New York City Mayor Bill de Blasio signed legislation prohibiting employers from inquiring about a prospective employee’s salary history during the hiring process. New York City joins Massachusetts and Philadelphia in passing legislation seeking to address the gender pay gap and ensure pay equity in the workplace.

Key details of the new law:

  • It will take effect October 31, 2017 and applies to private employers, among others.
  • It amends the Administrative Code (section 8-107) of the City of New York in relation to prohibiting employers from inquiring about or relying on a prospective employee’s salary history.  Therefore, as an employer, if inquiring into salary history is a part of your background screening process, you will need to re-evaluate this practice in order to ensure compliance by October 31, 2017.
  • Once effective, it will be an unlawful discriminatory practice for an employer, employment agency, or employee or agent to (i) inquire about the salary history of a job applicant; or (ii) rely on the salary history of a job applicant in determining salary, benefits or other compensation during the hiring practice, and including the negotiation of a contract.
  • Exceptions — an employer can still engage in a discussion with the job applicant about their expectations with respect to salary, benefits and other compensation; but, they cannot ask about salary history.   Another exception to the general restriction on inquiring about salary history is where the job applicant proactively discloses salary history, at which point an employer may consider salary history and may even verify the job applicant’s salary history.
  • The general prohibition on inquiring about salary history does not apply to situations where federal, state or local law requires such disclosure or verification of salary history for employment purposes; (ii) internal transfers or promotions; and (iii) public employee positions governed by a collective bargaining agreement.

Background screening companies note the term “agent” and the potential for a claim of engaging in an unlawful discriminatory practice. Bear in mind that New York City’s Stop Credit Discrimination in Employment Act (SCDEA) makes it unlawful to “aid or abet” any form of prohibited discrimination, including credit discrimination and this applies to consumer reporting agencies (i.e., background screeners). It is likely that the New York City Commission on Human Rights will issues regulations and guidance to clarify the intent of the law and we will see if they address this issue and other aspects of the law.

New York City passed a local law to amend its administrative code to prohibit employment discrimination based on one’s arrest record or criminal conviction.  Employers and background screeners take note.  The legislation, the Fair Chance Act, passed City Council earlier this month (6/10/15) and Mayor Bill de Blasio is expected to sign it.  Note too that the law impacts licensing and permits, but for purposes of this blog posting I will only review the sections related to employment screening.  Also, note that it is being dubbed a Ban the Box law, but it is clearly so much more than that as a pure Ban the Box law would simply remove the question about one’s criminal history from the job application.

Who does the law affect and what does it do?

  • It impacts private employers in New York City;
  • It makes it an unlawful discriminatory practice for any “employer, employment agency or agent thereof” (background screeners take note of the agent language) to deny employment or take adverse action against any employee due to criminal convictions;
  • Employers still need to abide, as they do in New York in general, by Article 23-A of the New York Correction Law which essentially requires an employer to tie the criminal history to the particular position through an individualized assessment;
  • It makes it an unlawful discriminatory practice potentially to deny employment or act adversely with respect to an employee based on an arrest;
  • It includes Ban the Box language in that an employer cannot make any inquiry, including on any form of application, regarding arrest or criminal accusation which does not lead to a conviction;
  • Requires a conditional offer of employment before any inquiry or statement related to a pending arrest or criminal conviction record can be made and requires that if an adverse employment action is going to be taken, the individual must be provided a written analysis for the adverse action akin to an individualized assessment (again, reference Article 23-A of New York’s Correction Law for this too);
  • It places restrictions on job advertisements which express limitations on a person’s arrest or criminal history as a condition or bar to employment; and,
  • There are limited exceptions, tied to federal, state or local laws requiring a criminal background check or barring employment based on criminal history.  It also does not apply to law enforcement job applicants.

This is a law that employers should take note given its breadth.  It will take effect 120 days after enactment, meaning it will likely go into effect later this year.  Also, if as an employer or background screener you are not already entirely freaked out (not a legal term) by this, note that there are also restrictions on an employer’s use of credit for employment screening purposes in New York City under the Stop Credit Discrimination in Employment Act.

 

This week New York City Mayor Bill de Blasio will hold on hearing on New York City’s Proposed Int. No. 261-A, which would ban the use of consumer credit history, making its use potentially an unlawful discriminatory practice. Certain exceptions apply to the general prohibition on an employer, or their agent’s, request or use for employment purposes of consumer credit history of a job applicant or employee.  The bill’s definition of “consumer credit history” limits the ban or prohibition to information found in consumer credit reports, a credit score or information provided by the individual.

Impact on Background Screening Companies

Background screening companies should pay special attention to the fact that the proposed legislation will not be limited to employers, but specifically applies the prohibition to “agents” who request consumer credit history of an applicant for employment or an employee.

Exceptions to the General Ban on the Use of Credit History

Certain exceptions to the prohibition on requesting or using credit history for employment include:

  • When an employer, or agent, is required by state or federal law or regulations or by a self-regulatory organization to use an individual’s consumer credit history for employment purposes; or
  • For persons applying for positions or employed in: law enforcement, positions of public trust, where bonding or a security clearance is required, positions involving fiduciary responsibilities and others.

There appears to be ambiguity with respect to how broad an employer can interpret the employer exception in proposed Section 8-107, subdivision 24, which states that the general prohibition on use of consumer credit history for employment purposes does not apply when “(1) an employer, or agent thereof, that is required by state or federal law or regulations or by a self-regulatory organization as defined in section 3(a)(26) of the securities exchange act of 1934, as amended to use an individual’s consumer credit history for employment;”.  This author’s view is that this exception to the general prohibition on credit history is only for those individual’s for whom such is required by state or federal or law.  Meaning it is individual specific and not meant to broadly exempt an employer if they have even one job applicant or employee for whom state or federal law requires a background check which includes credit history.

Upcoming Hearing

On May 6, the mayor (who is expected to sign the legislation) will hold a hearing on the proposed legislation.  Click here and then on “Legislation Details” for notice of the hearing.  No further information regarding the hearing has been provided.  Therefore, to be clear, New York City’s ban on the use of consumer credit history for employment screening purposes is not yet in effect.

Law Citation and Effective Date

The title of the bill is the “Stop Credit Discrimination in Employment Act”, and if signed by the mayor, the law would take effect 120 days after enactment. It would amend New York City’s Human Rights Law, sections 8-102 and 8-107 of the administrative code of the city of New York.

 

New York Attorney General Eric T. Schneiderman recently announced settlements against two major retailers (Big Lots Stores and Marshalls) for violations of Buffalo’s “Ban the Box” ordinance at local stores.  Click here to read the announcement.   In addition, the stores agreed to pay fines of $100,000 (Big Lots) and $95,000 (Marshalls).

State and local Ban the Box laws generally prohibit an employer from inquiring on a job application about a candidate’s criminal history.  That inquiry must generally wait until after a conditional offer of employment.  Buffalo is one of three major cities in New York with such a law on the books (New York City and Rochester are the other two).  Note that each Ban the Box law should be read individually as although there are similarities, there are also nuances to each.

Employers in Buffalo — the Ban the Box law applies to public and private employers with 15+ employees.  It states that you cannot inquire on a job application or prior to an initial interview about criminal history.  In addition, because Buffalo is in the state of New York, Article 23-A of the New York Correction Law also applies, specifically when considering an applicant’s prior criminal convictions in determining suitability for employment.  See Article V: Fair Employment Screening to learn more about this potentially unlawful discriminatory practice in Buffalo.

 

 

This week’s Compliance News Flash features information on New York City’s pay equity law, stats on FCRA litigation, personnel moves at the Federal Trade Commission, news about a Form I-9 scam, and information about my presentation on developing a compliant background screening at my firm’s upcoming Employment Law Seminar in Atlanta.

Click here to read my News Flash.

On January 10 Department of Homeland Security agents raided 100 7-Eleven stores nationwide as part of an effort to ensure employees’ legal work authorization in the United States. This week’s raids stemmed from a 2013 investigation against multiple 7-Eleven franchisees and managers who allegedly employed undocumented workers in New York and Virginia.

Click here to read the Alert I wrote and what to expect if your company is the subject of a Department of Homeland Security worksite enforcement investigation and how to prepare.

San Francisco’s Board of Supervisor’s passed a pay equity ordinance on July 11, 2017 which is now awaiting the Mayor’s signature. The “Parity in Pay” ordinance will become operative July 1, 2018. The ordinance will ban private employers from inquiring about and considering a job applicant’s prior salary history. It will also apply to certain contractors working with the city of San Francisco.  The ordinance, which adds Article 33 to the Police Code and Chapter 12K to the Administrative Code, can be found by clicking here.

  • The ordinance will apply to applicants applying for private employment to be performed in the geographic boundaries of San Francisco (the city and county). Under certain circumstances, the ordinance also applies to applicants for private employment where the work is performed under a contract with the city of San Francisco or when the work is performed on city property used under a lease, permit or license.
  • The prohibition is such that an employer cannot consider or rely on an applicant’s salary history as a factor in determining whether to offer employment to an applicant, or what their salary will be. Furthermore, employers cannot release the salary history of current or former employees to an applicant’s prospective employer without written authorization from the current or former employee, unless the release of salary history is required by law, is part of a publicly available record, or is subject to a collective bargaining agreement.
  • If an applicant voluntarily discloses salary history or provides written authorization to the release of salary history, then such can be considered or verified by an employer.

California’s Office of Labor Standards Enforcement (OLSE) will publish and make available in multiple languages notices describing to job applicants and employees their rights under the law. Employers will be required to post such notices in a conspicuous place at their workplace.

San Francisco joins the following states and cities with pay equity ordinances on the books — Delaware, Massachusetts, Oregon, New York City, NY and Philadelphia, PA.

 

Los Angeles is the latest major city to pass a Ban the Box measure (Ordinance 184652) applicable to private employers. It will become effective January 22, 2017 and will be enforced beginning in July 2017. Other major cities with Ban the Box laws include:

And don’t forget that eight states have Ban the Box measures on their books which are applicable to private employers — HI, IL, MA, MN, NJ, OR, RI, VT.

What is Ban the Box?  In its most basic form it means that an employer cannot ask on the job application about criminal history (i.e., arrests or convictions).  Generally, an employer must wait until a conditional offer of employment has been extended to inquire about criminal history and conduct a background check.  Ban the Box moves the criminal history inquiry until later in the process to afford ex-offenders the opportunity to be judged on their merit and not their past. At least in theory that’s what is supposed to happen as a result of Ban the Box measures, which are often referred to as fair hiring policies.

But, nothing in life is simple. Often, Ban the Box measures go beyond simply requiring employers remove the criminal history question from the job application and they include additional requirements, such as requiring:

  • Employers conduct an individualized assessment if criminal history is discovered during an background check (e.g., Austin, San Francisco, Los Angeles).
  • Employers advise the applicant the reason for their decision to not hire if it includes criminal history information (e.g., Chicago, Portland, San Francisco, Seattle, Washington, DC).
  • Employers provide a specific amount of time to allow the applicant to review and respond to criminal history information discovered as a result of a background check (e.g., Philadelphia, San Francisco).
  • Employers provide disclosures about the law (e.g., Philadelphia, San Francisco, Washington, DC).
  • Employers cannot have restrictive language in their advertisements (e.g., Seattle).
  • Important Although above bullet points cover some of the key requirements, they are not exhaustive as Ban the Box measures are similar but not identical.
  • And, and, and (yes, I meant three and’s), don’t forget that as a private employer you must also comply with the federal Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.) if you receiving background check reports from a third-party background screening company.

For employers in a jurisdiction that has a Ban the Box law it’s important to understand what your obligations are. A comprehensive background screening policy will assist any employer seeking  compliance with federal and state law.  If that is on your “to do” list for 2017, we can assist in developing policies and procedures.