On March 24, 2016, the Austin City Council passed the Fair Chance Hiring Ordinance, which will prohibit most employers from asking questions about or considering an individual’s criminal history until after making a conditional offer of employment.  Passage of the Ordinance follows closely on the heels of similar legislation enacted in other cities and states, including Portland, Oregon and New York City.¹  It is expected that the Ordinance will become effective 7 to 10 days after its passage.  Thus, Austin employers should immediately assess whether they are covered by the Ordinance and, if so, whether they need to revise their job applications and guidelines and documentation for the hiring process.

Coverage and Exemptions

The Ordinance applies to any “person, company, corporation, firm, labor organization, or association that employs at least fifteen individuals whose primary work location is in the City for each working day in each of 20 or more calendar weeks in the current or preceding calendar year.”  It also applies to “an agency acting on behalf of an employer.”  However, the Ordinance excludes from coverage the United States, the state or any state agencies, Section 501(c) bona fide private membership clubs, and any “job for which a federal, state, or local law disqualifies an individual based on criminal history.”

The Ordinance is broad enough to cover virtually any type of “employment,” including temporary and seasonal work, contract and contingent employment, work through a temporary or other employment agency, and participation in a vocational, apprenticeship, or educational training program.

Unlawful Practices

The Ordinance makes it unlawful for any covered employer to solicit criminal history information about an individual or consider an individual’s criminal history unless the employer has first made a conditional employment offer to the individual, which is “conditioned solely on the employer’s evaluation of the individual’s criminal history.”  In other words, employers may not ask job applicants about their criminal history on a job application and may not procure a criminal background check on the applicant until after making a conditional offer. 

In addition, covered employers may not:

• Publish or cause to be published information about a job that states or implies that an individual’s criminal history automatically disqualifies the applicant from consideration for the job.
• Solicit or otherwise inquire about the criminal history of an applicant in an application for a job covered by the Ordinance.
• Refuse to consider employing an applicant who submits an application in a covered job because the individual did not provide criminal history information before the individual received a conditional employment offer.

The Ordinance also prohibits an employer from taking adverse action against an applicant based on their criminal history unless the employer has a “good faith belief that the individual is unsuitable for the job based on an individualized assessment conducted by the employer.” 

In conducting this assessment, employers must consider, at a minimum, the following factors:

• The nature and gravity of any offenses in the individual’s criminal history;
• The length of time since the offense and completion of the sentence; and
• The nature and duties of the job for which the individual has applied.

An employer who takes adverse action against an individual because of criminal history must inform the individual in writing that the adverse action was based on the individual’s criminal history.  The term “adverse action” is broadly defined to include “a refusal to promote,” which means the adverse action requirements are not limited to job applicants, but also apply to incumbent employees.

Although the Ordinance bars employers from soliciting or considering any criminal history information until after a conditional employment offer, an employer may explain to individuals, in writing, the individualized assessment system the employer uses to consider criminal history.  The Ordinance is silent, however, on when employers may provide this written explanation to an individual.

The legislation affirmatively states that it does not foreclose an employer from withdrawing a job offer “for any lawful reason, including determination that an individual is unsuitable for the job based on an individualized assessment of the individual’s criminal history.” 

Enforcement

The Ordinance does not provide an aggrieved individual with a private right of action against a covered employer.  Rather, an aggrieved individual may file a complaint with the Equal Employment/Fair Housing Office (Office) no later than 90 days after the date on which the individual receives knowledge of the alleged violation, but in no event later than one year from the date of the alleged violation. 

Civil penalties will not be imposed for violations that occur before the first anniversary of the effective date of the Ordinance.  Violations that occur during the first year will result in a written notice from the Office, which will inform the employer that a civil penalty may be assessed for any violations that occur after the first anniversary.    

After the first anniversary, an employer that fails to cure a violation of the Ordinance by the end of the tenth business day after the day the employer receives written notice of the violation is liable for a civil penalty of $500.  For first-time violations, the Office may instead issue a warning if the employer attends an appropriate training session about compliance with the Ordinance.

Recommendations

Austin employers, and multi-state employers with employees in Austin, should assess whether they are covered by the Ordinance, and, if so, whether they need to do the following:

• Revise job applications, interviewing guidelines and policies and procedures for background checks;
• Revamp the sequencing and timing of events in the hiring process; and
• Implement guidelines and documentation that comply with the new law.

Employers throughout the United States should continue to monitor developments in this and related areas of the law, including laws restricting the use of credit history information² and the fair credit reporting laws.³