Federal “Ban the Box” Regulations Proposed

June 2, 2022

The U.S. Office of Personnel Management (OPM) proposed initial regulations to implement the Fair Chance to Compete for Jobs Act of 2019 (Fair Chance Act). The proposed regulations would apply to federal employees and will serve as the model for forthcoming regulations governing how and when federal contractors may consider the criminal histories of applicants and employees.

Background on the Law and Regulatory Process

As McGuireWoods previously reported, the Fair Chance Act, Section 1123 of the National Defense Authorization Act for Fiscal Year 2020, was signed into law on Dec. 20, 2019, and took effect on Dec. 20, 2021. The law bans civilian and defense executive agencies from both awarding federal contracts and releasing payment to any contractor that violates the statutory requirements.

Specifically, as a condition of either a 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 extension of a conditional offer of employment. This restriction applies to criminal background requests made verbally and in writing. The Fair Chance Act provides two exceptions to the restriction, namely when: (1) consideration of an applicant’s criminal history is required by law; or (2) the individual, if hired, will have access to classified information or hold sensitive law enforcement or national security duties.

The statutory text left many questions unanswered and delegated rulemaking authority to the Federal Acquisition Regulatory Council (FAR Council). The FAR Council, in turn, is required to issue regulations consistent with those issued by OPM. Likewise, the law authorizes the Administrator of General Services, in consultation with the Secretary of Defense, to identify additional categories of positions to which the law does not apply.

OPM proposed the first set of regulations through a Notice of Proposed Rulemaking (NPRM), issued April 27, 2022. While these regulations, if adopted, will affect only federal employees, as noted above, the regulations also will serve as the blueprint for regulations the FAR Council will issue applicable to federal government contractors. To date, and not inconsistent with other rulemaking processes, the Open FAR/DFARS Case reports disseminated by the Office of the Under Secretary of Defense have indicated continued postponement of the deadline for the FAR Acquisition Law Team to draft a proposed FAR rule.  See FAR Case No. 2020-008.

Details on the OPM Proposed Regulation

As an initial matter, the proposed OPM regulations contain a number of procedural elements that are likely limited to federal employment. Of most interest to federal contractors, however, the proposed regulations identify positions for which the prohibition under the Fair Chance Act for collecting criminal history information will not apply. These exceptions would include: (1) any position for which an agency is required by statute to inquire about criminal history prior to making an offer; (2) positions that may access classified information; (3) positions designated as sensitive by OPM and the Office of the Director of National Intelligence; (4) dual-status military technicians subject to a determination of eligibility for acceptance or retention in the armed forces, in connection with concurrent military membership; (5) federal law enforcement officers; and (6) political appointees.

Agencies also may request exceptions from OPM on a case-by-case basis. In turn, OPM will consider such requests based on specific job-related reasons as to why the agency needs to evaluate an applicant’s criminal history for a position prior to making a conditional offer of employment, giving due consideration to positions that involve transactions with minors, access to sensitive information or managing financial transactions. OPM will consider, among others, such factors as the nature of the position being filled and whether a clean criminal history record would be essential to the ability to perform one of the duties of the position effectively.

The proposed OPM regulations also establish a complaint process for job applicants to allege violations of the Fair Chance Act. Applicants initially would file a complaint with the employing agency, which would investigate and transmit the complaint and corresponding investigative report to OPM. If OPM determines that an agency employee has violated the Fair Chance Act, OPM may direct an employing agency to: (1) issue the employee a written warning; (2) process a suspension; and (3) collect a civil penalty.

Next Steps for Federal Contractors

The NPRM is subject to a notice-and-comment period that ends June 27, 2022. Comments may be submitted through the Federal eRulemaking Portal. Once OPM issues a final rule, the FAR Council presumably will propose its own, largely consistent regulations. The FAR Council is required to explain any substantive modification of the OPM regulation. It remains to be seen how closely the contractor regulations will adhere to the regulations issued by OPM. Given the statutory mandate that the FAR Council model its regulations on the OPM’s regulations, federal contractors should remain alert for forthcoming proposed changes to the FAR.

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 employmentaffirmative action or government contracting teams.