A growing number of states and municipalities have passed “fair chance” laws that, to varying degrees, prohibit employers from inquiring into a job applicant’s criminal background during the hiring process or restrict employers from using certain criminal conviction information in connection with their hiring decisions.

Recently, Los Angeles County joined this group and New York City is posed to again amend the rules for its existing law. The Los Angeles developments create new intricacies for employers, while the New York actions may be best understood as clarification of existing law. In either case, keeping up with the changes is important for employers who are hiring in those locations. 

Los Angeles County’s New Law

The Los Angeles County Fair Chance Ordinance for Employers (“FCO”) was adopted by the Los Angeles County Board of Supervisors on February 7, 2024, and becomes operative on September 3, 2024. The FCO was designed to complement California’s “Ban-the Box” law, called the Fair Chance Act (“FCA”), and introduces additional compliance requirements for covered employers, including, but not limited to, mandatory language for job postings and solicitations, and written notice requirements in connection with the extension of a conditional offer of employment.

The FCO applies to employers that are located or doing business in the unincorporated areas of Los Angeles County, and employ five (5) or more employees, regardless of location, who perform a minimum number of hours of work each week within certain areas of Los Angeles County. For the purpose of determining whether an employer meets this five-employee threshold, an employer must count any person who performs at least two (2) hours of work on average each week within the unincorporated areas of the County for the employer, including part-time, temporary, and/or seasonal employees, independent contractors, and any owner(s). Please click here to see a comprehensive list of unincorporated areas of Los Angeles County included in updated FAQs recently posted by the County of Los Angeles Department of Economic Opportunity as part of its Fair Chance Campaign. (As a reminder, employers in the City of Los Angeles remain subject to the Fair Chance Initiative for Hiring Ordinance enacted there in 2017, as we explained here.)

The FCO’s protections extend to all applicants whose employment will involve performing at least two (2) hours of work on average each week within the unincorporated areas of the County, and “employment” is broadly defined to include (a) individuals seeking contracted work; (b) individuals seeking placement through a temporary or other employment agency; and (c) current employees seeking a promotional opportunities.

The FCO prohibits employers from making inquiries into criminal history prior to making a conditional job offer, unless legally required. In addition, employers may never ask about, require the disclosure of, or base an adverse action on certain types of criminal history, including:

• An arrest that is not followed by a conviction;
• Referral or participation in a diversion program;
• Convictions that are sealed, dismissed, expunged, invalidated, pardoned, or eradicated pursuant to law;
• Juvenile arrests or detentions;
• Non-felony convictions for possession of marijuana that are 2 or more years old;
• Convictions that are more than 7 years old (exceptions apply for certain jobs, e.g., providing care to minors);
• Offenses other than a felony or misdemeanor (such as an infraction, except that driving infractions may be considered for certain roles); and
• Convictions arising out of conduct that has since been decriminalized.

Under the FCO, before conducting a criminal background check, employers must provide written notice to the applicant stating that the conditional offer is contingent upon the review of the individual’s criminal history and that the employer has good cause to conduct a review of criminal history for the job position, with supporting justification. Significantly, if an employer will be obtaining a criminal history report or a conviction history report from any source, the employers may not ask or request that an applicant provide any information, either orally in writing, regarding their criminal history, until the applicant has been provided with a copy of the report.

Once a criminal background check has been completed, employers must make an individualized assessment of whether the applicant’s criminal history has a direct, adverse, and negative bearing on their ability to perform the duties of the job before taking any adverse action, and provide a preliminary notice of adverse action that explains the applicant’s right to respond before the decision becomes final. If the applicant so responds, the employer must make a second individualized assessment. Then, if the employer plans to move forward with an adverse action, it must send a final notice.

The FCO also contains additional notice requirements, as well as posting and record-retention requirements.

Lastly, and important for employers to know, the FCO imposes administrative penalties ranging from $5,000 to $20,000 for violations of the ordinance, potential action against licenses, and potential civil liability. Details about these penalties are listed in updated FAQs recently posted by the County of Los Angeles Department of Economic Opportunity.

New Rules Proposed for New York City

The New York City Commission on Human Rights (the “Commission”) proposed amendments to the New York City Fair Chance Act (“NYC FCA”), which, among other things, prohibits employers from inquiring into an applicant’s criminal background before a conditional offer of employment is made or from inquiring into or taking adverse action against an applicant or employee for certain types of criminal history (e.g., arrests that did not result in conviction, sealed or expunged records, or juvenile delinquency findings).

On September 5, 2024, the Commission is scheduled to hold a hearing on the proposed amendments, which include:

• Enumerating the Article 23-A factors of the New York State Corrections Law that all New York employers must consider when determining whether to take adverse action based on an applicant’s or employee’s pre-employment conviction history;
• Defining the “Fair Chance Employment Analysis” and the “Fair Chance Employment Process” that must include the Article 23-A factors analysis with respect to pre-employment convictions;
• Incorporating the “New York City Fair Chance Employment Factors” that New York City employers must consider before making an employment decision based on an applicant’s pending cases or a current employee’s pending cases or post-employment convictions;
• Expanding the definitions of the terms “criminal background check,” “non-conviction,” “pending case,” and “public agency”;
• Modifying what constitutes a per se violation of the NYC FCA;
• Clarifying applicable exemptions from the NYC FCA for employers in the financial services industry to the extent compliance with industry-specific rules and regulations promulgated by a self-regulatory organization require such actions;
• Addressing an employer’s ability to place an employee on a leave of absence while conducting the Fair Chance Employment Process; and
• Providing additional requirements on how to respond to information regarding pending cases and how to withdraw a conditional offer of employment, among other things.

While these proposals are based on existing law and guidance issued by the Commission, not an amendment to the NYC FCA, if adopted, they may provide clarity as to the Commission’s interpretation of the law. That, in turn, may serve as insight to how the Commission may enforce fair chance employment. New York City employers should monitor for issuance of the final amended rules and whether any or all of the above modifications are implemented.

Employer Takeaways

Allegations of noncompliance with a fair chance or “ban the box” law can lead to potentially costly litigation. Employers covered by a fair chance law in one or more of the jurisdictions discussed above should review and, if necessary, update their policies and procedures, including job advertisements, applications, and other hiring forms to ensure they are compliant with all applicable mandates. Employers should also consider training personnel involved in the hiring process about applicable laws. Consult with counsel if you have questions about how to comply with the fair chance laws applicable to your organization.