bar Association Employment Law Division, the Association of Corporate Counsel, and the Professional Background Screening Association.

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