Monthly Archives: December 2008

New York Passes Four New Rules Affecting Background Checks to Help Ex-Offenders Have a Second Chance

Effective February 1, 2009, three (3) new rules go into effect in the State of New York designed to give ex-offenders a second chance of entering the workforce.  These rules affect both employers and background firms.  A fourth law, effective September, 2008, gives employers some additional protections against lawsuits for negligent hiring if they can show that an applicant with a criminal record was hired after good faith consideration of the rules affecting the use of criminal convictions.

Under existing New York law (Correctional Law Article 23-A), an employer is required to consider and balance various factors where an applicant has a criminal record (unless, of course, there is a statute that prohibits the employment of a person with certain convictions).  The factors are set out in New York Corrections law section 753 found at:

The factors enumerated in section 753 of Article 23-A include such things as:

  1. The duties of the job
  2. The relationship between the criminal offense and the job
  3. How long ago the conviction occurred
  4. The applicant’s age at time of the crime
  5. How serious the offense was
  6. Information produced regarding the applicant’s rehabilitation and good conduct.

In passing some of these laws, the New York legislature cited a 2007 study that found that New York employees were largely not familiar with New York laws on utilizing past convictions, or that a criminal record poses a significant barrier to employment.

In response, the three new laws require the following effective February 1, 2009:

1.    Provide a copy of Article 23-A:  An employer must provide a copy of Article 23-A to all job applicants undergoing a background check.  An employer may want to provide that notice at the same time the applicant signs a consent form and receives a disclosure form.  A technical reading of the statute may suggest such a requirement is limited only to a situation where an employer is requesting a special type of background report called an ‘Investigative Consumer Report,’  where information is obtained through interviews.  However, the legislature in New York, based upon the legislative history, clearly intended this to apply to all consumer reports.  As a best practice, employers should consider providing this notice regardless of the type of background report being conducted. 

2.    Posting a copy of Article 23-A:  An employer must also post a copy of Article 23-A in ‘a place accessible to his or her employees and in a visually conspicuous manner.’  Employers can simply download the copy of 23-A linked in this article.  The required notice will likely be included in commercial labor posters that come out in 2009 for the state of New York.

3.    Provide additional copy of Article 23-A if a criminal record is found:  Where a background report on an applicant contains information on a criminal conviction, the employer must again provide a copy of Article 23-A to the applicant. 

As part of the legislative approach, New York employers that follow Article 23-A now have increased protection from lawsuits for negligent hiring. This protection applies where an employer hires someone that has a conviction history but the employer has made a reasonable and good faith determination that, due to the factors in Article 23-A, the applicant should still be hired. In that situation, there is a ‘rebuttable presumption’ that evidence of the employee’s past criminal record cannot be admitted into evidence and be used against the employer. 

A ‘rebuttable presumption’ is an assumption of fact accepted by the court until disproved by the other side.  For example, evidence of the employee’s past criminal record can only be used in a negligent hiring case if the plaintiff can overcome the presumption by showing that there was not a reasonable and good faith determination by the employer under article 23-A.  This new protection can potentially provide employers that do hire applicants with a criminal record protection from a lawsuit as long as the employer can document  that the employer discovered the criminal record and then applied the criteria in Article 23-A in a reasonable and good faith manner.

ESR clients will receive a detailed memorandum and training in January on the details of these new laws in New York as well as some other ‘only in New York’ rules. This also raises issues on how employers that are not in New York need to deal with New York applicants or applicants that formerly lived in New York. 

The Story Behind the Story-Why States and Cities are Concerned about Second Chances for Ex-Offenders

There is an increasing awareness in the United States that ex-offenders are having difficulty obtaining jobs due to their criminal records.  Although employers have a duty to exercise due diligence to promote a safe workplace, civil rights laws also do not permit employers to automatically disqualify someone with a criminal record before considering if there is a business justification based upon the nature and gravity of the crime, the nature of the job and how long ago the job occurred.  As noted above, New York has added additional factors that can be considered.

As reported in past ESR newsletters, there have been efforts made to help ex-offenders obtain jobs. In its January, 2007 newsletter, ESR reported that a number of municipalities were not asking about past criminal records on the initial application. The short-hand name is “ban the box,” referring to the box on an application asking about past criminal conduct. The logic behind theses law is to ensure that applicants are considered for jobs based upon their qualifications and experience before the employer searches for criminal records. In addition, such protection also encourages ex-offenders to apply in the first place. Cities are concerned about the burden placed on them by large numbers of un-employed ex-offenders.  See:

In March, 2008, the ESR newsletter discussed a meeting of the Conference of Mayors in New York City on the same topic. According to a press release from the Conference;

“With 1 in 31 American adults in prison, jail, on parole or probation, the US prison system is in crisis. Hundreds of prisons nationwide are overcrowded to the breaking point, and high recidivism rates are largely to blame: 39 percent of prisoners have served three or more sentences. This cycling in and out of prisons is taking a devastating economic toll on already-vulnerable urban communities. At this critical moment, policymakers and experts are determined to come together and develop concrete solutions to making sure that people who leave prison do not reoffend and go back.”


In the September, 2006, edition, ESR reported on lawsuits for discrimination based upon ex-offenders denied employment.

In passing the new laws in New York, the New York legislature gave as a justification that up to 60% of ex-offenders are unemployed one year after release and there is a strong correlation between unemployment and recidivism.  The legislature cites statistics that, in New York State, eighty-three (83%) of individuals who are in violation of the terms of their probation are unemployed.  See (legislative justification contained in New York A07847)

The bottom-line: As a society, we do not want to risk the lives and property of people by bad hiring decisions. Employers who fail to exercise due diligence can be sued, and innocent consumers, co-workers and members of the public can be the victims of workplace violence, theft or other wrongdoing.     

On the other hand, our society does not want to create a permanent class of unemployable ex-offenders who can never re-enter society and be productive. Automatic rejection of any applicant with a criminal record makes it very difficult for an ex-offender to get back into the workforce. Given that, on the average, it costs over $30,000 a year to incarcerate a prisoner in the United States, and that without a job it is very difficult for an ex-offender to become a law abiding tax paying citizen, it is critical that society gives everyone an opportunity to work. Unless ex-offenders can get a second chance, our society will spend more time and resources building prisons instead of schools, hospitals and roads.

The key is to understand that there is a job for everyone, although not everyone is qualified for every job. Employers should not overreact or react automatically because an otherwise qualified applicant has had difficulty in the past unless there is a business justification to reject the applicant. However, this pre-supposes that employers are doing proper screening and practice due diligence in their hiring.

It is also important for our society to help with the re-entry of ex-offenders by supporting programs and opportunities. In fact, the National Association of Professional Background Screeners ( has donated money to such programs.

Background screening firms are often caught in the middle of this debate.  Although a screening firm does not make the hiring decision, screening firms are retained by employers to research potential criminal records.  A background screening firm should clearly advise employers that there are limitations on the use of criminal records.

How a Simple Background Check Could Have Saved Investors $340 Million

A shocking story in the December 7, 2008, San Francisco Chronicle recounts how investors lost $340 million, over one-third of a billion dollars, invested in a start-up firm that went bankrupt due to a dysfunctional CEO named John P. Rogers that was only minimally background checked.

The firm was developing “pay by touch” machines for biometric payment at checkout stands. “Pay By Touch” lost $137 million on $600,000 in revenues in 2007, according to the news story, and the firm was in total disarray.  According to news reports, the CEO engaged in drug abuse, partying and other excesses, such as instructing his staff to give jobs and shares of stock to women he met.

Smart investors, including two billionaires and Venture Capitalists, were among the people hoodwinked into investing millions of dollars.  A nationally known wealth management investment firm, according to the new story, continued to ensnare investors, including NFL players, even after the firm was in trouble and even though it did not do a background check.

According to the article, there was plenty in Roger’s past that would have demonstrated that no sensible person would have invested in this endeavor.  The Chronicle uncovered civil judgments and other run-ins that would have been big red flags for rational investors.  The matter is now in litigation.  The full incredible story is available at

What is even more incredible is that the cost of doing a due diligence check on a CEO, partner, joint venture or other investment is de minimis.  There are numerous sources of information available to professionals that could have potentially saved investors from this type of debacle for less than some of these investors may spend for a nice dinner.

ESR offers a service called an “Integrity Check,” designed to conduct due diligence in critical business relationships, such as appointing members to a board of directors, entering into a joint venture or other business relationship, acquiring a business, investing in a business or numerous other situations where the integrity of who you are dealing with is critical.   For more information on in-depth integrity checks when it comes to investment and business dealings, see: