Why Fair Chance Hiring Can Lead to Better Talent Acquisition

Fair chance hiring is an act in place to help give everyone a fair chance at getting a job. Today, about 77 million Americans (or one in every three adults) have some type of criminal record, ranging from arrests to felony convictions. Whether convicted or not, these individuals often face significant stigma when trying to find employment or re-enter the workforce after serving a prison sentence. In fact, just having a criminal record can reduce an employer call-back rate by 50%. This points to serious bias in many businesses’ hiring practices.

Formerly incarcerated individuals have the most difficulty finding work due to employment bias. Yet, these people have the same aspirations and hopes as anyone else—they want to build a better life for themselves and provide for the people they love. This becomes impossible if they’re systematically shut out of the workforce before they can even try to re-establish themselves.

So how should organizations balance inclusive hiring with compliance and protecting their workforce and business? The answer: fair chance hiring.

We asked Checkr, one of our background check solution partners, to dive into how organizations can use fair chance hiring practices to build more diverse, equitable, and inclusive workplaces.

Below you can discover more about the Fair Chance Act and how opening the talent pool for hiring can help your business in several ways. Read on to find out more.

First, What Is a Conviction?

A conviction is a formal declaration by a judge or jury that a person is guilty of committing a crime. There’s a range of convictions that exist on a spectrum, but the most common convictions include drug, weapon, sex, and larceny-theft offenses.

The consequences of a conviction depend on factors like the nature and severity of the offense, federal and state laws, and the defendant’s criminal history. Some potential outcomes include probation, fines, community service, restitution, treatment programs, and incarceration.

Racial minorities are incarcerated at much higher rates in the US. According to The Sentencing Project, Black people are incarcerated in state prisons at nearly five times the rate of White people, and Latinx people are incarcerated at 1.3 times the rate of White people. And the Safety and Justice Challenge reports states with higher Native American populations have incarceration rates up to seven times higher compared to White people.

When it comes to marrying the principles of diversity, equity, and inclusion (DEI) with hiring, most organizations still feel justified in discriminating against formerly incarcerated and justice-impacted individuals. This is tragically ironic since refusing to hire Americans with criminal backgrounds has a disproportionate effect on racial minority applicants.

“The effect of a criminal record is...40 percent larger for [B]lacks than for whites.” –Devah Pager, “The Mark of a Criminal Record,” American Journal of Sociology

What Is Fair Chance Hiring?

Fair chance hiring is built on the premise that individuals with a criminal history have the right to be fairly assessed for a role they’re qualified to fill.

While specific legislation varies at the federal, state, and local levels, fair chance hiring essentially requires employers to consider a candidate’s criminal record only after they’ve been interviewed and are found to be qualified for the open position.

HR Compliance: What Regulations Support Fair Chance Hiring?

From legislation to incentives, there are many policies that mandate or encourage employers to implement fair chance hiring practices. Some include:

Ban the Box

Ban the Box policies prohibit employers from asking individuals about their criminal history on a job application and delay background checks until later in the hiring process. The “box” refers to the yes/no check box many employers previously included on application forms asking if the candidate had ever been convicted of a crime.

Hawaii was the first state to enact Ban the Box policies in 1998. Currently, 37 states, Washington D.C., and over 150 cities and counties have passed Ban the Box legislation. In most states, the laws only apply to public-sector employment. According to the National Employment Law Project, 15 states and 22 cities and counties extend their laws to private companies.

The Fair Chance Act

Through the years, many jurisdictions have expanded their Ban the Box policies, evolving into what’s commonly called Fair Chance legislation. Forming part of the National Defense Authorization Act, the Fair Chance to Compete for Jobs Act passed Congress on December 17, 2019.

The law prohibits federal agencies and contractors from inquiring about criminal records in job advertisements, application questions, and interviews; they can only ask candidates about past convictions after they make a conditional offer. However, the Act does not apply to roles where a background check is required by law.

In October 2023, the US Office of Personnel Management (OPM) finalized regulations regarding the Act, including a complaint process for applicants. OPM also details penalties for federal employees who’ve violated the Act, such as written warnings and suspensions without pay.

There are several local ordinances for fair chance hiring as well. For example, under Seattle’s Fair Chance Employment law, employers cannot run criminal background checks until they’ve conducted an initial screening to eliminate unqualified applicants. Employers must also give the applicant a chance to explain or correct criminal history information, plus hold the position open for at least two business days.

Neither Seattle’s ordinance nor Washington state’s Fair Chance Act apply to prospective applicants who will have unsupervised access to children under 16 or vulnerable people. Washington’s law also doesn’t apply to applicants for law enforcement agencies, financial institutions, or other employers who are permitted or required by law to consider an applicant’s criminal record for employment.

The Equal Employment Opportunity Commission

While Title VII of the Civil Rights Act doesn’t explicitly protect people with a criminal record, the Equal Employment Opportunity Commission (EEOC) provides clear enforcement guidelines related to fair chance hiring:

• Excluding individuals from a job solely based on an arrest record violates Title VII.
• Being convicted of a crime is also not enough to automatically disqualify someone from a job.
• Disqualifying an applicant based on their criminal record must be “job-related for the position in question and consistent with business necessity.”

The EEOC’s rationale behind each of these guidelines boils down to the following factors:

• The American justice system discriminates against race and national origin.
• Criminal record databases aren’t always kept up to date and contain errors.
• Whether overtly or unintentionally, employers can potentially use criminal records as a means of committing further racial and ethnic discrimination.

Work Opportunity Tax Credit

The Work Opportunity Tax Credit (WOTC) is a federal tax credit program available to employers who hire individuals from 10 targeted groups, including qualified ex-felons. WOTC benefits businesses by reducing tax liability while fostering more inclusive and supportive work environments.

4 Key Benefits of Fair Chance Hiring

With fair chance hiring, employing someone with a criminal record isn’t just about fighting against bias and discrimination. It’s also good for business.

Here are some of the major benefits of fair chance hiring practices:

• Larger talent pool: Businesses that practice fair chance hiring have more qualified and diverse candidates in their talent funnel.
• Higher engagement rates: At Checkr, fair chance talent outperforms other employees on scores of engagement and loyalty by over 30%.
• Reduced turnover: Recent studies show employees with criminal records are more loyal to employers than others. And according to a recent survey conducted by Checkr, executives who have hired fair chance talent gave glowing reviews of these workers. They say fair chance talent sustains strong relationships with staff and managers, making it easier to retain employees and allowing the business to save on turnover costs.
• Increased diversity: Hiring fairly is hiring diversely; in a study comparing applicants with a criminal record (a felony drug conviction involving prison time) to those without, 17% of white people with a record got called back after a job interview compared to only 5% of Black people with a record. The study’s author concludes, “the effect of a criminal record is…40% larger for [B]lacks than for whites.”

By acknowledging the unfair playing field and by giving all applicants an equal chance—especially through diversity and belonging initiatives—employers have the opportunity to right a systemic wrong while pursuing short- and long-term business outcomes.

How to Incorporate Fair Chance Hiring Into Your Recruitment Process

Seeing beyond a criminal record can be challenging for anyone, even those with experience in hiring and DEI. Here are a few suggestions to get everyone at your organization on board with fair chance hiring practices.

Educate Yourself and Your Team

Start by educating your recruiting team and managers on the challenges faced by individuals with criminal records. For example, you can start by sharing the statistics mentioned above and reviewing the EEOC’s best practices for screening and hiring people with criminal records which include:

• Training anyone involved in hiring and management on Title VII
• Eliminating across-the-board exclusions of people with any type of criminal record
• Eliminating questions about convictions on job applications
• Developing evidence-based policies and procedures for screening applicants and employees who have criminal records
• Limiting any questions about a person’s criminal record to what’s strictly related to the job or necessary for the business
• Keeping all applicant information confidential

Focus on Candidates’ Potential

Many previously incarcerated individuals will have gaps in their resumes and may require additional onboarding or training. Shift the focus to candidates’ aptitude and ability to perform on the job by conducting a skills-based assessment, a best practice for eliminating bias in hiring.

Evaluate Each Candidate’s Record for the Specific Needs of the Role

The EEOC calls out three criteria (referred to as the “Green” factors) for determining whether or not someone’s past criminal conduct is relevant to the job:

• The nature and gravity of the offense or conduct
• The time that has passed since the offense, conduct, and/or completion of the sentence
• The nature of the job held or sought

An example from the EEOC: Leo is a Black man with a misdemeanor assault conviction dating back 20 years. Since then, he’s earned a college degree and has a positive work history. However, when a new company buys out his employer, the new owners fire Leo based on his criminal record without considering his high performance at the company.

Based on the Green factors, the EEOC concludes that his new employer has no right to fire Leo. He’s both objectively qualified for his job and his behavior since his conviction and in his current position shows that there’s no basis for their policy, which is based on the belief that people with convictions would pose a risk or prove to be poor employees. Their policy would, however, have a disparate impact on Black people with convictions, like Leo.

Make a Conditional Offer

After you’ve assessed a candidate’s qualifications and deemed them fit for the open position, extend a conditional offer of employment in writing. Communicate that, following a comprehensive background check, you’ll either finalize the job offer or notify them in writing that you intend to revoke the offer if their conviction history is directly related to the job’s duties.

In the latter scenario, inform the candidate they’ll have an opportunity to prove the conviction history report is inaccurate or provide information regarding their rehabilitation. The appeal will be reviewed, and a final decision will be provided in writing, either finalizing or revoking the offer.

To ensure compliance with fair chance hiring regulations, stay current with your city and state’s specific requirements. For example, New York City employers must give applicants five business days to respond to the background check and are obligated to keep the position open during the five-day period.

Support Those with a Criminal Record, Including the Formerly Incarcerated

Fair chance hiring goes beyond the offer; it’s about setting justice-impacted workers up for long-term success. The true second-chance model combines a process for selecting high-quality candidates with cost-effective support systems.

Without a traditional work history to gauge how one would perform in the position, employers can recruit from various sources for an initial assessment of fit and character, such as in-prison training programs, second-chance staffing agencies, or referral pipelines from nonprofit workforce organizations and government partners.

As for support, consider providing tailored accommodations such as transportation and flexible schedules to allow employees to meet with their parole officer. And while many employers offer employee assistance programs, they’ve realized many justice-impacted workers don’t have experience accessing these services. Instead, the most experienced true second-chance employers have dedicated staff, including social workers, psychologists, and life coaches, to help employees achieve their goals.

For the true second-chance model to succeed, it’s important to view these support initiatives not as costs, but as valuable investments in people eager to work hard and prove their worst mistakes do not define them.

Leverage Technologies That Support Fair Chance Hiring

When choosing software to help you run background checks, look for features that allow you to fine-tune the selection process for each role to include more people rather than automatically exclude them.

For example, Checkr allows hiring teams to filter out certain charges and set parameters based on a business model or job description. What’s more, candidates have the opportunity to explain offenses and outline any rehabilitation that comes up during a background check. Hiring teams can also set a filter that won’t flag certain offenses as an automatic disqualification.

Incorporate Fair Chance Hiring Today with Checkr in BambooHR

By incorporating fair chance hiring into your recruitment strategy, you’re opening an entirely new candidate pool. People with criminal records offer diversity in thought and experience, and statistics show that they are loyal, hard-working employees—perhaps more than those who have never encountered the criminal justice system.

Removing bias against people with criminal records in your hiring process will help you build a top-performing team and equip you for the increasing demands of running a successful business.

Checkr’s mission is to build a fairer future by designing technology to create opportunities for all. Through the Checkr platform, customer education, and a non-profit arm, Checkr.org, Checkr aims to break down the barriers of a background check and help companies reduce bias and establish fairer adjudication practices.