New York City Fair Chance Act: 2021 Amendments

Seyfarth Synopsis: The New York City’s Fair Chance Act amendments are scheduled to go into effect on July 29, 2021, after bill Introduction No. 1314-A became law on January 10, 2021.  Among other things, the amendments expand employment protections for individuals with certain criminal histories by adding to the list of information that employers are prohibited from considering, adding additional steps and procedures that employers must take when presented with certain criminal information, and clarifying certain timing, as well as other obligations and requirements, that are part of the Fair Chance Process.  

As background, the Fair Chance Act (FCA) went into effect in 2015 as part of a wave of “Ban the Box” laws that have been passed across the country (our prior analyses of the FCA can be found here, here, here, and here).  Generally, the FCA prohibits New York City employers with four or more employees from inquiring about a job applicant’s criminal history before making a conditional job offer, and prior to revoking that conditional job offer, the FCA requires that the employer engage in a detailed Fair Chance Process.  The 2021 amendments make certain clarifications, expand certain requirements on timing and analysis, and create new protections under the FCA. 

FCA Covers Employees and Independent Contractors

The amendments explicitly define that an “employer” is anyone who has four or more persons in their employ, inclusive of “natural persons working as independent contractors in furtherance of an employer’s business enterprise” as well as family members working for the employer.  The amendments also prohibit any inquiry or statement related to criminal history when an individual is applying for a “position,” not just employment, in an apparent effort to clarify that independent contractors are protected by the FCA, too.  While many employers have already adopted this conservative reading of the law, the amendments make this more clear.

“Conditional Offer of Employment” Redefined

The amendments redefine a “conditional offer of employment” to capture an initial offer of employment, as well as a promotion or transfer.  Additionally, in order to constitute a “conditional offer of employment,” the offer must be one that can only be revoked based on the results of a criminal background check (one that is compliant with the FCA), a medical exam as permitted by the Americans with Disabilities Act, or “[o]ther information the employer could not have reasonably known before making the conditional offer….” 

An employer who revokes a conditional offer based on such “other information” will have an affirmative obligation to prove its defense that it could not have reasonably otherwise known the information and “it would not have made the offer regardless of the results of the criminal background check.”  Though the amendment language does not affirmatively state as much, the New York City Commission on Human Rights (the agency who enforces the FCA) may take the position that this new definition requires that employers conduct any other investigation, such as other background checks, prior to the conditional offer.  If so, this would be a sea change for many employers.   

Expanded Protections: Convictions of Current Employees & Pending Charges  

The FCA and New York state law have already prohibited a denial of employment based solely on a criminal conviction or findings that an applicant lacks “good moral character” due to criminal history without undergoing the appropriate analysis under New York Article 23-A.  

The amendments now explicitly codify that employers are prohibited from taking any adverse action:

(a) against a current employee who is convicted during the employment, or based on a finding that the person “lacks ‘good moral character’” because of the conviction, or

(b) against an applicant or current employee who has a pending arrest or criminal accusation, or based on a finding that the person “lacks ‘good moral character’” because of the pending arrest/accusation. 

The amendments provide an exception, allowing an employer to take an adverse employment action when the employer completes an individualized analysis as part of the Fair Chance Process, and in accordance with Article 23-A, and determines that either (i) there is a direct relationship between the criminal conviction, or the wrongdoing that underlies the arrest/accusation, and the employment sought/held by the person; or (ii) the granting/continuation of the employment would involve an unreasonable risk to property, or to the safety or welfare of specific individuals or the general public.  Criminal charges that are adjourned in contemplation of dismissal are not to be considered “pending” unless the adjournment is revoked and the case is restored to the court’s active calendar.  As such, employers should revisit how they are viewing pending criminal records.

Prohibited Inquiries and Information That Cannot Be Considered By Employers

The FCA prohibits employers from denying employment based on an arrest or criminal accusation.  The amendments expand this protection to prohibit “any inquiry in writing or otherwise” about any arrest or criminal accusation. 

Employers are also now prohibited from taking adverse employment action based on an applicant or employee being convicted of (A) a “violation” under New York Penal Law (defined as an offense, other than a traffic infraction, that carries a potential of no more than 15 days imprisonment), or (B) a non-criminal offense in another state, even if the individual was arrested for or charged with something greater than a violation or non-criminal offense.

Intentional Misrepresentations & Lies

The amendments make clear, however, that employers are allowed to take adverse action against an applicant or employee who is found to have made an intentional misrepresentation about their arrest or conviction history.  In such instances, the employer has to provide the individual with a copy of the document(s) that formed the basis for the determination that an intentional misrepresentation was made and give the person a reasonable time to respond.

Updated Fair Chance Process

For applicants, the amendments clarify that as part of the Fair Chance Process, employers are required to request from applicants information related to the relevant Fair Chance factors.  The amendments also increase from three to five business days the amount of time that the position must be held open to give the applicant time to respond to the employer’s individualized analysis before a conditional offer of employment can be withdrawn.

The amendments add that for current employees, prior to taking adverse employment action, employers are required to (1) request from the employee information relating to the relevant Fair Chance factors, (2) perform an individualized analysis consistent with the FCA (and Article 23-A), (3) provide a written copy of the analysis to the employee, including the supportive documents upon which the analysis and determination are based, and (4) allow the employee “reasonable time to respond before taking adverse action.”  Employers are permitted to place an employee on unpaid leave for a “reasonable time” while the employer engages in the Fair Chance Process for a current employee. 

Private employers are not obligated to follow the Fair Chance Process where federal, state, or local law requires criminal background checks or bars employment based on criminal history.  This includes regulations promulgated by a self-regulatory organization as defined by the Securities Exchange Act, i.e., FINRA.

 “Relevant Fair Chance Factors” to Be Considered

The FCA requires that employers conduct an individualized analysis of an individual’s criminal information prior to taking an adverse employment action, i.e., revoking the offer of employment.  The amendments now create two sets of factors for employers to use.

When analyzing arrests or convictions that took place prior to the employment (i.e., that are not pending at the time of the employment), an employer is directed to use the factors in Section 753 of the N.Y. Correction Law, as has been required since the FCA became law in 2015.

When analyzing arrests or criminal charges that are pending at the time of the application for employment (or promotion or transfer), the amendments create a new list of factors, such as:

(a) the policy of the city, as expressed in this chapter, to overcome stigma toward and unnecessary exclusion of persons with criminal justice involvement in the areas of licensure and employment;

(b) the specific duties and responsibilities necessarily related to the employment held by the person;

(c) the bearing, if any, of the criminal offense or offenses for which the applicant or employee was convicted, or that are alleged in the case of pending arrests or criminal accusations, on the applicant or employee’s fitness or ability to perform one or more such duties or responsibilities;

(d) whether the person was 25 years of age or younger at the time of occurrence of the criminal offense or offenses for which the person was convicted, or that are alleged in the case of pending arrests or criminal accusations;

(e) the seriousness of such offense or offenses;

(f) the legitimate interest of the public agency or private employer in protecting property, and the safety and welfare of specific individuals or the general public; and

(g) any additional information produced by the applicant or employee, or produced on their behalf, in regards to their rehabilitation or good conduct, including history of positive performance and conduct on the job or in the community, or any other evidence of good conduct.

In light of these amendments, the New York City Commission on Human Rights will likely update its forms and notices, including the Fair Chance Evaluation Form, however, as of the date of this update, they have not done so. 

New York City has long established its Fair Chance Act and Fair Chance Process as among the most robust and complex in the nation.  Employers should ensure that they are aware of the reaffirmation of prior interpretation and the new changes that have occurred by these amendments.