In reviewing our now-extensive blog library, I noticed that we tend to end the year with a feel-good post, then ease into the new year with a fun compliance topic. This year, I’m going to try something different.
Just kidding.
Recent and ongoing legislation in New York and California made me think that, if asked to pick the two most “challenging” states for employment screening, without hesitation I would say . . . New York and California. These states are not only more complicated for consumer reporting agencies (CRAs), but also for employers. And the aforementioned legislation has created even more rules and restrictions that compound the challenge.
Stricter State Standards
New York and California impose more stringent restrictions than the Fair Credit Reporting Act (FCRA), the federal law that governs what a CRA can report to an employer during a background check, among other things. While there are numerous differences, this article focuses on criminal records.
We’ve already discussed how the FCRA regulates background checks conducted by CRAs, or background check companies. One common misconception is that anything in the public record can be reported in an employment-related background check. This is not true. The FCRA restricts what a CRA can report to an employer, in addition to containing other rules for both CRAs and employers.
One stark difference between the FCRA and New York and California laws governs what criminal matters a CRA can report to its client. The FCRA states that criminal convictions can be reported forever; however, non-convictions can only be reported 7 years from the filing date unless the candidate’s salary will equal, or reasonably be expected to equal, $75,000 or more. At this salary level, non-convictions can also be reported without time restriction. However, New York only allows the reporting of criminal conviction information within the past 7 years—unless the candidate’s salary will be $25,000 or more—and adjudicated non-convictions can never be reported. And California is even more strict: criminal convictions can only be reported within the past 7 years, regardless of salary. Like New York, non-convictions can never be reported.
Restrictions on Criminal Checks
Both California and New York City prohibit inquiring about or using criminal history information until after making a conditional offer of employment. In fact, in most cases, an employer cannot mention a criminal check requirement before making a conditional employment offer. In addition, New York City requires a bifurcated, or two-step, background check process for employers considering non-criminal information, as we previously mentioned when discussing the New York City Fair Chance Act.
Both jurisdictions also limit the use of criminal records when making hiring decisions. For example, the criminal record information must relate to the job in question, or employing the person would pose an unreasonable risk to others. Furthermore, both jurisdictions require that the employer conduct an individualized assessment of the criminal record, considering such factors as the severity of the record, the time elapsed since the offense, how the incident relates to the job, what rehabilitation has occurred, and other factors. Employers also need to give the candidate a chance to dispute the findings and/or provide additional information before taking adverse action based on criminal record information. In fact, California now has a two-step notification process as of October 2023 when the state expanded this employer requirement, among others, in its own Fair Chance Act. All of this goes beyond the FCRA’s pre-adverse action requirements.
Employer Guidance
At a minimum, employers in New York and California should consult with legal counsel to make sure that they comply with local laws when conducting background checks. Additionally, many other states and local jurisdictions have their own requirements and restrictions involving the timing of criminal history inquiries (“ban the box”), the ability to legally obtain and use a credit report, what can be reported in a criminal background check, how to take adverse action, and more. In short, employers should be aware of federal, state and local laws when using consumer reports to make hiring decisions.
Working with a knowledgeable background check provider and legal counsel can help address these issues to avoid breaking the law and incurring penalties.
