Important Additions to NYC’s Fair Chance Act Limit Employers’ Ability to Perform Background Checks

Q: What do I need to know about the recent additions to New York City’s law about the use of criminal history in employment decisions?

A: While the New York City Fair Chance Act (“FCA”) has been in effect since October 2015, the New York City Commission on Human Rights (“Commission”) recently enacted final rules, which clarify many aspects of the law.  The final rules went into effect on August 5, 2017.

The key provision of the FCA prohibits employers from inquiring about an applicant’s criminal history until after a conditional offer of employment has been made. The final rules explain the meaning of a conditional offer, and clarify the steps an employer must take before revoking a conditional offer or taking an adverse employment action.

A conditional offer is defined as an offer of employment, promotion, or transfer. It is essential for employers and all relevant decision makers to understand that the FCA’s provisions cover far more than just an initial offer of employment – they also cover promotions and transfers.  The FCA provides that a conditional offer can only be revoked based on one of the following:

  • The results of a criminal background check (in which case the “Fair Chance Process” must be followed); or
  • The results of a medical exam, as permitted by the American with Disabilities Act; or

Other material information the employer could not have reasonably known before making the conditional offer if, based on the material information, the employer would not have made the offer.If an employer wishes to rescind a conditional offer based on a criminal background check, the employer must follow the “Fair Chance Process,” which is described in section 8-107(11-a) of the New York City Administrative Code. This includes providing the applicant with a copy of the background check report and an analysis of the factors that went into the decision (the list of acceptable factors is in Article 23-A of the New York State Correction Law), and allowing the applicant to address the criminal history at issue before the offer is rescinded. A sample notice approved by the Commission is available here:

http://www1.nyc.gov/assets/cchr/downloads/pdf/FairChance_Form23-A_distributed.pdf.

The final rules also added a number of per se violations. Engaging in such action is considered a violation regardless of whether the employer takes an adverse action against an employee. Fines for per se violations range from $500 to $10,000, depending on the facts and whether the employer has previous FCA violations. Per se violations include making any inquiry or statement about an applicant’s criminal history before a conditional offer is made, and using applications that require applicants to consent to a background check and/or provide information about criminal history. The use of such applications is a violation even if the application contains a disclaimer that states New York City applicants should not answer certain questions. This prohibition is quite unusual and runs counter to many employers’ practices of using nationwide or multi-state employment applications.To ensure FCA compliance, employers should review their existing policies and practices, and ensure key personnel are up to date with the FCA requirements. Employers should consult a labor and employment law attorney with any questions.

— Jessica Rothenberg

NYC Predictable Scheduling Law To Have Wide-Ranging Effects on Retail and Fast Food Employers

Q.  I heard there is a new law in New York City that covers retail and fast food establishments. What do I need to know?

A.  Effective November 26, 2017, retail and fast food employers will be subject to strict new laws that govern scheduling. The law is meant to provide retail and fast food employees with more predictability around scheduling by requiring employers to provide schedules a certain amount of time in advance, and prohibiting on-call shifts, among other provisions. Retail employers are simply prohibited from violating the law, while the law provides that fast food employers are required to pay employees premiums of varying amounts for some violations.

Retail

In the retail context, the law covers any retail business with 20 or more employees that is engaged in the sale of consumer goods. Consumer goods are defined as products primarily for personal, household, or family purposes, such as appliances, clothing, electronics, groceries, and household items.

Employers are required to provide employees with a written work schedule at least 72 hours before the first shift on the work schedule. In addition, employers will be prohibited from: (1) scheduling an employee for an on-call shift; (2) canceling a regular shift within 72 hours of the scheduled start of the shift; (3) requiring an employee to work with fewer than 72 hours’ notice, unless the employee consents in writing; and (4) requiring an employee to contact his/her employer to confirm whether to report for a regular shift fewer than 72 hours before the start of a shift.

The law permits employees to trade shifts. Moreover, employers may change schedules with fewer than 72 hours’ notice in the case of certain emergencies.

Fast Food

In the fast food context, the law will cover any fast food establishment whose primary purpose is serving food or drink, where patrons order and pay before eating, and that is part of a chain that has 30 or more establishments nationally.

Unlike in the case of retail establishments, fast food employers may make changes to work schedules. But it will cost them money to do so.

Employers are required to provide employees with at least 14 days’ notice of their schedules. If employers make changes to the work schedule with less than 14 days’ notice where additional hours or shifts are added, or the date, start time, or end time is changed with no loss of hours, the employer must pay the employee $10 for each such change.  If the employer makes changes to the work schedule with less than 14 days’ notice where hours are subtracted from a shift or a shift is cancelled, the cost to the employer rises to $45 for each such change.

If changes are made with less than 7 days’ notice but with no loss in hours, the employer must pay the employee $15 for each change. If changes are made with less than 7 days’ notice and the change results in lost hours or a shift is cancelled, the employer must pay the employee $75 per change.

Like in retail, fast food establishments may make changes in the case of certain emergencies. In addition, the employer may make changes without penalty if  the employee requests the change in writing, or if employees voluntarily trade shifts subject to an existing employer policy.

Fast food employers will also be prohibited from requiring employees to work consecutive shifts that involve both the closing and opening of a restaurant. Employers must provide a minimum of 11 hours of time off between shifts when the first shift ends on the previous calendar day or spans two calendar days.  The law provides an exception if the employee requests or consents to work such hours in writing, but even in such a scenario, the employer must pay a premium of $100 for each such shift.

Finally, the law requires fast food employers to offer shifts to current employees before hiring additional employees. The law establishes a specific procedure for offering the shifts, which involves posting a notice with detailed information about the shifts.  Employers are required to offer hours to current employees until the point at which the employer would be required to pay overtime, or until all current employees have rejected available hours, whichever comes first.

Recommended Action for Compliance

As is clear from the description above, the law is extremely onerous for retail and fast food employers, and particularly so for fast food employers. Given the high premiums employers must pay for violations of the new law, it is essential for employers to begin preparing for the law significantly in advance.  Employers should conduct a detailed review of their scheduling procedures and systems, and revise them to make scheduling more predictable (and in line with the upcoming law).  Given the unpredictable nature of the fast food industry, particularly in New York City, it will be nearly impossible for employers to avoid paying any premiums under the law.  However, with advance preparation, employers can certainly take steps to minimize the premiums that will be paid.

We expect that many employers will take the potential premiums into account when setting hourly pay rates for those employees who are paid above the minimum wage. Employers who would otherwise pay a higher hourly rate may decide to pay a lower rate to account for the potential premium payments.

While the law provides for many exceptions based on consent (as well as request) from employees, consent is often an amorphous concept in the world of employment litigation. We strongly recommend obtaining written consent (rather than verbal consent) so there is a record.  It is unclear under the law whether employers must get written consent for each instance, or whether a blanket written consent suffices.  To balance administrative ease and risk management, we recommend having a blanket written consent form that each employee can fill out (with check boxes for the various kinds of consent), and then if possible, confirming each instance of consent via email or text.  It is a good idea to partner with an employment lawyer to ensure that your consent forms are in compliance.

-Jessica Rothenberg

New York City Employers May Not Inquire About Applicants’ Salary History

Q.  My company has employees in New York City.  We often ask applicants about their salary history as a starting point for negotiating and setting a new salary.  Are we still permitted to do this?

A.  Effective October 2017, it will be unlawful for employers to ask job applicants in New York City about their salary history.  Salary history includes “current or prior wage, benefits, or other compensation.”  The ban includes inquiries to an applicant’s current or former employer and searches of publicly available information for salary history.

The new law provides that employers can still engage in discussion with an applicant about his/her expectations with respect to salary, benefits, and other compensation, so long as the employer does not inquire about salary history or rely on salary history for determining compensation. Employers can also continue to run background checks and verify an applicant’s disclosure of non-salary related information. However, if the verification or background check discloses the applicant’s salary history, then the employer cannot rely upon it for determining salary.

Prospective employees can volunteer salary history (so long as it is “without prompting”), and in those cases, the employer can consider salary history in determining salary, and can verify the applicant’s salary history.

The new legislation aims to combat pay inequity by preventing employers from perpetuating pay inequity applicants may have experienced in the past. Such legislation has also recently been passed by Philadelphia (effective May 2017), as well as in numerous other cities and states. In 2016, Mayor Bill de Blasio issued an executive order prohibiting New York City agencies from asking prospective employees about their pay history.

The Philadelphia and New York City laws have many similarities. Like the New York City law, the Philadelphia law broadly defines wages as “all earnings of an employee,” including fringe benefits, wage supplements and “other compensation.” The Philadelphia law is enforced by Philadelphia’s Commission on Human Relations, and the New York law is enforced by its equivalent agency, the New York City Commission on Human Rights. Both laws provide that applicants can volunteer salary history, in which case the employer can rely on it to determine the new salary.

To prepare for this law, employers should ensure that job applications for positions in New York City do not ask about salary history. Employers should also update their internal policies and interviewing guidelines to ensure all relevant personnel are aware of the change. Employers who have employees both in and outside of New York City should consider whether to make such changes company-wide, or only to applicants for New York City positions.

Jessica Rothenberg