Wednesday, March 15, 2017

Making Minority Hiring Better In Theory And Worse In Practice


I'm friends with some very thoughtful minority business owners who have made a conscious decision to hire ex-cons who’ve exhibited a willingness to bootstrap themselves up from where they used to be.  One is Jailhouse Christian who has been blessed with financial success. His own faith took root while he was an inmate at Wasco State Prison.  He now runs a very successful auto repossession business, but also suffers from the searing pain of having had to bury his own son, who he lost to the world of gangs and drugs. Another is an ex-con who runs an automotive service business in San Fernando. Both are outstanding human beings. But, unlike most business owners, they measure their success by the number of lives they can touch, not the number of dollars in their bank account.  They each probably give away more money than they keep, but, as one of them puts it, “as long as he keeps blessing other people, the Lord keeps blessing him.” As much as I admire both of these men, it is clear that their business experience is not representative of the business community at large. The business community is risk-averse, and hiring people with a sordid past can be risky, especially if that past includes violence. When the City of Los Angeles enacted FCIHO, the Fair Chance Initiative for Hiring Ordinance, city rule makers wanted to encourage employers to give people with prior criminal histories a chance. Starting January 1, 2017, Los Angeles businesses that employ ten or more employees have been given new mandates that are supposed to be more forgiving to those of us with a sordid past.  


Let’s clear the air about pre-employment screening. The City of Los Angeles bureaucrats meant well. The old “have you ever been arrested?” checkbox on a background questionnaire is long gone, and good riddance. With the original “box,” a current state prison parolee and a 60’s freedom rider were both considered equally worthless. The question made no distinction as to whether the accused was adjudicated innocent or guilty. With institutional bias in law enforcement, disparate sentencing in the court systems, and a host of other societal evils, this wording was a particularly bad choice.

While the old “been arrested” or the modern "been convicted" part of the question comes down hard on Black and Latino males in particular, the front half of the question “have you ever,” comes down hard on older applicants who had cleaned up their lives and left their youthful indiscretions behind. “Have you ever,” has now gone away too, even when followed by the phrase “been convicted of a crime.” 
The question an HR professional in California would likely ask today, is “have you been convicted of a crime in the last seven years.” While the “Ban the Box” or BTB concept is simple, keeping on top of its recordkeeping requirements is not. BTB started in Hawaii in the late 90’s, and has since spread to 24 states and 150 cities and counties, each with variations on the theme. The way it typically works is: 


1.      The employer's not allowed to ask up front about criminal convictions.

2.      With a signed release from the applicant, a criminal background check is done once a conditional offer of employment is received.

3.      If the background reveals an adverse finding, the applicant receives a "pre-adverse action notice," and gets an opportunity to challenge inaccuracies.

4.      If the applicant doesn't respond in a timely manner, an "adverse action notice" is sent telling them they've out of the running.


Labor and employment laws have changed tremendously over the years. Many of these changes have turned out to be for the better, but hiring decisions are still ventures into shark-infested waters. The small business owner can find him or herself stuck between a rock and a hard place. The rock that can hit small business owners is a negligent hiring or negligent retention action. In a negligent retention action, the sword that Plaintiff’s Counsel is looking for is proof that:

1.      Your employee behaved badly.

2.      You should have known about it.
 Understanding the rock is comparitively straightforward. It sticks out of the shark infested waters. As long as you do a pre-employment background check, you’ll likely see what you "reasonably should have known." Understanding the hard place of “fair employment practices,” is more like sailing shark infested waters where there are submerged reefs. Those submerged reefs are a rocky field of federal, state, county, and municipal requirements. In a fair employment practices action, the sword Plaintiff’s Counsel is looking for is proof that:

1.      The employer made an adverse employment decision.

2.      The decision was made without giving the employee a fair chance.
 The first question out of a business owner’s mouth is likely to be “that sounds kind of vague, define fair chance.”


Under LA’s 2017 rules, you can no longer say that a criminal background must be “passed to be considered for a position,” and you can’t inquire about an applicant’s criminal history prior to extending a conditional employment offer, but it’s a lot more complicated than that. Here’s the short version for employers hiring in the VICINITY of Los Angeles:

NAVIGATING - the short version

1.      Make a determination whether the applicant falls within the expanded definition of “Employee” as defined in FCIHO.

a.       Is their workplace within the City of Los Angeles?

b.      If not, during the last four weeks before the position was advertised, did the individual performing the job perform two or more hours of work inside the City of Los Angeles on an average week?

c.       Is the applicant a “telecommuter” who works for an employer outside the city while living inside the City of Los Angeles?

d.      If you answered yes to any of the above, they’re subject to FCIHO.

2.      Collect resumes, applications, etc., without touching on the issue of criminal history at all.

3.      Conduct interviews without touching on the issue of criminal history at all.

4.      Extend a conditional offer of employment. Get the candidate’s written permission to conduct a background investigation.

5.      Have a criminal background investigation done, making sure the investigator redacts any inadmissible findings.

6.      If a history of criminal conduct is found, assess whether that history is deemed an “unreasonable risk.” 

7.      If the answer is “yes,” prepare a written notice specifically articulating why that conditional employee’s conviction constitutes an unreasonable risk to the company. This notification should consider, at minimum, the nature and gravity of the offense, the time that has passed since the offense and/or sentence, and the nature of the job held or sought.

8.      Record the date the conditional employee is notified, follow all document retention requirements, and give the conditional employee at least five business days to complete the Fair Chance Process.

9.      If the conditional employee submits evidence or other information, do the whole assessment process over again, considering what the conditional employee provided.

They say the path to hell is paved with good intentions. They also say that “in propria persona” means your lawyer has a fool for a client. With FCIHO, Los Angeles has reached the point when employers need to either write their own legal arguments explaining how their conditional employee’s criminality precludes them from working, or hire a labor and employment attorney to write custom responses every time a background gets a “hit.” 


In some cases, “criminal conduct exclusion” is a fairly clear business necessity. A past crime shouldn’t be used to exclude a conditional employee unless it is in some way relevant to the job they are being asked to perform. Clearly pedophiles doing childcare and bank robbers driving armored cars are legitimate criminal conduct exclusions, but how does an employer handle a conviction related to domestic violence where both the alleged victim and the alleged perpetrator were criminally charged. There’s no way in the world a streetwise California business owner would make that call without involving a labor and employment lawyer. 

The simple fact however, is that when business owners feel legal pressure to give an up or down vote, things go sideways, and that’s where the problem lies. Under the new L.A. system there are clear winners, and clear losers. 


The biggest winners are:

1.      Los Angeles area Labor and Employment Attorneys

2.      LA City Bureau of Contract Administration & Office of Finance Bureaucrats.

 The biggest losers are: 

1.      Low skilled Black males without criminal records

2.      Low skilled Latino males without criminal records.

 Why? In the words of Yogi Berra “In theory, things turn out the same in theory and in practice. In practice, they don’t.” Call it subconscious avoidance, pernicious racism, or a reality check, but given the litigious climate here in sunny Southern California, the simple fact is that employers don’t want to hire people who’ve been convicted of crimes. BTB was conceived as a way to combat racial prejudice, and while that’s a good premise on the surface, when we look at actual employer behavior, it’s an ugly game of connect the dots. 

In the real world, employers know that some minority populations, particularly young Black and Hispanic men, are disproportionally represented in the criminal justice system. When Jennifer Doleac of the University of Virginia and Benjamin Hansen of the University of Oregon did a BTB study(1), they found that “removing information about job applicants’ criminal histories could lead to employers who don’t want to hire ex-offenders to try to guess who the ex-offenders are, and avoid interviewing them. In particular, employers might avoid interviewing young, low-skilled, black and Hispanic men when criminal records are not observable. This would worsen employment outcomes for these already-disadvantaged groups. In this paper, we use variation in the details and timing of state and local BTB policies to test BTB's effects on employment for various demographic groups. We find that BTB policies decrease the probability of being employed by 3.4 percentage points (5.1%) for young, low-skilled black men, and by 2.3 percentage points (2.9%) for young, low-skilled Hispanic men. These findings support the hypothesis that when an applicant's criminal history is unavailable, employers statistically discriminate against demographic groups that are likely to have a criminal record.” 


The City of Los Angeles, despite good intentions, has almost certainly taken the single largest problem with BTB, and given it a dangerous injection of steroids with the implementation of FCIHO. 

1.        Doleac, Jennifer L., Hansen, Benjamin. National Bureau of Economic Research Working Paper No. 22469. NBER, July 2016.

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