What does adverse action mean in hiring? Learn the steps employers must follow when taking adverse action, and the rights of job candidates who receive adverse action notices.
Editor’s note: This post was originally published in September 2019. It has been updated with new information.
Thanks to increasing efforts to “ban the box,” companies face a patchwork of local laws prohibiting initial job applications from asking about criminal histories. Failing to comply with ban-the-box or related fair chance hiring laws can mean costly penalties.
Find out what ban-the-box means for employers, get an overview of state laws, and learn how your company can stay compliant.
Most HR professionals are familiar with the term ban the box, as it’s an issue that’s made national headlines. Less familiar, however, are the complexities of the associated fair chance hiring laws. As the ban-the-box movement gains traction, more and more states are adopting laws that apply to both public and private employers.
Fair hiring laws are also being implemented at the federal level. In December 2019, President Trump signed into law the Fair Chance to Compete for Jobs Act, which will take effect in December 2021 and applies to federal agencies and federal civilian and defense contractors, to prohibit inquiry into criminal history until a conditional job offer has been made.
As ongoing movements related to ban-the-box laws at the state and federal level show, compliance is increasingly more challenging, especially for multi-state employers. Despite the challenges, compliance is critical, as private corporations are paying significant penalties.
While the jury is still out on the long-term efficacy of ban-the-box efforts, there’s no doubt that the patchwork of these fair chance laws makes employment screening more complicated. Moreover, the adverse-action provisions of the federal Fair Credit Reporting Act (FCRA) have become a major lawsuit trigger, even without the added complications of local ban-the-box adverse-action requirements.
Read on to understand what ban the box means for employers, get an overview of state laws, and find out what you can do to help your organization stay compliant. We start with a look at some key terms you need to understand.
What is Ban the Box?
Ban the box is a national campaign designed to ban employers from asking questions regarding an applicant’s criminal history on initial job application forms. Promoted by advocates for people with records, ban-the-box laws and policies aim to remove the stigma associated with previous convictions and give all applicants a fair chance at employment.
The history of ban the box goes back to 1998, when Hawaii passed a law prohibiting employers from asking job applicants about their criminal history. The movement has been gaining traction ever since, with advocates saying that it is more important than ever, given stricter sentencing laws, and increased dependence on background checks since 9/11.
There are an estimated 77 million Americans with arrests or convictions who may have difficulty finding a job, even when highly skilled. Research shows that employment is a significant factor in reducing recidivism. Advocates of ban the box contend that these policies are not only beneficial for job seekers who have a criminal history, but are also good for the economy, as they help put people become employed.
Many industry groups, however, have criticized the ban-the-box campaign as they say it exposes companies to potential crime. Critics also contend that it increases the possibility of litigation and penalties, and significantly complicates the hiring process.
Despite the controversy, the movement continues to gain momentum, and today, there are 36 states and more than 150 cities and counties across the country that have adopted ban-the-box laws. For the majority of these states, the regulations cover public sector employment; however, 13 states have mandated removal of any conviction history questions from job applications for private employers.
Also, there are several private-sector employers, including Starbucks, Facebook, Walmart, and Target, that have adopted ban-the-box policies before being mandated to do so.
What is Adverse Action?
Adverse action describes the process employers must follow when rejecting, terminating, reassigning, or failing to promote an individual due, in whole or in part, to the results of an employment background check. The FCRA sets out three important steps that employers must follow when taking adverse action: Employers must send a pre-adverse action notice with a copy of the background report and a Summary of Rights; then give the candidate reasonable time to respond (typically five business days); then send a final adverse action notice.
However, as many different states, counties, and cities have passed their own versions of a ban-the-box law, some jurisdictions set out adverse-action requirements that are more robust than those prescribed under the FCRA, leaving employers to navigate both federal and local adverse-action requirements when using background checks. This article will dig deeper into this topic.
What are Fair Chance Laws?
Fair chance and ban the box are often used interchangeably, but reference different aspects of the hiring process. Ban the box is a campaign that was explicitly initiated to eliminate the check box on employment applications that asks candidates whether they have any prior convictions.
Fair chance policies do more than ban the box; many fair chance laws incorporate best practices outlined in the 2012 U.S. Equal Employment Opportunity Commission (EEOC) guidance on the use of criminal background checks in hiring, including:
- Delaying background checks and any records-related inquiries until after making a conditional offer
- Banning employment ads that say “background check required”
- Eliminating questions regarding criminal history during job interviews
- Imposing restrictions on an employer’s consideration and use of criminal convictions
While these policies vary from state to state and city to city, in general, they provide a better chance at employment for people with records. They go beyond removing the conviction history questions from job applications, and delay background checks until later in the hiring process, ensuring that potential employers consider skills and qualifications first.
What Does Ban the Box Mean for Employers?
For private employers, compliance can be challenging. Since there is no federal ban-the-box statute, and policies vary between jurisdictions, companies that hire across the country must comply with a variety of regulations.
Another dilemma for HR and hiring managers is finding the balance between giving applicants with prior convictions a fair chance and potentially becoming liable for negligent hiring. Organizations across the board are responsible for ensuring a safe working environment, and many consider knowledge of applicants’ conviction history to be essential for that purpose.
Ban-the-box policies do not forbid employers from running background checks, but some require a delay in obtaining one until after the first job interview, or after a conditional offer of employment is made. Several states also have laws that impose restrictions on an employer’s ability to use credit history in making employment decisions.
In some jurisdictions, employers face restrictions on how the information obtained in a background check, or credit check, can be used. Some require applicants to get additional notice, and in some localities, applicants have the right to appeal employer decisions based on criminal history.
While it’s possible to disqualify applicants based on criminal history, depending on the jurisdiction, there may be restrictions to be aware of. Hiring managers may wish to withdraw a conditional offer of employment, but in some localities, withdrawal is limited. For example, it is typically permissible to withdraw an offer of employment when a background check indicates a criminal conviction that directly affects the applicant’s ability to perform the job in question.
Since publishing its list of best practices in 2012, the EEOC has started to bring claims against employers for violating ban-the-box laws. State attorneys general may also enforce ban-the-box laws. Two major retailers, Marshall’s and Big Lots, paid significant penalties for continuing to ask applicants about their criminal history on initial employment applications. Continued enforcement of similar laws in Massachusetts, New York, Washington DC, and other jurisdictions have served as a wake-up call for organizations to bring their hiring practices into compliance.
Thirty-six states have ban-the-box laws in place, and 14 states do not. The following chart provides an overview of ban-the-box states, which employers are covered, and details of the law. The laws vary significantly from state to state, so it’s critical to understand whether the law may affect your organization, and how. (Keep in mind that this is a list of ban-the-box states; there are more than 150 counties and cities that have also implemented local fair hiring laws.)
States with Ban the Box Laws
|Arizona||Public, state agency employers||No criminal history inquiries prior to initial job interview|
|California||Any employer with 5+ employees||Criminal background inquiries prohibited until after conditional job offer|
|Colorado||Public, state agency employers||No background check prior to conditional employment offer or candidate has been named a finalist|
|Effective September 1, 2019, for all private employers with 11+ employees; effective on or after September 1, 2021, for all private employers||No criminal history questions on initial job applications|
|Connecticut||All employers||No criminal history questions on initial job applications|
|Delaware||Public employers||No criminal history inquiries or background check prior to initial job interview|
|Georgia||Public employers for the State of Georgia||No criminal history questions on initial job applications|
|Hawaii||All employers||No criminal history inquiries prior to conditional employment offer|
|Illinois||Any private employer with 15+ employees and public-sector employers for the State of Illinois||No criminal history inquiries prior to initial job interview, or after the conditional job offer if there is no interview|
|Indiana||Public employers in the state’s executive branch||No criminal history inquiries unless a particular crime precludes applicant for employment in particular job|
|Kansas||Public employers under jurisdiction of the Office of the Governor||No criminal history questions on initial job applications and a criminal record may not automatically disqualify a candidate from receiving an interview|
|Kentucky||Public employers in the executive branch for the State of Kentucky||No criminal history inquiries until after offering initial job interview|
|Louisiana||Public employers for the State of Louisiana hiring for an “unclassified” position||No criminal history inquiries until after initial job interview or conditional job offer if no interview is conducted|
|Maine||Public sector, state government employers||No criminal history questions on initial job applications|
|Maryland||Any private employer with 15+ employees and public-sector employers for the State of Maryland||No criminal history questions until after first interview|
|Massachusetts||All employers||Prohibits criminal history questions on initial application form, but also bans inquiries about certain types of crimes later in the hiring process|
|Michigan||Public employers||No criminal history inquiries until after initial job interview or conditional job offer|
|Minnesota||All employers||No criminal history inquiries until after initial job interview or conditional job offer if there is no interview|
|Missouri||Public employers in the executive branch of the State of Missouri||No criminal history questions on initial job applications|
|Nebraska||Public employers||No criminal history questions until the employer has determined the applicant meets the minimum employment qualifications|
|Nevada||Public employers||No criminal history inquiries until after a final in-person job interview or conditional job offer|
|New Jersey||All employers with at least 15 employees||No criminal history inquiries until after initial job interview|
|New Mexico||Public employers||No criminal history inquiries until applicant has been named a finalist|
|Private employers||No criminal history questions on initial job applications|
|New York||Public employers||No criminal inquiries prior to initial job interview|
|All employers||No criminal history questions related to a Youthful Offender Adjudication or any arrest that was processed as a Juvenile Delinquency proceeding in Family Court or any sealed arrest or conviction records, unless specifically required or permitted by NY state law|
|North Carolina||Public employers||No criminal inquiries on initial application or prior to initial job interview|
|North Dakota||Public employers (excluding school districts)||No criminal history inquiries until initial job interview|
|Ohio||Public employers||No criminal history questions before conditional job offer|
|Oklahoma||Public, state agency employers||No criminal history questions on initial job applications|
|Oregon||All employers||No criminal history inquiries until after initial job interview or conditional job offer if there is no interview|
|Pennsylvania||Public employers hiring for non-civil service positions falling under the governor’s jurisdiction||No criminal history questions on initial job applications|
|All employers||Employers should only assess pending cases and felony and misdemeanor convictions and must assess whether convictions relate to suitability for employment in the specific position|
|Rhode Island||All public employers for the State of Rhode Island and any private employer with four or more employees||No criminal history inquiries until initial job interview or later|
|Tennessee||Public employers||No criminal history inquiries on initial job applications|
|Utah||Public employers||No criminal history inquiries until initial job interview or conditional job offer if there is no interview|
|Vermont||All employers||No criminal history inquiries until an interview or until applicant is deemed otherwise qualified for a position|
|Virginia||Public employers in the executive branch||No criminal history inquiries until applicant is deemed otherwise qualified for a position|
|Public employers||No criminal history inquiries until applicant is deemed otherwise qualified for a position|
|All employers||No inquiries into arrests or convictions for simple possession of marijuana|
|Washington||All employers||No criminal history inquiries before job applicant is deemed otherwise qualified for a position|
|Wisconsin||Public employers||No criminal history inquiries until applicant is deemed otherwise qualified for a position|
The chart below includes states that do not currently have a state-wide ban-the-box mandate in place. Some of these states have city- or county-level policies; see our ban-the-box guide for details.
States Without Ban-the-Box Guidance
|Alabama||Idaho||New Hampshire||West Virginia|
Ban the Box and Your Hiring Process: A Step-by-Step Guide
While many ban-the-box laws apply to public sector employers only, blanket ban-the-box laws impacting both public and private sectors are on the rise. These laws present complexities for employers and continue to be controversial in some parts of the country. However, there is no doubt that as more states, counties and cities adopt these laws, organizations that do not comply will face stiff penalties.
HR professionals and hiring managers need to stay informed to ensure they are in compliance. Following are some recommended steps to take to help ensure your company is compliant with ban-the-box laws:
STEP 1: DETERMINE IF A BAN-THE-BOX LAW APPLIES TO YOU
Check to see if your organization or your prospective employees are in a ban-the-box jurisdiction. (GoodHire’s list of ban-the-box and fair hiring laws is straightforward and easy to use.) If there’s a law in one of those locations, you will need to determine whether your organization meets the definition of an “employer” under the law—usually based on number of employees—then determine whether your candidate meets the definition of “employee.”
In some locations with a ban the box law in place, not all employers are covered by the statute. For example, New Jersey’s ban-the-box law only applies to employers with 15 or more employees, while Washington, D.C.’s only applies to employers with 11 or more employees working in the district. And, as previously noted, some ban-the-box laws apply to only public employers or only private employers.
If your organization and your candidate meet those definitions, follow the provisions of the ban-the-box law for that candidate.
STEP 2: FIND OUT WHEN YOU CAN RUN A BACKGROUND CHECK
Most ban-the-box laws prohibit employers from running a background check prior to a conditional offer or a first interview. It’s important to check the timing provisions of the law so you know exactly when a background check is allowed.
STEP 3: FIND OUT WHICH CRIMINAL RECORDS YOU CAN CONSIDER
Some ban-the-box laws prohibit the consideration of non-convictions or records that do not directly relate to the duties of the job position. Determine whether the law in your jurisdiction restricts what kinds of criminal records you can consider in your hiring decision.
STEP 4: SCRUTINIZE ADVERSE ACTION REQUIREMENTS CAREFULLY
Some ban-the-box laws require that a pre-adverse action notice include extra documentation or a specification of the criminal record that could lead to adverse action. Employers may also be required to use a specific form (this is the case for employers in New York City and Los Angeles). Work with your background screener to make sure your pre-adverse action notice is compliant.
STEP 5: DETERMINE WHETHER ADVERSE ACTION WAITING PERIODS APPLY
Some ban-the-box laws specify special adverse action waiting periods that may apply to your jurisdiction. Federal law requires five business days, but some ban-the-box laws require longer waiting periods between pre-adverse and final adverse action. Work with your background screener to ensure the correct waiting period is followed.
STEP 6: BEST PRACTICE: PERFORM AN INDIVIDUALIZED ASSESSMENT
Finally, make sure you’re performing an individualized assessment if required. When you’re ready to send your final adverse action notice, make sure to share the results of that assessment, if required, and include any additional language required under your specific ban-the-box law. (GoodHire’s Comments for Context helps you make confident, effective, and fair hiring decisions when a candidate has a criminal record.)
By following this six-step framework, you’re more likely to be in full compliance with ban-the-box laws. If you use GoodHire, you’re already one step ahead! GoodHire’s integrated localized adverse action workflow handles the specific requirements of all the adverse-action rules that apply based on your location and your candidate’s location.
In addition, make sure that hiring managers are trained on the implications of ban-the-box requirements and how they impact their hiring procedures.
Best-practice guidance is to adopt the policies in the most stringent jurisdiction and use them as a model for the whole organization. HR professionals are also advised to have procedures reviewed by experienced employment attorneys to ensure compliance throughout the hiring process.
HANDPICKED RELATED CONTENT: The complex web of laws governing background checks is difficult to maneuver. Watch this on-demand webinar to find out what you need to do to stay compliant and protect your company. WATCH NOW
Adverse Action: Compliance with FCRA & Ban the Box
If you’re not located in a ban-the-box jurisdiction, you can focus on complying with the three-step adverse action process set out under the FCRA. However, if you are in a ban the box jurisdiction, make sure you’re complying with both federal law AND any local laws in effect. Don’t be fooled into thinking that federal law preempts or trumps local laws when it comes to ban-the-box requirements. To help you understand your obligations, check the ban-the-box law in your jurisdiction for the following criteria:
Adverse action requirements
Some ban-the-box jurisdictions merely delay the timing of a background check, while others regulate how an employer must perform adverse action. If the adverse action requirements under the ban-the-box law are the same as those under the FCRA, then you can perform adverse action by following the adverse action process outlined under the FCRA.
If, however, the FCRA’s adverse action requirements differ from those required under the applicable ban-the-box statute, you must comply with both laws in a way that most benefits the candidate.
For example, San Francisco requires that employers wait seven days after they send the pre-adverse action to send the final adverse action. Because the FCRA has a shorter five-day waiting period, the employer must wait the full seven days because it satisfies both the FCRA and the local requirement. However, Seattle only requires employers to wait only two business days between pre-adverse action and final adverse action. Because the FCRA favors the consumer by providing a longer waiting period, the Seattle employer must follow five-day waiting periods in the FCRA.
Adverse action steps
Ban-the-box laws usually target three different areas of adverse action. They may require:
- A different waiting period between sending pre-adverse action and final adverse action
- An explanation of the specific information in the background check that led to the adverse action
- Specific notifications to the candidate, such as a notice of their right to meet with HR and provide evidence of inaccuracy of the background check or rehabilitation after a conviction.
Use of a Consumer Reporting Agency (CRA) vs. DIY
Adverse action requirements under some ban-the-box laws apply regardless of whether you use a CRA, or procure the consumer report yourself.
This is a key difference between ban-the-box laws and the FCRA. The FCRA only applies when a consumer report has been procured from a CRA, but ban-the-box laws apply across the board. An employer who inquires into the criminal history of its applicants must follow local ban-the-box laws, regardless of whether the employer obtained the background check information without the use of a CRA.
Remember, if you’re using a consumer reporting agency to procure a background check on a candidate, you must always comply with the FCRA’s adverse action process, no matter what. So, make sure your adverse action process always includes providing a pre-adverse action notice, a five business day waiting period, and a final adverse action notice.
Next, make sure you’re giving your candidates all the benefits provided under the ban-the-box law. If the local law requires that the pre-adverse action notice includes a written statement as to what information in the report may lead to denial, then adjust your FCRA compliant adverse action notice to include this statement.
If the local law requires you to highlight areas of the report that are problematic, do that! Make sure you’re performing your federal law obligations while also expanding them in the way required by ban the box.
When in Doubt, Apply the Strictest Laws
As an employer, it’s your responsibility to understand your legal ban-the-box obligations, and build a compliant framework for following ban-the-box requirements at federal, state, county, city, and town levels. When compliance laws overlap, it’s best to apply the strictest laws to help mitigate risk for FCRA litigation or scrutiny by the EEOC. We’ve also created this helpful flow chart to help you determine which laws you have to follow—even when the rules seem to clash.
Q: ON THE JOB APPLICATION, CAN WE ASK IF AN APPLICANT HAS BEEN CONVICTED OF A CRIME?
You may ask this question if you are in a jurisdiction that DOES NOT have a ban-the-box law in effect. However, if you are in a jurisdiction (state, county, or city) with a ban-the-box law in effect that applies to your business, you must delay the criminal history inquiry (the box applicants check or don’t check) until later in the hiring process. Depending on your jurisdiction, some ban-the-box laws may require you to delay the background check until after a conditional offer is made.
Ban-the-box laws are designed to allow individuals with criminal records the opportunity to present their true qualifications for jobs, and for employers to consider their applications in light of those qualifications, without having a criminal history prejudice the process.
As ban-the-box laws continue to be enacted in new jurisdictions, it’s only a matter of time before most states enact a version of the law. A proactive compliance best practice is to remove prior conviction questions from your applications. Learn about your state’s laws.
Q: WHAT ARE THE WAITING PERIODS FOR ADVERSE ACTION, AND DO BAN-THE-BOX LAWS AFFECT THEM?
The adverse action waiting period is the amount of time an employer must wait between sending a pre-adverse action notice and a final adverse action notice.
Under federal law (FCRA), an employer must wait at least five business days after sending a pre-adverse action notice before sending the final adverse action notice. State and local ban-the-box laws can extend this waiting period, but those extensions vary by jurisdiction.
For example, if the ban-the-box law in your state requires seven days between pre-adverse action and final adverse action notices, you must wait seven days even though the FCRA only requires five. Moreover, if your ban-the-box law requires a two-day waiting period, you still must wait the full five days the FCRA requires. For more information about the adverse action process, download our decision guide.
Q: DO BAN-THE-BOX LAWS ALSO AFFECT THE LANGUAGE EMPLOYERS ARE ALLOWED TO INCLUDE IN JOB POSTINGS?
Yes, a few jurisdictions specifically prohibit employers from including language in job postings that “ask” applicants about their criminal history.
For example, New Jersey, New York City, Washington, and Wisconsin’s ban-the-box laws specifically prohibit job postings or advertisements that state: “background check is required,” “clean criminal history,” “no felons,” “no criminal background,” or any language that expresses any limitation in the hiring of an individual, directly or indirectly, based on his or her arrest or criminal background.
While the majority of ban-the-box laws do not expressly prohibit such language in job postings, use of such language could come under scrutiny by the EEOC, which views prior conviction questions with suspicion.
Q: DO BAN-THE-BOX LAWS APPLY TO SCREENING OF PROSPECTIVE VOLUNTEERS OR ONLY PROSPECTIVE EMPLOYEES?
Volunteer screening falls under the employment provisions of the federal FCRA. However, ban-the-box requirements typically don’t apply. So there is slightly less complexity around conflicting rules. Still, FCRA compliance and state law compliance can be challenging enough. Be sure to follow the FCRA, obtain consent on a clear and conspicuous consent form, and follow the federal adverse action process when screening volunteers.
Q: IF I USE GOODHIRE AND MY COMPANY IS BASED IN ONE STATE AND I’M SCREENING CANDIDATES IN DIFFERENT STATES, WILL GOODHIRE IMPLEMENT ANY RESTRICTIONS ON THE BACKGROUND CHECK BASED ON THE LOCAL AND STATE LAWS WHERE THEY LIVE?
Yes, that’s one of the advantages to using GoodHire! Since ban-the-box laws may apply to both the employer’s location AND the candidate’s location, GoodHire’s built-in, localized adverse action workflow is designed to recognize the company location, the work location, and the candidate’s location, and apply the strictest rule set from all jurisdictions. We take a complex process and automatically guide you through it step-by-step.
The resources provided here are for educational purposes only and do not constitute legal advice. We advise you to consult your own counsel if you have legal questions related to your specific practices and compliance with applicable laws.