Update (Sept. 1, 2023): On Sept. 1, 2023, OPM issued
the final regulations implementing the Fair Chance Act for employees of the
federal government. The proposed FAR rule affecting government contractors has
not been released.
Update (June 2, 2022): Federal “Ban the Box” Regulations Proposed
In December 2021, covered federal contractors may start seeing new or amended solicitations and contract clauses that prohibit them from inquiring into job applicants’ criminal backgrounds. The federal Fair Chance to Compete for Jobs Act of 2019 (Fair Chance Act) regulates how and when federal contractors may consider the criminal histories of applicants and employees. It does not appear that the law will apply to federal subcontractors.
While the Fair Chance Act was first signed into law on Dec. 20, 2019 as Section 1123 of the National Defense Authorization Act for Fiscal Year 2020, it does not take effect until Dec. 20, 2021. The law bans civilian and defense executive agencies from either awarding federal contracts or releasing payment to a contractor who violates the statutory requirements. Specifically, as a condition of either contract award or receiving payment on a contract, government contractors may not request a job applicant on the contract to disclose his or her criminal history information prior to the contractor’s extending a conditional offer of employment. This restriction applies to criminal background requests made either verbally or in writing.
Exceptions to the restriction exist when: (1) consideration of the criminal history record is required by law; or (2) the employee will have access to classified information or have sensitive law enforcement or national security duties, if hired. Likewise, covered agencies may not require either an individual or sole proprietor bidder to disclose criminal history record information before determination of the apparent awardee.
The law required the Administrator of General Services to issue regulations by April 20, 2021 that would identify other positions exempt from the law. Specifically, the regulations were supposed to consider as exempt positions that involve interaction with minors, access to sensitive information, or managing financial transactions. However, the government has not issued such regulations to date. Although the Defense Acquisition Regulatory Council Director in January 2020 tasked the Acquisition Law Team to draft a proposed Federal Acquisition Regulation rule, no such rule has been published. The latest report extends the deadline to January 5, 2022 – which is now after the statute takes effect.
In addition to the federal Fair Chance Act, contractors should be mindful of their obligations under other federal, state and local laws. For example, federally, the Equal Employment Opportunity Commission (EEOC) scrutinizes background check policies that may have an asserted statistical disparate impact on employees in protected classes, requiring such limits – among other things – to be job related and consistent with business necessity.
In 2012 the EEOC published Enforcement Guidance explaining that an employer can demonstrate an exclusion meets the “job-related” standard in one of two ways. First, the employer can validate the criminal conduct screen for the position in question pursuant to the Uniform Guidelines on Employee Selection Procedures, a set of federal guidelines that address the use of tests and other selection criteria in hiring and other employment decisions. Second, an employer can conduct a “targeted screen” based on the three “Green” factors (taken from the federal Green v. Missouri Pacific Railroad decision), analyzing: (1) the nature and gravity of the conduct; (2) the time elapsed since the conduct or completion of the sentence; and (3) the nature of the job. Evaluating these factors and conducting an individualized assessment can help guard against potential violations of the federal non-discrimination statutes the EEOC enforces. The same is true with respect to affirmative action plan audits, given that in 2013 the Office of Federal Contract Compliance Programs (OFCCP) adopted EEOC’s enforcement guidance as applicable to federal contractors and subcontractors, as well, for purposes of the OFCCP’s compliance reviews.
On the state and local level, contractors should also bear in mind and follow applicable “ban the box” laws. Fifteen states and 22 cities currently prohibit private employers from inquiring about criminal conviction history on job applications, and the District of Columbia and approximately 37 cities and counties have laws affecting government contractors as well. McGuireWoods has addressed some of these obligations in legal alerts on Sept. 5, 2014; June 3, 2015; and more recently on May 22, 2020.
For questions related to the Fair Chance Act or criminal background checks generally, contact any of the authors or another member of the McGuireWoods labor and employment, affirmative action or government contracting teams.