Among other changes, the rules clarify the procedures employers must follow before basing an adverse employment action on criminal history, identify certain per se violations, and eliminate the early resolution process previously available to smaller employers facing Commission-initiated complaints.
BACKGROUND
The FCA, which first took effect on October 27, 2015, is incorporated into the New York City Human Rights Law (NYCHRL) and generally applies to employers with four or more employees. Subject to certain statutory exceptions, the FCA restricts employers from inquiring into or considering an applicant’s criminal history before extending a conditional offer of employment.
The law also prohibits employers from considering certain categories of criminal-history information and requires an individualized assessment and specified procedural safeguards before employers may take certain adverse employment actions based on an individual’s criminal history.
Effective July 29, 2021, amendments to the FCA significantly expanded its protections, including by extending coverage to current employees, independent contractors, and other covered workers, and addressing pending criminal cases and additional categories of criminal-history information.
The amendments established a more clearly defined conditional-offer framework, generally requiring employers to complete noncriminal background screening before extending a conditional offer and to defer consideration of criminal history until after the offer is made, subject to limited exceptions.
Where an employer proposes to take adverse action based on covered criminal history, the FCA generally requires the employer to conduct and document an individualized assessment, provide the individual with a written Fair Chance Notice and relevant criminal-history information, and afford at least five business days to respond before finalizing the adverse action.
On July 30, 2024, the Commission published proposed amendments to its FCA regulations in the City Record to clarify and implement the statutory changes enacted in 2021. The Commission held a public hearing on the proposed amendments on September 5, 2024.
Following a rulemaking process spanning more than two years, the Commission approved the final regulations at a public meeting on September 15. The final regulations, which incorporate several revisions to the original proposal, were published in the City Record on September 30 and are scheduled to take effect on October 30.
While the amended rules do not generally impose new substantive obligations, they provide additional clarity concerning existing requirements and modify the Commission’s enforcement procedures.
KEY CHANGES TO THE FAIR CHANCE ACT RULES
The amended rules clarify several definitions relevant to when and how employers review criminal history, including “pending case,” “non-conviction,” and “conditional offer of employment.” Additionally, an “adjournment in contemplation of dismissal” is classified as a non-conviction, rather than a pending case, unless the order has been revoked and the case restored for prosecution before the employer initiates its assessment.
The rules also codify the minimum five-business-day period for applicants and employees to respond to a Fair Chance Act Notice, and confirm that employers must consider any information submitted during that period and provide timely written notice if the employer subsequently decides to take an adverse employment action.
This process of individually assessing an applicant’s or employee’s criminal history in accordance with the factors set forth in Article 23-A of the New York Correction Law, documenting that assessment in a Fair Chance Notice, providing the notice to the individual, and giving the individual five business days to submit a response is referred to as the “Fair Chance Employment Process.”
Additionally, the amended rules clarify that employers may place an employee on a paid or unpaid leave for a “reasonable period” while conducting the Fair Chance Employment Process concerning a conviction or pending case arising during employment. However, under the rules, there is a rebuttable presumption that a reasonable time will not exceed five business days.
The rules further identify certain conduct that constitutes a per se violation of the FCA, regardless of whether an adverse employment action occurs or an individual suffers actual injury. For example, an employment application that requests or references criminal history before a conditional offer constitutes a violation, even if applicants are instructed to disregard the question, unless the language is required by another law.
Similarly, the rules provide that an employer commits a per se violation if it fails to conduct a new Fair Chance Employment Analysis[1] before taking adverse action after an applicant or employee identifies a material error in the criminal-history information considered during the initial assessment.
The amendments also clarify the standards for applying the FCA’s “direct relationship” and “unreasonable risk” exceptions, which constitute the circumstances under which an employer may base an adverse action on an individual’s criminal history.
To establish a direct relationship, an employer must identify a connection between the conduct underlying a conviction or pending case and the specific duties of the position, then consider the relevant statutory factors to determine whether the concerns have been mitigated.
The rules likewise provide that a conviction or pending case alone generally does not establish an unreasonable risk, and the seriousness of an offense is not dispositive without consideration of the applicable factors.
With respect to decisions employers may base on an individual’s intentional misrepresentations concerning criminal history, the rules clarify that employers must provide the individual with the information supporting the alleged misrepresentation, allow at least five business days to respond, and consider the response before taking adverse action. A discrepancy between an individual’s self-reported criminal history and a background check does not necessarily establish intentional misrepresentation.
The amended rules also expressly permit employers to encourage individuals with criminal records to apply for employment and to respond to applicants’ questions about whether criminal background checks are conducted.
This clarification carries particular significance for employers that recruit for positions capable of being performed across multiple jurisdictions. Some jurisdictions, including Los Angeles and San Francisco, affirmatively require employers to state in their job advertisements that qualified individuals with arrest or conviction histories will be considered for employment.
That mandate previously appeared to conflict with the FCA’s broad restriction on referencing or alluding to criminal screening standards before a conditional offer, which required national employers to choose which laws to follow. By expressly authorizing these statements, the amended rules allow employers to satisfy other jurisdictional obligations without violating the FCA.
The amendments eliminate the Commission’s early resolution process for Commission-initiated FCA complaints, previously available to employers with 50 or fewer employees. Under the former process, eligible employers could resolve certain alleged violations through an expedited procedure involving an admission of liability and payment of a prescribed penalty. The Commission eliminated this process to align enforcement of the FCA with other protections under the NYCHRL.
IMPLICATIONS FOR EMPLOYERS
While many of the amendments clarify existing requirements rather than establish new obligations, they emphasize the importance of complying with the FCA’s procedural protections when considering criminal history in employment decisions.
In particular, the identification of per se violations reinforces that employers may face liability for certain prohibited practices, even where no adverse employment action has occurred. The elimination of the early resolution process also removes an expedited avenue for smaller employers to resolve Commission-initiated complaints.
Employers should ensure that their background screening procedures appropriately separate noncriminal and criminal history inquiries and that individualized assessments adequately address the relevant statutory factors. Employers should also carefully evaluate information submitted by applicants and employees before making final employment decisions.
NEXT STEPS
With the amended rules taking effect October 30, New York City employers should review their employment applications, background screening policies, and procedures for evaluating criminal history to ensure compliance with the FCA.
Employers should also confirm that their Fair Chance Employment Procedures provide the required five-business-day response period, account for corrected or supplemental criminal-history information, and include appropriate documentation of individualized assessments and adverse employment decisions.
Finally, employers should consider providing updated training to human resources personnel, recruiters, and hiring managers concerning the clarified requirements, specifically regarding the standards governing direct relationship, unreasonable risk, intentional misrepresentation, and per se violations.
