In our initial post, BLS & Co. alerted companies and site selectors to the likelihood that more and more U.S. states are choosing to intercede in the employee/employer relationship in ways that can exceed federal regulations. In this commentary, we will review and discuss key state and local laws governing the recruitment and hiring of new workers, including Ban the Box laws, applicant salary history bans and applicant credit check bans.
Altogether, BLS & Co. has found an increasingly regulated employment landscape, with many state and local municipalities working to expand “fair-chance” hiring processes. Here’s what you need to know:
Ban the Box Laws
“Ban the Box” laws generally limit or prevent an employer from inquiring about an applicant’s criminal history (arrests or convictions) on an initial job application. These rules are intended to give ex-offenders a “fair chance” in the employment market. However, there are indications that some employers, understandably frustrated over their inability to inquire about applicants’ criminal history until late in the hiring process, are instead raising job requirements for education and experience, thus hurting the very population that the law is intended to help. Thirteen states have adopted some variation of Ban the Box law for private-sector employers.
In addition, the District of Columbia and 31 cities and counties now extend fair-chance hiring policies to government contractors. Eighteen of those localities – Austin, Baltimore, Buffalo, Chicago, Columbia (Mo.), the District of Columbia, Kansas City (Mo.), Los Angeles, Montgomery County (Md.), New York City, Philadelphia, Portland (Ore.), Prince George’s County (Md.), San Francisco, Seattle, Spokane and Westchester County (N.Y.) — extend such laws to private employers within their jurisdictions.
STATES WITH BAN THE BOX STATUTES
Salary History Ban
Forbidding employers from asking job applicants for information about their salary history is an increasingly popular public policy intended to improve pay equity among employees of varying age, ethnicities, gender, etc. Employers, however, have found these laws frustrating as they can make it more difficult (and lengthen the time required) to determine if an applicant aligns well with a position’s particular pay range.
Thirteen states and Puerto Rico have now passed legislation regulating the use of salary information during the hiring process of all private-sector employers. Delaware’s law applies to any company with more than four employees.
In addition, several jurisdictions in states that do not ban salary history questions for private-sector employers have chosen to do so at the local level. Notable cities include: Atlanta, Ga.; Louisville, Ky.; New Orleans, La.; St. Louis, Mo.; Kansas City, Mo.; Cincinnati, Ohio; Philadelphia, Pa. and Pittsburgh, Pa.
STATES THAT BAN SALARY HISTORY QUESTIONS BY PRIVATE EMPLOYERS
Many employers (not merely banks and financial institutions) favor having the ability to scour an applicant’s credit history for indications that a candidate may have a history of acting irresponsibly or negligently. At the federal level, the Consumer Finance Protection Bureau and the Federal Trade Commission enforce the Fair Credit Reporting Act (FCRA). FCRA does not forbid an employer from conducting third-party credit checks on job applicants provided (among others conditions) that the prospective employee has given their written consent to a review of their credit report.
However, in recent years, 11 states and the District of Columbia have gone beyond FCRA by placing additional restrictions on how and when employers can conduct credit checks as part of the employment verification process.
STATES RESTRICTING ACCESS TO CREDIT HISTORIES
While these restrictions vary, they generally limit employer access to credit reports to positions involving financial institutions, law enforcement, or to highly compensated individuals or persons who will have access to proprietary information or trade secrets.
Again, some municipalities have enacted regulations in states that have chosen not to do so. For example, New Orleans prohibits the use of credit history for the purpose of employing city contractors, except in limited circumstances. Further, New York City generally bans credit checks except for financial institutions and law enforcement jobs.
Lawmakers around the U.S. are increasingly treating jobs as an entitlement, rather than an earned opportunity. Layers of additional state and local regulation, such as those which apply to recruiting and hiring, can complicate an already nuanced and competitive labor and talent landscape confronting site selectors.
Many of these laws, while well-intentioned, can create undue financial, scheduling and record-keeping burdens on employers, and can also subject unwary companies to otherwise avoidable litigation, fines and penalties.
Stay tuned to BLS & Co.’s ongoing employment law series. Subsequent pieces will investigate wage and benefit laws (e.g., state minimum wages and pay equity), right-to-work status and workplace regulations affecting privacy, protected time off, scheduling changes and accommodations (maternity/paternity leave in particular) and non-compete agreements.
Andrew Shapiro is the managing director at Biggins Lacy Shapiro & Co., a specialty site selection and economic development incentives advisory firm based in Princeton, N.J. Andy Shapiro leads BLS & Co.'s San Francisco Bay Area office, which offers BLS & Co.’s full suite of services. Connect with Andy on LinkedIn or email him directly at email@example.com.