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BEST PRACTICES FOR COMPLYING WITH NEW YORK CITY FAIR CHANCE ACT

“Given the imminent effective date of New York City’s Fair Chance Act, employers may be wondering what they need to do to comply with the law.  As many employers are aware, effective October 27, 2015, the Fair Chance Act amends the New York City Human Rights Law to prohibit most employers from inquiring about criminal history until after a conditional offer of employment is extended. (Some employers may fall into the exceptions of this law.)  The law also imposes upon employers the obligation to provide applicants with a copy of the relevant inquiry (e.g. the consumer report) and the company’s analysis under Article 23-A of the New York Corrections Law (in a form provided by the New York City Commission on Human Rights (“NYCCHR”)).  On Friday, October 23, 2015, the NYCCHR released its Fair Chance Act Notice form, and is expected to release its enforcement guidance imminently.  In the meantime, we recommend employers consider the following:

  1. Review all pre-employment forms.  Employers should ensure that job advertisements, applications for employment, interview questionnaires, and all other pre-conditional offer documents make no reference to the fact that a background check will be conducted, that criminal history will be considered, or otherwise inquire about criminal history.
  2. Train hiring managers.  Hiring managers should be trained not to ask questions about criminal history prior to a conditional offer of employment.  If a job candidate independently informs the manager of his or her criminal background prior to a conditional offer, managers should be trained to respond that such information is not considered by the Company at this stage in the process.
  3. Revise the adverse action protocol.   The Fair Chance Act requires that prior to taking adverse action based on criminal history an employer:
    1. provide the applicant with a copy of the “inquiry” (which by definition includes “any question communicated to an applicant in writing,” “any searches of publicly available records,” or consumer reports);
    2. conduct an analysis in accordance with Article 23-A and provide a written copy of that analysis to the applicant, and any supporting documentation that impacted the analysis; and
    3. keep the job opportunity open for at least three business days after the applicant receives the above documentation before taking adverse action.

The law anticipates that employers provide a copy of the Article 23-A analysis in the form provided by the NYCCHR.

  1. Consider best practices for direct inquiries to the applicant.  Many employers may still wish to ask the applicant personally whether he or she has a criminal history.  Such inquiry is still permissible under the Fair Chance Act, provided (1) it occurs after a conditional offer of employment is given; (2) the applicant is provided a copy of the inquiry, at the same time as the applicant is given the consumer report and any Article 23-A analysis (as described above); and (3) the question otherwise complies with the state law limitations as to the type of criminal history an employer is permitted by law to consider.  Employers are still able to terminate or refuse to hire an individual who makes misrepresentations in responding to a criminal history inquiry, but employers should follow the notice protocol above and as set forth in the Fair Credit Reporting Act (FCRA) before taking action.
  2. Review FCRA disclosure forms.  Employers should ensure that their FCRA disclosure forms accurately describe the information to be obtained by the Company in a consumer report.  And, particularly in light of the Fair Chance Act’s companion law, the Stop Credit Discrimination in Employment Act (SCDEA), applicants should not receive disclosure forms mentioning that a consumer report may include credit history information, unless the applicant meets an exception under the law.”

Originally posted by Lexology. Full article at http://www.lexology.com/library/detail.aspx?g=79e01e92-5fd0-4607-9728-fb8575f23655

MASSACHUSETTS SENATOR PROPOSES FEDERAL BAN ON CREDIT CHECKS FOR EMPLOYMENT PURPOSES

“Sen. Elizabeth Warren (D-Mass.) introduced legislation that prevents companies from considering a candidate’s credit history during the hiring process. Warren believes the screening process establishes unnecessary roadblocks for the poor seeking lucrative employment.

“This is about basic fairness — let people compete on the merits, not on whether they already have enough money to pay all their bills,” Warren said. “A bad credit rating is far more often the result of unexpected medical costs, unemployment, economic downturns, or other bad breaks than it is a reflection on an individual’s character or abilities.”

Warren and Senate Democrats assert that studies indicate a poor credit history does not reflect on an individual’s ability to perform a job well done. Currently, Americans with negative credit reports, especially after the 2008 financial crises, face unjust discrimination due to employer credit analysis.

The Equal Employment for All Act would alter the Fair Credit Reporting Act by prohibiting employers from considering a candidate’s financial history. Only the federal government or its contracting agencies could consider an individual’s credit rating when hiring for positions requiring national security clearance.

FICO, a leading provider of credit scores, reports that Americans’ average credit scores continue to sink despite spending and debt reduction. Roughly 35% of consumers, or 70 million Americans, have credit scores below 650, which is subprime. The workforce remains at a 35-year low. This move could help those caught with low scores, but qualified resumes.

For this reason, the proposed ban is gathering bi-partisan support among Americans that agree good candidates are facing discrimination of sorts.

“A good friend of mine has real trouble finding steady white-collar work solely because of his credit report. He’s got experience and references galore, but he made a few financial mistakes right out of school, and they’ve haunted him ever since. Since companies don’t hire him based on that credit report, he ends up in more financial trouble, which leads to more bad credit reports, and so on,” said Ryan Graff, an author and political commentator.

Banks and credit agencies can make serious mistakes too. Taking this out of the hiring equation helps qualified workers get the jobs they’re best suited for, regardless of irrelevant past mistakes. That’s a good thing.”

While the ban could level the playing field and protect a candidate’s privacy, what impact could this move have on employers? Should employers and employees willing to voluntarily exchange credit information through the hiring process be prohibited by a federal ban?

“Why ban this practice instead of incentivize employers to hire those with poor credit ratings? If I could accept a tax break to hire someone with a poor credit score, I would in a heartbeat,” said Steven, an entreprenuer and small-business owner in Dallas. “I don’t use this tool anymore because everyone has poor credit. So is this really the epidemic requiring federal action?”

Since the financial crisis of 2008, the percentage of employers using credit background checks dropped below half. Only 14% cited a credit check as the most important factor in a hiring decision, compared to 87% who said previous work experience, organizational fit and skills were the three most important factors. 80% hired someone despite a poor credit report.

Those that do conduct reports do so to protect their business. According to a 2012 survey by the Society for Human Resources, most employers screen with credit checks to prevent theft and embezzlement. Legal repercussions for negligent hiring and due diligence failures can be costly and removing screening tools places companies at risk. Currently, employers do not evaluate credit scores, but the subjective information in the report, such as debts, payment consistency, liabilities, default history and bankruptcy.

The bill has been endorsed by 50 advocacy groups, ranging from labor unions to women’s rights and minority-advocacy organizations. With heavy-hitters such as Patrick Leahy (D-Vt.), Sens. Richard Blumenthal (D-Conn.), Sherrod Brown (D-Ohio), Jeanne Shaheen (D-N.H.) Sheldon Whitehouse (D-R.I.) and Ed Markey (D-Mass.), the bill could become law.”

 

 

Originally posted by The Washington Times and can be viewed at http://communities.washingtontimes.com/neighborhood/citizen-warrior/2013/dec/17/elizabeth-warren-proposes-federal-ban-credit-check/#ixzz2nxCBE4Uo