On July 21, 2017, New Jersey Governor Chris Christie vetoed legislation that would have amended the New Jersey Law Against Discrimination to prohibit employers from requesting salary history information from prospective employees.  The legislation had passed easily though the State’s Democratically controlled Senate and Assembly, with votes along party lines.  With the upcoming gubernatorial election in November, employers may expect to see the bill revived and quite possibly enacted – particularly if the next governor is a Democrat. The proposed amendment may be read here.

 

This issue of Take 5 encapsulates the incredible breadth of societal changes and challenges facing the entire retail workplace. The topics addressed below reflect a microcosm of the many issues currently facing our overall society, covering growing political activism in the workplace, increasing expectations to accommodate religious beliefs, otherwise outrageous employee speech that may very well enjoy protection under the law, and the ever-increasing requirements for criminal background checks enacted piecemeal by states and cities. These extremely topical subjects often tap into broader emotionally charged concerns encountered by retailers.

We also address the ever-timely issue of wage and hour classification, in this case, focusing on the classification of assistant store managers.

The articles in this Take 5 include:

  1. Managing Employees’ Political and Social Activism in the Workplace
  2. Religious Accommodation: Handling Unusual Requests
  3. Second Circuit Agrees with NLRB That Employee’s Vulgar Facebook Tirade Against Manager Is Protected Concerted Activity
  4. Increasing Criminal Background Check Requirements Pose Challenges for National Retailers
  5. Correctly Classifying Assistant Store Managers to Avoid Wage and Hour Misclassification Claims

Read the full Take 5 online or download the PDF.

As a follow-up to our blog post from April 24, 2017, the New York Court of Appeals has issued its decision in Griffin v. Sirva, addressing the questions certified by the U.S. Court of Appeals for the Second Circuit regarding the scope of liability for employment discrimination based on an individual’s criminal history under the New York State Human Rights Law (“NYSHRL”). In its May 4, 2017 opinion, the Court of Appeals held that only a worker’s employer may be liable for direct discrimination under NYSHRL § 296(15), while other entities who do not qualify as employers may be liable for aiding and abetting an employer’s discriminatory acts under NYSHRL § 296(6).

In Griffin v. Sirva, defendant Allied Van Lines (“Allied”) and its corporate parent Sirva, Inc., had contracted with Astro Moving and Storage Co. (“Astro”) to have Astro’s employees provide packing and moving services on an independent contractor basis at the homes of Allied’s customers. Plaintiffs argued that defendants should be held liable for violating the NYSHRL even though they were not plaintiffs’ direct employer, because Allied had required plaintiffs to pass a background check before being assigned to its jobs. When plaintiffs’ background checks revealed prior convictions for sexual offenses against young children, Astro terminated their employment because those convictions disqualified plaintiffs from performing work for Allied, which constituted 70 to 80 percent of Astro’s business.

The Second Circuit had certified three questions regarding the scope of liability for discrimination based on a worker’s criminal history under the NYSHRL: (1) does NYSHRL § 296(15), prohibiting discrimination based on criminal convictions, limit liability to an aggrieved party’s “employer”; (2) if so, does the term “employer” include entities that are not an aggrieved party’s “direct employer,” but who exercise a significant level of control over the direct employer’s discrimination policies and practices; and (3) does NYSHRL § 296(6), providing for “aiding and abetting” liability, apply to an out-of-state entity that requires its New York State agent to discriminate based on a worker’s criminal history. In addressing these questions, the Court of Appeals reformulated the second and third queries as discussed below, to make them more broadly applicable beyond the parameters of this particular case. Five judges supported the majority opinion, while one judge dissented.

Question 1: Only an Employer May Be Liable for Direct Discrimination

The NYSHRL states that it “shall be an unlawful discriminatory practice for any person, agency, bureau, corporation or association” to deny employment based on an individual’s prior criminal conviction “when such denial is in violation of the provisions of article twenty-three-A of the correction law.” While this statutory language would appear to extend liability to “any” person or entity, not just an individual’s employer, the court found it significant that “liability under section 296(15) arises only upon a violation of [New York Correction Law Article 23-A (“Article 23-A”)].” Article 23-A prohibits a “public or private employer” from denying employment based on a criminal conviction unless, after analyzing eight specified factors, the employer can demonstrate that there is either a direct relationship between the criminal offense and the position sought or that granting employment would pose an unreasonable risk to the property or safety of others. Given this language, the court held that, “[b]ecause it incorporates Article 23-A by reference, section 296(15) of the Human Rights Law likewise limits liability to a public or private employer.”

Question 2: Common Law Principles, Especially Control, Determine Employer Status

The Court of Appeals questioned the assumption inherent in the Second Circuit’s second certified question, that “a significant level of control” over an employer’s “discrimination policies and practices” might be sufficient to confer employment status on a third party. Because “other factors are relevant to that determination,” the court reformulated the second question to read: “[i]f [liability under] Section 296(15) is limited [to an employer], how should courts determine whether an entity is the aggrieved party’s ‘employer’ for the purposes of a claim under Section 296(15)?”

Noting that neither the NYSHRL nor Article 23-A contains a substantive definition of “employer,” the court referred to both federal and New York case law holding that, in the absence of statutory guidance, common law principles should be used to determine employer status. Under applicable New York precedent, employer status is based on four relevant factors: (1) the selection and engagement of the worker; (2) the payment of salary or wages; (3) the power of dismissal; and (4) the power of control over the worker’s conduct. The Court of Appeals accordingly held that these four factors should be used to “determine who may be liable as an employer” under the NYSHRL, “with greatest emphasis placed on the alleged employer’s power ‘to order and control’ the employee in his or her performance of work.”

Question 3: Out-of-state Non-Employers May Be Liable for Aiding and Abetting Discrimination

The Court of Appeals indicated that the third certified question, regarding whether “an out-of-state principal corporation that requires its New York State agent to discriminate in employment on the basis of a criminal conviction may be held liable for the employer’s violation of § 296(15),” was too focused on “whether there was discrimination in this particular case.” Because the court interpreted the Second Circuit’s question as seeking “clarification as to who may be liable” under the NYSHRL’s “aiding and abetting” provision, it reformulated the third question to ask “whether section 296(6) extends liability to an out-of-state nonemployer who aids or abets employment discrimination against individuals with a prior criminal conviction.”

In granting summary judgment for defendants, the district court had held that a third party who was not the plaintiff’s direct employer could only be liable for “aiding and abetting” discrimination if the third party and the direct employer were “joint employers.” The Court of Appeals rejected that decision, holding that the “aiding and abetting” provision “applies to any ‘person,’” and “nothing in the statutory language or legislative history limits the reach of this provision to employers” or joint employers. Instead, the broad language of the NYSHRL’s “aiding and abetting” provision applies to any person or entity, including out-of-state defendants who are not employers of an aggrieved party, as long as “the alleged discriminatory conduct had an impact in New York.”

Impact of Court of Appeals Decision

The Court of Appeals did not address how its answers to the Second Circuit’s certified questions should apply to the underlying facts of Griffin v. Sirva. In her dissent, however, Judge Jenny Rivera indicated that, under the majority’s decision, “it is unlikely that either [Allied or Sirva] could be found to be an employer,” because “[n]either contributed to the selection and engagement of Astro employees, paid salary or wages, possessed the power of dismissal, or controlled Astro’s employees’ conduct.” Judge Rivera appeared to take the position that requiring a criminal background check, standing alone, should not be sufficient to establish “employer” status under the NYSHRL.

As we previously discussed, however, that does not end the inquiry. Under the Court of Appeals’ decision, an entity that is not a “direct employer” may face liability under the NYSHRL in one of two ways. First, depending on the facts of a particular case, a third party engaging another company’s workers on an independent contractor basis may be liable as an “employer” under New York’s four-part common law test, especially if any indicia of the third party’s control over the contract workers are present. Second, even in the absence of an employment relationship, a third party that requires an independent contractor’s employees to pass a criminal background check may be found liable under the NYSHRL’s “aiding and abetting” provision. Because the Court of Appeals held that this provision should be “construed broadly,” and applied to both non-employers and out-of-state defendants, the court’s interpretation of the “aiding and abetting” provision may sweep more third parties within the NYSHRL’s ambit going forward.

The Court of Appeals raised, but left unanswered, the question of whether a third party may be found liable for “aiding and abetting” discrimination in the absence of any finding of direct discrimination by a worker’s employer. The court previously held that “a newspaper company that had no employment relationship with the plaintiff” was liable for “aiding and abetting” discrimination by publishing its employment ads in separate categories by gender. The Griffin court found it “[n]otabl[e]” that this previous opinion imposed “aiding and abetting” liability without “consider[ing] the issue of whether, separate from the newspaper company, any employer or prospective employer was liable for primary discrimination under the Human Rights Law.” This discussion may have significance for the Griffin appeal, because Allied and Sirva now face potential “aiding and abetting” liability, even though a jury previously found that plaintiffs’ direct employer did not discriminate against them in violation of the NYSHRL. Whether a court will impose liability against a third party for “aiding and abetting” discrimination, after a fact-finder has expressly determined that the primary employer did not discriminate against plaintiffs, however, remains to be seen.

In summary, the Court of Appeals’ decision provides some good news for companies that engage independent contractors, by holding that only “employers” are subject to direct liability for employment discrimination under the NYSHRL. The court’s decision also poses some challenges, however, as it may extend liability to a third party either by finding employer status under New York’s four-part common law test, or by determining that imposition of a background check requirement constitutes “aiding and abetting” discrimination. Accordingly, companies who conduct background checks on their independent contractors should remain cognizant of both the four factors that determine employer status under New York common law, and the various statutes, including the NYSHRL, the New York City Human Rights Law, and the New Jersey Law Against Discrimination, that may impose liability for “aiding and abetting” acts of employment discrimination under such circumstances.

Ever since the National Labor Relations Board (“NLRB”) issued its August 2015 decision in Browning-Ferris Industries of California, Inc., holding two entities may be joint employers if one exercises either direct or indirect control over the terms and conditions of the other’s employees or reserves the right to do so, the concept of joint employment has generated increased interest from plaintiffs’ attorneys, and increased concern from employers. Questions raised by the New York Court of Appeals in a recent oral argument, however, indicate that employers who engage another company’s workers on an independent contractor basis would be wise to guard against another potential form of liability, for aiding and abetting acts that violate various anti-discrimination statutes, including both the New York State (“NYSHRL”) and New York City Human Rights Laws (“NYCHRL”) and the New Jersey Law Against Discrimination (“NJLAD”).

On March 28, 2017, the New York Court of Appeals heard oral arguments in Griffin v. Sirva, Inc., to answer three questions that had been certified by the U.S. Court of Appeals for the Second Circuit: (1) does the NYSHRL’s prohibition of employment discrimination based on workers’ criminal records limit liability to an aggrieved party’s “employer”; (2) if so, is the scope of the term “employer” limited to a worker’s direct employer, or does it include other entities who exercise a significant level of control over the direct employer’s discrimination policies and practices; and (3) does the portion of the NYSHRL that prohibits aiding and abetting the discriminatory acts of another apply to a non-New York entity that requires its New York agent to discriminate in employment based on a worker’s criminal history.

Griffin illustrates a concern faced by employers in a variety of industries, who subcontract certain types of work to employees of a separate business entity on an independent contractor basis. Among other tasks, companies may engage contractors to provide cleaning services, security, delivery of goods, installation of purchases or, as in Griffin, packing and moving services.  Such subcontracted services may be performed in a variety of settings, ranging from the company’s premises to its customers’ homes.  With increasing concerns regarding workplace violence, companies often choose to conduct their own criminal background checks on these contract workers, either personally or through an outside vendor, in an attempt to protect the company’s employees, customers, and property. This concern is particularly heightened when, as in Griffin, the contract workers in question will be performing services in the homes of a company’s customers.

In these types of scenarios, a question often arises regarding whether the company that engaged the contractors can be liable for violating state or city laws prohibiting discrimination based on criminal convictions, by virtue of requiring the background check, even though that company was not the workers’ direct employer. In resolving this question, courts typically rely on the concept of joint employment, analyzing the extent to which the company is involved in the hiring or firing of the contractors, or in exerting control over their working conditions. Presumably anticipating this sort of analysis, the parties in Griffin (including the State of New York, which filed an amicus curiae brief and was permitted to participate in oral argument) focused their briefing and arguments on whether a company that performs background checks on its contract workers should be deemed an employer under the NYSHRL.  Through its questions at oral argument, however, the court appeared to indicate that there may be a simpler resolution in this type of case, which does not require addressing the complex question of whether the company requiring the background checks is the workers’ employer or joint employer.

In addition to directly prohibiting discrimination based on criminal history, the NYSHRL states that it is “an unlawful discriminatory practice for any person to aid, abet, incite, compel or coerce the doing of any of the acts forbidden under [the NYSHRL], or to attempt to do so.” “Person” is defined as including “one or more individuals, partnerships, associations, corporations, legal representatives, trustees, trustees in bankruptcy, or receivers.” Based on this expansive language, several judges seemed to indicate that the NYSHRL’s “aiding and abetting” provision was sufficiently broad to encompass third parties who conduct background checks on contractors, regardless of whether such entities would otherwise be considered the contract workers’ employer or joint employer.  Assuming the “aiding and abetting” provision covers such conduct, multiple judges noted that imposing liability under that provision would be simpler than wrestling with the joint employment issue.  Further, the judges expressed concern that expanding liability under the main section of the NYSHRL to non-employers would render the “aiding and abetting” provision superfluous.

While it is premature to predict how the Court of Appeals may ultimately rule in Griffin, particularly given the recent unexpected death of one of the court’s seven members, Judge Sheila Abdus-Salaam, companies who engage workers on an independent contractor basis should be aware that potential joint employment issues may not be their only concern with regard to such workers. Regardless of whether a company exerts sufficient control over its contract workers to be deemed a joint employer, if the company operates in a jurisdiction whose anti-discrimination laws allow for “aiding and abetting” liability, that provision may serve as an alternative basis of potential liability for a company that conducts criminal background checks on contract workers engaged through a separate business entity.  Specifically, because the NYSHRL, NYCHRL, and NJLAD each include broad provisions that prohibit any person or entity from aiding, abetting, inciting, compelling, or coercing any acts that violate those laws, businesses that operate in New York State, New York City, or New Jersey should ensure that any background check requirement imposed on another entity’s workers complies with all applicable “ban-the-box” and anti-discrimination laws (e.g., NY State Correction Law Article 23-A, the NYC Fair Chance Act, and the NJ Opportunity to Compete Act), in order to avoid potential liability under the applicable “aiding and abetting” provisions in those jurisdictions.

Our colleagues Brian W. Steinbach and Judah L. Rosenblatt, at Epstein Becker Green, have a post on the Heath Employment and Labor blog that will be of interest to many of our readers in the retail industry: “Mayor Signs District of Columbia Ban on Most Employment Credit Inquiries.”

Following is an excerpt:

On February 15, 2017, Mayor Muriel Bowser signed the “Fair Credit in Employment Amendment Act of 2016” (“Act”) (D.C. Act A21-0673) previously passed by the D.C. Council. The Act amends the Human Rights Act of 1977 to add “credit information” as a trait protected from discrimination and makes it a discriminatory practice for most employers to directly or indirectly require, request, suggest, or cause an employee (prospective or current) to submit credit information, or use, accept, refer to, or inquire into an employee’s credit information. …

Read the full post here.

In January, a New York federal district court denied a retailer’s bid to dismiss a former regional manager’s lawsuit alleging that workplace rumors spread by three female co-workers that she showed her breasts to the company’s CEO by wearing a revealing blouse without a bra and that her subsequent termination shortly after she complained about the gossip constituted hostile work environment sex discrimination and retaliatory discharge. Baez v. Anne Fontaine USA, Inc., No. 14-cv-56621 (KBF), 2017 U.S. LEXIS 1630 (S.D.N.Y. Jan . 5, 2017).

Background

Baez, who normally dressed without a bra, was employed as the East Coast Regional Manager for Anne Fontaine USA, Inc. (“AFUSA”), a clothing retailer that operates 25 stores nationwide.

In September 2013, AFUSA began looking for candidates to replace Baez because of alleged unsatisfactory job performance.  On September 27, 2013, AFUSA extended an offer for Baez’s position to a candidate who declined the job.

In late December 2013, Baez heard that two female managers who reported to Baez and the company’s retail operations manager (also female) were spreading a rumor that Baez had worn a revealing blouse and no bra at a meeting with the CEO, thereby showing him her breasts. On December 27, 2013 Baez reported the rumor to the company’s Controller who, after conferring with the retail operations manager, advised Baez not to write-up one the managers because Baez had already given her a verbal warning and not to terminate the other manager because she was a top performer.

On the 27th, Baez also sent an email to the CEO complaining that one of the managers was telling her team that Baez would soon be terminated. Baez did not, however, mention the rumor about her revealing blouse.

On January 14, 2014 the Controller responded in writing to Baez’s complaint about the rumor advising her “[R]garding the content of the rumor/gossip, you either need to be strong and say ‘so be it, I make my own fashion and life choices…’ Or, if the content bothers you, you need to adjust what you are doing to prevent such rumors/gossip, but you can’t prevent people from having their opinions.” The Controller reiterated that she did not recommend escalating the matter to a written warning.

On January 30, 2014, however, at the direction of the CEO the Controller and Baez met with one of the managers to issue her a written warning. Baez disagreed with the wording of the warning and the manager refused to sign it.

In the meanwhile on January 6, 2014 a week after Baez’s emailed complaints, AFUSA went back to the candidate who had turned them down in September and arranged for her to meet with the CEO. On January 27, 2014 AFUSA offered and the candidate accepted the position of “North America Director,” to start on February 10, 2014.

Thereafter, on February 7, 2014, the CEO and the Controller terminated Baez’s employment. In the termination meeting, which Baez unilaterally taped, the CEO gave Baez three reasons for her discharge: (1) unsatisfactory management of an employee at one of the stores under her supervision; (2) problems associated with the opening of a store; and (3) that she was connected with “too much drama.”  Baez sued AFUSA, the CEO and the Controller alleging violation of Title VII of the Civil Rights Act of 1964 (“Title VII”), the New York State Human Rights Law (“NYSHRL”) and New York City Human Rights Law (“NYCHRL”).

The Court Rulings

The district court found that Baez’s complaint about the gossip regarding her going bra-less and allegedly showing her breasts to the CEO constituted protected conduct and a “very weak claim of discrimination.” The court noted that “if comments on bra-less attendance at a meeting were made by a man, plaintiff’s case would be much stronger[,]” but found “no legal reason why the gender” alters the analysis. The court opined that “even ‘a single comment that objectifies women . . . made in circumstances where that comment would, for example, signal views about the role of women in the workplace [may] be actionable.”

The district court also held that the short time frame between Baez’s December 27, 2013 Complaint and her February 7, 2014 discharge, in part, for being associated with “too much drama” created a sufficient factual dispute to preclude summary judgment on the retaliation claim. The district court acknowledged that AFUSA had articulated two legitimate business reasons for Baez’s discharge, i.e., alleged poor management of an employee and alleged problems with a store opening. Citing Second Circuit precedent, however, the court stated that retaliation need not be the only reason for the adverse job action, but “only that the adverse action would not have occurred in the absence of the retaliatory motive.”

The district court also concluded that there was an issue of material fact over whether the controller adequately investigated the rumor and whether AFUSA responded with the appropriate discipline.  The court granted summary judgement as to the CEO finding no evidence that he directly participated in or abetted any violation of law.

In sum, the content of the gossip, which concerned Baez’s sex; the remedial nature of discrimination statutes and in particular the expansive nature of the NYCHRL; and the use of the word “drama”- a term more likely to be applied to a woman’s behavior – as a reason for Baez’s discharge following her complaints, combined to create enough of a factual dispute to preclude summary judgment.

Lessons For Employers

Retail employers, especially those operating in New York City, should ensure that employees are counseled about the employer’s anti-discrimination and anti-harassment policies, fully investigate all complaints that potentially implicate anti-discrimination laws, and, when appropriate, discipline offending employees.

Retail employers should also ensure that adverse employment actions are based solely upon legitimate non-discriminatory factors which, preferably, are documented. Employers should be careful to avoid ambiguous or potentially charged language, which might undermine the employer’s legitimate reasons for discharge or discipline, when speaking with the employee.

A New Year and a New Administration: Five Employment, Labor & Workforce Management Issues That Employers Should MonitorIn the new issue of Take 5, our colleagues examine five employment, labor, and workforce management issues that will continue to be reviewed and remain top of mind for employers under the Trump administration:

Read the full Take 5 online or download the PDF. Also, keep track of developments with Epstein Becker Green’s new microsite, The New Administration: Insights and Strategies.

The Age Discrimination in Employment Act (“ADEA”) protects individuals who are at least 40 years of age from discrimination in the workplace. As such, the outcome of disparate-impact claims under the ADEA hinges, ordinarily, on whether or not an employer’s facially neutral-policy has a disparate impact on employees who are 40 years of age or older.  On January 10, 2017, the Third Circuit, in Karlo v. Pittsburgh Glass Works, LLC, 2017 BL 6064 (3d Cir. 2017), issued a precedential ruling, holding that disparate impact claims under the ADEA are not limited to comparisons of the impact an employer’s policy has on employees over 40 with the impact to employees under 40. Rather, the Third Circuit found that claims premised on an allegation that an employer’s policy impacted workers over the age of 50 are cognizable under the ADEA even when the policy had no disparate impact when employees in their forties were considered.

The defendant employer in Karlo terminated approximately 100 employees through a series of reductions in force (“RIFs”). While the impact of the RIFs did not have a disparate impact when comparing employees under the age of 40 with those over the age of 40, the plaintiffs in Karlo, all 50 years of age or older, asserted an ADEA claim premised on the allegation that the RIFs had a disparate impact on employees who were 50 or older.  Rejecting the defendant employer’s argument that the disparate impact claim failed because no evidence of disparity existed when the younger members of the protected category (employees between the age of 40 and 50) were considered with the employees over the age of 50, the Third Circuit opined that: “The ADEA prohibits disparate impact based on age, not forty-and-older identity,” and that “requiring the comparison group to include employees in their forties has no logical connection to that prohibition.”

The Third Circuit’s decision creates a split among the federal appeals courts on whether the ADEA permits disparate impact claims by subgroups of workers in the “40-and-over” protected category when the alleged bias disproportionately impacts older workers within that protected class. The ruling rejects the view of the Second Circuit (Lowe v. Commack Union Free Sch. Dist., 886 F.2d 1364 (2d Cir. 1989)), Sixth Circuit (Smith v. Tenn. Valley Auth., 924 F.2d 1059 (6th Cir. 1991)), and Eighth Circuit (E.E.O.C. v. McDonnell Douglas Corp., 191 F.3d 948 (8th Cir. 1999), that such claims are not allowed.

The Third Circuit correctly recognized that its decision “may very well require employers to be more vigilant about the effects of their employment practices.” The ruling that disparate impact claims may be asserted by subgroups within the protected category of employees over the age of 40 most definitely complicates employers’ ability to effectuate workforce reductions. Before approving a proposed RIF, retail employers concerned with avoiding potential disparate impact claims cannot simply satisfy themselves that employees over and under the age of 40 are treated fairly.  Retail employers now need to check for age-based impacts across different strata of their employees over the age of 40.

Our colleagues Judah L. Rosenblatt, Jeffrey H. Ruzal, and Susan Gross Sholinsky, at Epstein Becker Green, have a post on the Hospitality Labor and Employment Law Blog that will be of interest to many of our readers in the retail industry: “Where Federal Expectations Are Low Governor Cuomo Introduces Employee Protective Mandates in New York.”

Following is an excerpt:

Earlier this week New York Governor Andrew D. Cuomo (D) signed two executive orders and announced a series of legislative proposals specifically aimed at eliminating the wage gap in gender, among other workers and strengthening equal pay protection in New York State. The Governor’s actions are seen by many as an alternative to employer-focused federal policies anticipated once President-elect Donald J. Trump (R) takes office. …

According to the Governor’s Press Release, the Governor will seek to amend State law to hold the top 10 members of out-of-state limited liability companies (“LLC”) personally financially liable for unsatisfied judgments for unpaid wages. This law already exists with respect to in-state and out-of-state corporations, as well as in-state LLCs. The Governor is also seeking to empower the Labor Commissioner to pursue judgments against the top 10 owners of any corporations or domestic or foreign LLCs for wage liabilities on behalf of workers with unpaid wage claims. …

Read the full post here.

On December 9, 2016, Los Angeles Mayor Eric Garcetti signed ordinances no. 184652 and 184653, collectively referred to as the “Fair Chance Initiative.” These ordinances prohibit employers and City contractors (collectively “Employers”), respectively, from inquiring about job seekers’ criminal convictions until after a conditional offer of employment has been made. Both ordinances will go into effect on January 22, 2017 and will impact all employers in the City of Los Angeles and for every position which requires an employee to work at least an average of two hours per week within the City of Los Angeles and all City contractors and subcontractors, regardless of their location.

No Criminal Inquiry Until After Offer

Specifically, these ordinances prohibit Employers from inquiring about a job applicant’s criminal history, at any time or in any manner, unless and until a Conditional Offer of Employment has been made to the applicant. Following the Conditional Offer of Employment, Employers are permitted to request information regarding the applicant’s criminal history. However, Employers can only withdraw or cancel the conditional offer as a result of the applicant’s criminal history after engaging in the “Fair Chance Process.”

New “Fair Chance Process” Required

The “Fair Chance Process” requires Employers to prepare a written assessment highlighting the specific aspects of the applicant’s criminal history that pose an inherent conflict with the duties of the position sought by the applicant. Employers must provide the applicant with written notification of the proposed withdrawal of the conditional offer, a copy of the written assessment regarding the risks posed by the applicant’s criminal history, and any other relevant documentation. The applicant is then given an opportunity to provide the Employer a response to the written assessment, including any supporting documentation. Employers must wait at least 5 business days after the applicant is informed of the proposed withdrawal before taking any action, including filling the position for which the applicant applied.

New Posting and Recordkeeping Requirements

Additionally, Employers’ job postings must now include a notice stating that they will consider all qualified applicants regardless of their criminal histories, in compliance with these ordinances. Employers must also conspicuously post a notice regarding the “Fair Chance Initiative” in a location in the workplace visible to all job applicants; this notice must also be sent to each union or workers’ group with which the employers have any agreement that governs over employees. Further, Employers must retain all job application documents for three years. Penalties for violations of these ordinances may be assessed at up to $500 for the first violation, up to $1,000 for the second violation, and up to $2,000 for subsequent violations. The City may then, at its discretion, distribute a maximum of $500 from that penalty directly to the applicant. The penalty provision of the ordinances will not go into effect for employers in Los Angeles City until July 1, 2017. However, the penalty provision for City contractors is effective immediately.

Exceptions from these ordinances include: (1) employers who are required by law to seek a job applicant’s criminal history; (2) positions for which an applicant would be required to possess or use a firearm; (3) positions which, by law, cannot be held by an individual with a criminal history; and (4) employers who are prohibited, by law, from hiring persons with criminal convictions.

Employers with operations in the City of Los Angeles should:

  1. Remove questions regarding criminal history from job applications;
  2. Ensure future job postings include required equal employment notices;
  3. Defer inquiries regarding criminal history until making conditional job offers; and
  4. Ensure the Fair Chance Process is followed before denying employment based on criminal history.