The New Jersey Department of Labor and Workforce Development (NJDOL) has adopted regulations for the Opportunity to Compete Act, the state Ban-the-Box Law, clarifying many questions, including the Act’s impact on businesses with multistate operations.

The new regulations discuss form applications, the scope of the Act’s prohibitions as to positions in which employees perform work primarily out-of-state, inquiries arising out of an applicant’s pre-offer self-disclosure of a criminal record, and the Act’s penalty provisions. Furthermore, the regulations clarify that, with the exception of domestic employees and independent contractors, the Act’s prohibitions apply to nearly every position at a company.

Effective March 1, 2015, the Act prohibits employers from inquiring into an applicant’s criminal background during the initial employment application process. With limited exceptions (e.g., law enforcement, homeland security, and the like), employers may not:

1. publish advertisements that state an applicant with a criminal background will not be considered for employment;

2. inquire into a candidate’s criminal background in an initial written application for employment; or

3. inquire into a candidate’s criminal background during an initial interview.

Following completion of this initial employment application process, the employer may inquire into a candidate’s criminal background and deny a position to a candidate based upon any criminal conviction background, consistent with other applicable law.

Definitions

The new regulations provide clearer definitions of key terms, such as Employer and Employment. Employer includes any entity or person with “15 or more employees over 20 calendar weeks, whether those employees work inside or outside of New Jersey[.]” Therefore, the Act applies to small employers and employers that may have only a handful of New Jersey employees, but an extensive out-of-state workforce. Determining the number of employees is based on the employer’s headcount for the current or preceding calendar year.

Additionally, regarding an employee whose duties may require travel or work in other states, the NJDOL defines employment as being substantially within New Jersey if, at the outset of the initial employment application process, the candidate will perform at least 50 percent of her or his work hours in the state.

Although this explanation leaves open questions regarding telecommuters, the regulations provided much-needed clarification for positions that perform work in multiple states. The regulations also expressly permit multistate operations to use form employment applications with criminal history inquiries, provided the application notepreceding the inquiry instructs New Jersey candidates not to complete that portion of the application.

With respect to the initial employment application process, the regulations clarify that the interview concluding the process may be conducted in person, by telephone, or by video-conferencing.

Penalties

The regulations clarify that the assessment of penalties for violations must follow standard administrative procedure — no penalties shall be levied without giving the employer notice and an opportunity to be heard. An employer may appeal any violation or penalty to the Commissioner of the Department of Labor within 15 days and appeals may be decided upon a written record or full hearing pursuant to the Administrative Procedure Act.

The factors for determining an appropriate penalty include:

1. the seriousness of the violation;

2. the past history of previous violations by the employer;

3. the good faith of the employer;

4. the size of the employer; and

5. any other factors appropriate considering the circumstances.