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New Changes to Section 19 Raise Questions for De Minimis Offenses, Regulation Z

Recently enacted changes to Section 19 of the Federal Deposit Insurance Act (Section 19) eased the restrictions on financial institutions when hiring individuals with criminal records, but the changes left some open questions regarding (i) the “de minimis” standard, and (ii) whether the changes to Section 19 effectively amended the Consumer Financial Protection Bureau’s (CFPB) Regulation Z (Reg Z), which applies to loan originators through Reg Z’s incorporation of Section 19 by reference.

John Gerak Cleveland Author

Kate E. Trinkle Indianapolis Author

Zachary V. Zagger New York Author

Congress Eases Criminal Offense Restrictions for Employment With Financial Institutions

Included in the defense spending bill signed by President Biden in December 2022 is a section with key provisions for financial institutions that will ease restrictions on hiring candidates with criminal records. Section 5705 in the National Defense Authorization Act (NDAA) for Fiscal Year 2023, titled “Fair Hiring in Banking,” further narrows convictions that would constitute a bar to employment under Section 19 of the Federal Deposit Insurance Act (Section 19) absent a written waiver by the Federal Deposit Insurance Corporation (FDIC).

John Gerak Cleveland Author

Zachary V. Zagger New York Author

Connecticut Clean Slate Law Brings New Requirements for Employers in 2023 and Beyond

On June 10, 2021, Governor Ned Lamont signed into law Connecticut’s “Clean Slate” law, Public Act No. 21-32. The Clean Slate law became effective January 1, 2023, and it provides for the automatic erasure of certain criminal records.

John G. Stretton Stamford Author

Andrés Jiménez-Franck Stamford Author

The Latest in Multi-Jurisdictional Background Check Compliance

Conducting criminal background checks on job candidates is a common practice for employers but one that raises a host of compliance concerns amid a series of federal, state, and local laws and regulations governing how and when background checks may be conducted.

Gustavo A. Suárez Greenville Author

James R. Silvers Greenville Author

Zachary V. Zagger New York Author

Des Moines Passes ‘Ban the Box’ Law Prohibiting Criminal Inquiries on Job Applications

On November 15, 2021, the city of Des Moines, Iowa, passed a “ban-the-box” law that will limit employer inquiries and background checks into an applicant’s criminal history until after a conditional offer of employment. Though the law was passed and has already taken effect, it has received little fanfare and media attention despite its implications for employers.

Gustavo A. Suárez Greenville Author

Christine Bestor Townsend Milwaukee
Chicago Author

Zachary V. Zagger New York Author

Arizona Strengthens Background Check Requirements for Nursing Home and Skilled Nursing Facility Employees

On March 18, 2022, Arizona Governor Doug Ducey signed nineteen bills into law, including, most notably for nursing home and assisted living facility employers, Senate Bill (SB) 1242, which strengthens employee background checks.

Nonnie L. Shivers Phoenix Author

Wisconsin Supreme Court Overturns Exception for Domestic Violence Crimes Under ‘Substantially Related’ Defense to Discrimination Claims

On March 10, 2022, the Wisconsin Supreme Court released its decision in Cree, Inc. v. Labor and Industry Review Commission, which provides significant clarity for employers evaluating whether a domestic-related crime of an employee or applicant is substantially related to a job and thus a lawful reason for discharging or not hiring the individual.

Brian M. Radloff Milwaukee Author

Jesse R. Dill Milwaukee Author

LIRC’s View of the ‘Substantially Related’ Defense to Arrest and Conviction Record Discrimination Claims: Will Recent Events in Waukesha Prompt Change?

Wisconsin is one of a limited number of states that prohibits discrimination in employment on the basis of arrest or conviction records. The Wisconsin Fair Employment Act (WFEA) protects “properly qualified individuals” from unlawful discrimination “by reason of their … arrest record[s] [or] conviction record[s].” Employers defending against claims of arrest- or conviction-record discrimination under the WFEA may raise a defense to liability that asks whether an employee’s or applicant’s charge or conviction “substantially relate[s] to the circumstances of the particular job[.]” That is, the WFEA provides that an employer is not prohibited from suspending an employee who is charged with a felony, misdemeanor, or other offense, or from refusing to employ an individual who is convicted of a crime that is substantially related to his or her position.

Jesse R. Dill Milwaukee Author

Maine’s New ‘Ban-the-Box’ Law: When Can Employers Inquire About Criminal Histories?

In July 2021, Maine enacted a new “ban-the-box” law that limits employer inquiries into an applicant’s criminal history. Under the new law, entitled “An Act Relating to Fair Chance in Employment,” employers are prohibited from including criminal history inquiries in an application, but can engage in such inquiries during an interview or once the employer has determined that the applicant is otherwise qualified for the position.

Gustavo A. Suárez Greenville Author

Louisiana Enacts Law Impacting Employer Consideration of Applicant Criminal Histories

On June 9, 2021, the Louisiana State Legislature passed House Bill (HB) No. 707, a measure that prohibits discrimination in employment based on criminal history records and that provides criteria for employers making hiring decisions in conjunction with criminal history records. This development will likely be good news for formerly arrested or incarcerated applicants reentering the workplace.

Andrew P. (Drew) Burnside New Orleans Author

Ellen C. Rains New Orleans Author

Nevada Amends Restrictive Covenant Statute

On May 25, 2021, Nevada Governor Steve Sisolak signed into law Assembly Bill (AB) 47, which amends Nevada’s noncompetition statute, NRS 613.195 and the Nevada Unfair Trade Practices Act. The changes will go into effect on October 1, 2021.

Anthony L. Martin Las Vegas Author

Suzanne L. Martin Las Vegas Author

Corissa L. Pennow Milwaukee Author

Supreme Court Provides Additional Guidance on FCRA Standing

On June 25, 2021, the Supreme Court of the United States issued a ruling that provides additional guidance related to the Fair Credit Reporting Act (FCRA), a federal law that regulates the collection of consumers’ credit information and access to their credit reports. In the employment context, the FCRA most frequently applies to background checks, including class actions alleging the most common background check claim—unlawful disclosure and authorization screens/forms (usually because of too much or too little information)—resulting in an informational injury.

S. Michael Nail Greenville Author

Stephen R. Woods Greenville Author

Michigan Supreme Court Pushes Back Effective Date for Personal Identifying Information Restrictions on Court Records

In May 2019, the Michigan Supreme Court issued rules that when implemented generally would prohibit Michigan courts from releasing personal identifying information (PII), such as birthdates, on court records. The rules were set to go into effect on July 1, 2021. Because consumer reporting agencies (CRAs) use PII to confirm the identities of the subjects of records and to comply with verification standards set forth in the Fair Credit Reporting Act (FCRA), CRAs would have been affected by the restrictions on access to court files, potentially impacting the timely and accurate release of background check information in Michigan.

Gustavo A. Suárez Greenville Author

Daniel G. Cohen Detroit (Metro) Author

Arizona’s New Law Affords Second Chances to Arizonans With Criminal Convictions

On April 1, 2021, Arizona Governor Doug Ducey signed into law House Bill (H.B.) 2067, which amends Arizona Revised Statute (A.R.S.) Section 13-905 to allow the courts to issue an order for a “Certificate of Second Chance” for individuals “whose judgment of guilt is set aside” after a criminal conviction. H.B. 2067 allows individuals who receive a Certificate of Second Chance the opportunity to apply for and obtain occupational licenses in Arizona, and provides some additional protections to employers, among other things.

Nonnie L. Shivers Phoenix Author

Illinois Enacts Stronger Anti-Discrimination and Equal Pay Laws Focusing on Criminal Convictions and Demographic Reporting

In 2021, the Illinois General Assembly passed Senate Bill (SB) 1480, which amends the Illinois Human Rights Act, the Illinois Equal Pay Act, and the Illinois Business Corporation Act. On March 23, 2021, Governor J.B. Pritzker signed the bill into law.

Jennifer L. Colvin Chicago Author

Michael H. Cramer Chicago Author

Where to Open Shop: New Report Ranks the Best Places to Do Business in the U.S.

The COVID-19 pandemic continues to affect the global economy, and employers are increasingly considering which are the most and least employer-friendly places new offices, distribution centers, and operational locations, both during the pandemic and after emerging from it. The Arizona State University Center for the Study of Economic Liberty recently released Doing Business North America 2020 (DBNA), a report analyzing and comparing data indicative of the regulatory context for business activity in a number of metropolitan areas. The report ranked 130 cities across Canada, Mexico, and the United States, based on 111 variables for determining where the best places to do business are currently (although given the ever-changing local, state, and federal landscapes, the assessment may change frequently). The variables underlying the rankings fall into six broad categories: starting a business; employing workers; obtaining electricity, land and space use; and paying taxes and resolving insolvency.

Nonnie L. Shivers Phoenix Author

New York City Amends Fair Chance Factors Under Ban-the-Box Law

On December 10, 2020, the New York City Council amended New York City’s Fair Chance Act (FCA), also known as the “ban the box” law. The recently enacted amendments will take effect on July 29, 2021.

James R. Silvers Greenville Author

Connecticut Employment Legislation in 2021: What’s on the Agenda?

Employers can expect an active 2021 Connecticut General Assembly since the 2020 legislative session was cut short. (The session lasted a little over a month before it was suspended on March 12, 2020, due to the pandemic and then officially adjourned on May 6, 2020.)

John G. Stretton Stamford Author

William C. Ruggiero Stamford Author

Nicole S. Mulé Stamford Author

San Francisco Issues Guidance on COVID-19 ‘Temporary Right to Reemployment’ Ordinance

On August 7, 2020, the San Francisco Office of Economic and Workforce Development (OEWD) published guidance regarding the City of San Francisco’s “Temporary Right to Reemployment Following Layoff Due to COVID-19 Pandemic Emergency Ordinance.” Also known as the “Back to Work” emergency ordinance, the ordinance took effect on July 3, 2020, requiring San Francisco employers with 100 or more employees to offer reemployment to eligible employees laid off because of the COVID-19 pandemic when the employers rehire for the same or similar job classifications.

Charles L. Thompson, IV San Francisco Author

California Legislature Advances Numerous Labor and Employment Bills

Despite all that is going on in the world, the California legislature has been busy this year. Below is a summary of the major employment law bills that are working their way through the state Assembly and Senate.

Christopher W. Olmsted San Diego Author

Michael J. Nader Sacramento Author

FDIC Loosens Requirements for Employment With Financial Institutions

On July 24, 2020, the Federal Deposit Insurance Corporation (FDIC) released a final rule to revise and codify into the agency’s regulations the FDIC’s Statement of Policy (SOP) on Section 19 of the Federal Deposit Insurance Act. Section 19 generally prohibits any person from participating in banking who has been convicted of a crime “involving dishonesty, breach of trust, or money laundering, or who has agreed to enter into a pretrial diversion or similar program in connection with a prosecution for any such offense,” without first obtaining written consent from the FDIC. The SOP provides guidance relating to Section 19 and the FDIC’s application of the statute.

John Gerak Cleveland Author

Joseph B. Cartafalsa New York Author

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