United States: Criminal Record Screening Policies Continue To Raise Important Multi-Jurisdictional Compliance Issues

Last Updated: September 23 2018
Article by Rod M. Fliegel and Stephen A. Fuchs

Employers that use criminal record screening policies must continue to be vigilant about compliance with all applicable laws.  Following a multi-million dollar settlement by a leading retailer earlier this year,1 a recent multi-million dollar settlement in New York involving a large New York City sports and entertainment venue reinforces this point.2  In the recent case, the employer settled a class action lawsuit for a significant cash payout, including $165,000 in attorney's fees, and other noteworthy programmatic relief.  This recent settlement provides valuable lessons for employers.

In this New York case, the plaintiffs alleged that the employer's criminal record screening policies violated New York's statutory protections for ex-offenders (commonly referred to as "Article 23-A"), New York's City's protections for ex-offenders (the New York City Fair Chance Act), the federal Fair Credit Reporting Act (FCRA), and New York's FCRA.  The claim centered on the standards for assessing ex-offender job applicants as eligible or ineligible for employment and the procedures for providing legally required notices to such job applicants, including the very specific notice required by the New York City Fair Chance Act.

Over an extended period, the parties negotiated a class-wide settlement that, under the Federal Rules of Civil Procedure, must be approved by the federal court in New York.  On September 12, 2018, the plaintiffs' attorneys submitted the proposed settlement to the court for approval.  In addition to monetary payment, the employer agreed to retain an expert in the field of industrial and organizational psychology and consider the expert's recommendations regarding whether its criminal record screening policies comply with the FCRA, and New York and New York City laws.  If the employer declines any of the expert's recommendations, the parties agreed to submit disputes to an arbitrator.  The settlement also calls for the expert to monitor the employer's compliance for one year after the employer has implemented the final modifications to its screening policies.  If the court approves the settlement, some class members will have a right to employment with the employer, depending on the results of an updated background check.

Overall, the subject of background checks, including criminal record screening policies, job postings and online applications, has become a thorny regulatory minefield and continues to garner attention from state legislatures,3 the Equal Employment Opportunity Commission (EEOC),4 state and local human rights agencies, and the plaintiffs' bar.  Several plaintiffs' attorneys have taken to "trolling" for online applications that do not comply with the New York City Fair Chance Act and sending demand letters on behalf of shadow clients who never applied for a job with the employer.  The New York City Human Rights Commission has instituted a series of complaints against employers for discrepancies relating to their recruiting procedures.

These actions indicate that it is prudent for all employers, and particularly multi-state employers, to take measures to help ensure they comply with all applicable laws, including the so-called ban-the-box laws and the FCRA.5  In particular, employers with operations in New York, especially those in New York City, must adhere to some of the more onerous laws in the country.6  This recent settlement highlights the danger of failing to account for all state and local background check obligations that a multi-state employer might be subject to through the recruiting process. 

Footnotes

See  Rod Fliegel, Criminal Record Screening Policies Continue to Raise Important Compliance Issues, Littler ASAP (Apr. 6, 2018).

Kelly et al. v. Brooklyn Events Center et al., Case No. 1:17-cv-4600 (E.D. N.Y.).

See  Rod M. Fliegel and Molly Shah, Ringing in 2018 with New Ban-The-Box Laws, Littler Insight (Jan. 8, 2018); Rod M. Fliegel and Allen P. Lohse, San Francisco is Likely to Amend its Ban-the-Box Law, Littler ASAP (Mar. 29, 2018); William J. Simmons, Uzo N. Nwonwu, and Jason N.W. Plowman, Kansas City, Missouri, Enacts "Ban-the-Box-Plus" Ordinance, Littler ASAP (Feb. 6, 2018).

See  Rod M. Fliegel, Barry Hartstein, and Jennifer Mora, EEOC Issues Updated Criminal Record Guidance that Highlights Important Strategic and Practical Considerations for Employers, Littler Insight (Apr. 30, 2012); Rod M. Fliegel and Allen Lohse, The EEOC Continues to Press Litigation Under Title VII Concerning Employer Criminal Records Checks, Littler Insight (Dec. 21, 2017); Rod M. Fliegel, Jennifer L. Mora and Allen Lohse, EEOC's Race Discrimination Suit Against Janitorial Company Includes Background Check Allegations, Littler ASAP (July 14, 2017).  See also Rod M. Fliegel and Molly Shah, EEOC's Background Check Guidance Suffers Loss in Texas Federal Court, Littler Insight (Feb. 5, 2018).

See Rod M. Fliegel and William J. Simmons, Third Circuit Holds Individual Plaintiffs Lack Standing for Some Alleged Violations of the FCRA's Pre-Adverse Action Notice Requirement, Littler Insight (Sept. 11, 2018); Rod M. Fliegel and Julie A. Stockton, Eighth Circuit Holds Individual Plaintiff Lacks Standing for Alleged Violations of the FCRA's Authorization and Disclosure Requirement, Littler Insight (Sept. 10, 2018); Rod M. Fliegel, Seventh Circuit Holds Class Action Plaintiff Had Standing for an Alleged Violation of the FCRA's "Pre-Adverse Action" Notice Provision,  Littler ASAP (Aug. 30, 2018); Rod M. Fliegel, The Ninth Circuit Holds Plaintiff Lacked Standing for an Alleged Violation of the FCRA's "Pre-Adverse Action" Notice Provision, Littler ASAP (July 18, 2018); Rod M. Fliegel, Alison Hightower, and Allen Lohse, High Alert for California Employers and Employers Nationwide for the Second Wave of FCRA Class Actions, Littler Insight (Oct. 19, 2017).

See  Stephen A. Fuchs, Final Regulations Clarifying and Expanding New York City "Ban the Box" Law Take Effect on August 5, 2017, Littler Insight (July 31, 2017); Rod M. Fliegel, Jennifer Mora, David Warner and Allen Lohse, "Who Can It Be Now?" New York's Highest Court Explains Who May Be Liable For Discrimination Based On A Criminal Conviction, Littler Insight (May 6, 2017).

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