Across the United States, employers regularly conduct criminal background checks to select and retain employees. According to a recent survey, 92 percent of employers conduct criminal background checks on some or all job applicants.1

When making hiring decisions, employers often try to mitigate the risk of liability for a “negligent hiring” claim that could arise were an employee to harm a coworker or other person in the course of his or her employment. Employers also may seek to minimize the opportunities for employee theft, misconduct or poor performance/attendance by effectively and thoroughly screening applicants. Thus, employers may hesitate to hire individuals with a criminal record. As a result, persons with criminal convictions struggle to reenter the workforce.

New York State, through Article 23-A of the New York Correction Law, aims to “break the cycle” of repeat offenders by creating a higher bar for employers to deny employment solely based on the existence of an applicant’s or employee’s criminal history. Similarly, the Equal Employment Opportunity Commission (EEOC), through its recently issued Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964 (Enforcement Guidance), has challenged the extent to which employers may consider criminal histories in the selection and retention of employees.

This article identifies the legal backdrop and the obligations and challenges to comply with Article 23-A and the EEOC’s Enforcement Guidance. Despite the legal complexity, the underlying rule is simple—an employer may not disqualify applicants for employment merely based on a criminal history, unless otherwise mandated by law. Instead, any such disqualification must be job related and consistent with business necessity.

Article 23-A

New York employers (with 10 or more employees) are required to comply with Article 23-A, which expressly limits an employer’s use of criminal history related to hiring and employment. Under Article 23-A, employment cannot be denied and an employee cannot be acted against because of a criminal conviction unless there is a “direct relationship” between the offense and employment, or, continuation of employment would involve an unreasonable risk to property or to the safety or welfare of specific individuals or the general public.2

Interaction with Article 15 of the New York Executive Law. Article 23-A is linked with Article 15 of the New York Executive Law (also known as the New York “Human Rights Law”), which makes it an unlawful discriminatory practice for an employer to deny employment to an individual based on a criminal history.3 Further, Article 15 of the Executive Law specifically prohibits inquiries into an arrest, and states that it is an unlawful discriminatory practice to make inquires about, or act adversely upon, any arrest which is no longer pending, where the criminal action terminated in favor of the arrested individual.4 In fact, where negligent hiring, retention, or supervision is alleged, Article 15 of the Executive Law creates a “rebuttable presumption” in favor of excluding from evidence the prior incarceration or conviction where the employer, after learning about the applicant or employee’s past criminal history, evaluated the factors listed in Article 23-A and “made a reasonable, good faith determination that such factors militate in favor of hire or retention of that applicant or employee.”5

Factors an employer must consider when analyzing an applicant’s prior conviction. Article 23-A lists a number of factors an employer must balance in considering an applicant with a prior conviction. The Article 23-A factors related to employment are:

• the state public policy encouraging the employment of previously convicted persons;

• the specific duties and responsibilities necessarily associated with the employment;

• the bearing the offense will have on the person’s fitness or ability to perform one or more such duties or responsibilities;

• the time elapsed since the offense;

• the person’s age at the time of the offense;

• the seriousness of the offense;

• information produced, attesting to the person’s rehabilitation and good conduct; and,

• the legitimate interest of the employer in protecting property, specific persons, or the general public.6

Giving consideration to these factors enables employers to make a fair and informed hiring decision. Moreover, Article 23-A directs employers to “give consideration to a certificate of relief from disabilities or a certificate of good conduct issued to the applicant” as these certificates “create a presumption of rehabilitation regarding the offense.”7 A person with a criminal record who is denied employment is entitled upon request to a written statement of the reasons for the denial within 30 days of the request.8

When does Article 23-A not apply? Article 23-A does not apply “where a mandatory forfeiture, disability or bar to employment is imposed by law and has not been removed by an executive pardon, certificate of relief from disabilities or certificate of good conduct.”9 For example in Sinclair v. Div. of Licensing of the Dept. of State,10 the Appellate Division upheld the licensing authority’s refusal to appoint a prisoner convicted of a felony as a notary public, because §130 of the New York Executive Law prohibits the appointment of a notary convicted of a felony. The court noted that Article 23-A does not apply where the law imposes a mandatory bar which has not been removed.11

EEOC Enforcement Guidance

Title VII of the Civil Rights Act 1964, a federal statute which applies to employers with 15 or more employees, prohibits workplace discrimination because of race, color, religion, sex, or national origin.12 On April 25, 2012, the EEOC, the federal agency tasked with enforcing Title VII issued the above-noted Enforcement Guidance because it is concerned that blanket policies on criminal convictions to bar employment are having a “disparate impact” based on race and national origin.13 If such a blanket policy is shown through statistical data to have had an adverse impact on those of a given race or national origin, the employer could be subject to “disparate impact liability” under Title VII unless it can prove that its policy is “job related for the position in question and consistent with business necessity.”14

It is important to note that the Enforcement Guidance does not have the force of law but is, rather, a policy statement that reflects the EEOC’s aim of balancing (i) the civil rights of those individuals with (ii) an employer’s legitimate ability to discover and consider criminal information. Undoubtedly, the EEOC will consider the extent of an employer’s adherence to the Enforcement Guidance in determining whether to charge the employer with a disparate impact violation.

An employer may not deny employment based upon an arrest record. Pursuant to the Enforcement Guidance and similar to Article 23-A, an employer may not deny employment to an applicant simply on the basis of an arrest record for the obvious reason that an arrest is not a legal finding of criminal activity. Further, “an exclusion based on an arrest, in itself, is not job related and consistent with business necessity.”15

Criminal conviction to be analyzed against the job in question. The Enforcement Guidance directs employers not to disqualify all individuals with a criminal conviction from every position. Rather, employers must consider reported criminal convictions with targeted screens and individualized assessments regarding whether the conviction is “job related and consistent with business necessity.” According to the EEOC, targeted screens filter out applicants whose convictions make them unsuitable for the job in question and help to satisfy the “job related and consistent with business necessity” requirement, allowing employers to make decisions based upon criminal records.16 An individualized assessment, referred to in the Enforcement Guidance, involves conducting an analysis tailored to the job and giving consideration to the applicant’s criminal background. It also “means that an employer informs the individual that he may be excluded because of past criminal conduct [and] provides an opportunity to the individual to demonstrate that the exclusion does not properly apply to him….”17

The EEOC Guidance does not apply to federally mandated restrictions on employment. Some employers are subject to federal statutory/regulatory requirements preventing the hiring of individuals with certain criminal histories. For example, §19 of the Federal Deposit Insurance Act prohibits a person convicted of any criminal offense involving dishonesty, breach of trust, or money laundering, from working for an insured depository institution for a period of 10 years, beginning on the date that conviction became final.18 An employer who complies with these federal laws and regulations has a viable defense to a discrimination charge challenging a disqualification based on a criminal history, as Title VII does not preempt these federally imposed restrictions.19

What are the practical implications of the EEOC Enforcement Guidance? In order to avoid a claim for disparate impact discrimination based on the use of criminal background checks, employers should not: (i) deny a job based upon an arrest record; or (ii) disqualify all individuals with a criminal conviction from every position. However, employers may: (i) perform background checks; (ii) ask applicants and employees about criminal histories (although inquires should be limited to records “for which exclusion would be job related for the position in question and consistent with business necessity”20); and (iii) screen out applicants whose criminal histories demonstrate they pose a risk.

The Enforcement Guidance also instructs employers on conducting hiring to: (i) consider the type of questions listed on job applications and limit the inquiries to job related requirements;21 and (ii) perform an individualized assessment. The time and expense involved in strictly complying with the Enforcement Guidance may be unrealistic for many employers. Therefore, it is possible in the future the EEOC will gauge an employer’s compliance by its size and resources.

Criminal Checks and FCRA

The Fair Credit Reporting Act (the FCRA) is a federal statute regulating the use of consumer information, which includes criminal background information.22 New York has its own statute, Article 25 of the General Business Law, generally similar to the FCRA. The federal and state FCRA provide notice and authorization requirements for the use of “consumer reports.” Employers must follow the notice and authorization requirements when procuring background checks. Under both statutes, employers must notify an applicant in a separate written document and obtain a written authorization to investigate a criminal background through a consumer reporting agency. If the employer plans to disqualify the applicant based on the report obtained, it must provide the applicant with notice and an opportunity to discuss or challenge the report before taking any adverse action.

Legal Enforcement

Individuals aggrieved by an employer’s unlawful discriminatory practice in violation of Article 23-A or Title VII may bring legal claims. Under the New York Executive Law, individuals may file a complaint with the New York State Division on Human Rights and can be awarded damages including equitable relief.23 Under Title VII, an individual may file a charge of discrimination with the EEOC. Any person claiming to be aggrieved by an employer’s unlawful discriminatory practice can file a complaint with an appropriate court; however before proceeding with a Title VII claim, the individual first must exhaust his or her remedies with the EEOC.24

In addition to a private right of action, the New York State Attorney General can investigate businesses for their failure to comply with Article 23-A and seek restitution and costs for the investigation. Likewise, the EEOC has investigative powers to address perceived systemic discrimination. Both agencies may insist on compliance programs in the event they conclude that violations took place.

Conclusion

Although private employers often do not consider convicted criminals to be “protected against discrimination,” both Article 23-A and the EEOC Enforcement Guidance place the onus on employers to demonstrate a legitimate reason to disqualify a convicted criminal from employment. As a result, employers should train their managers, hiring officials, and decision-makers to develop, implement and interpret appropriate hiring policies and procedures.

Mitchell Boyarsky is a director in the employment & labor law department of Gibbons in New York, where Peter J. Dugan is an associate.

Endnotes:

1. EEOC Enforcement Guidance 915.002, at 6 [§III(B)] (citing Society for Human Res. Mgmt., Background Checking: Conducting Criminal Background Checks, slide 3 (Jan. 22, 2010), http://www.slideshare.net/shrm/background-check-criminal?from=share_email).

2. N.Y. Correct. Law §752.

3. N.Y. Exec. Law §296(15).

4. Id., §296(16).

5. Id., §296(15).

6. N.Y. Correct. Law §753(1)(a)-(h).

7. Id., §753(2).

8. Id., §754.

9. Id., §751.

10. 96 A.D.2d 1130 (3d Dept. 1983).

11. Id. at 1130-31.

12. See 42 U.S.C. §2000e-2.

13. EEOC Enforcement Guidance 915.002, p.10 [§V(A)(2)].

14. 42 U.S.C. §2000e-2(k)(1)(A)(i).

15. EEOC Enforcement Guidance 915.002, p.12 [§V(B)(2)].

16. Id. at 14 [§V(B)(4)].

17. Id. at 18 [§IV(B)(9)].

18. 63 Fed. Reg. 66184 (Dec. 1, 1998; amended May 10, 2011).

19. EEOC Enforcement Guidelines 915.002, p.21 [§VI(A)].

20. Id. at 25 [§VIII].

21. Id.

22. 15 U.S.C. §1681 et seq.

23. N.Y. Exec. Law §297(4)(c).

24. Id. at §297(9).