Compliance Corner Archives

Philadelphia City Council Amends and Expands Fair Criminal Record Screening Standards Law (commonly referred to as the “Fair Chance Law” or “Ban-the-Box”).

What is this about?

On September 25, 2025, the Philadelphia City Council passed a bill amending and expanding the existing Philadelphia Fair Chance Law. This legislation introduces several changes to enhance protections for job applicants and employees with criminal records. It becomes effective on January 6, 2026, and applies to employers in Philadelphia.

Key Changes:

Shortened Lookback Period for Misdemeanors

Under the existing Fair Chance Law, employers are prohibited from considering conviction information that is older than seven years from the date of the inquiry. The new amendments reduce the lookback period for misdemeanors to four years. The lookback period for felony convictions remains subject to the
seven-year window.

Summary Offenses Excluded From Employment Decisions:

The amendments reconcile the limitations under the Fair Chance Law with those imposed by the Pennsylvania Criminal Records Information Act (CHRIA) by confirming that employers may not consider summary offenses—offenses that do not rise to the level of a felony or misdemeanor—in making
employment decisions.

Added Protections for Expunged or Sealed Records:

Employers may not consider expunged or sealed criminal records. Furthermore, if such records appear in a background check or in PennDOT driver history reports, employers must allow applicants to provide proof of sealing or expungement before making a final decision.

Notice of Background Checks:

Employers who choose to provide notice of their intention to perform a
background check during the hiring process, such as in a job advertisement or in a job offer, must now also state that any consideration of the background check will be an individualized assessment based on the applicant’s or employee’s specific record and the requirements and duties of the particular
job.

Notice and Rebuttal Opportunities
Employers will have additional pre-adverse action requirements, which include
providing applicants or employees with:

A summary of the applicant’s or employee’s rights under the Fair Chance Law.
A statement that the employer will consider evidence of any error in the criminal history records, evidence of rehabilitation, or other mitigation if provided by the applicant or employee. A list of the types of evidence that may be offered includes:
- - the completion of a mental health or substance use
    disorder treatment program
  - the completion of a job training program
  - the completion of a GED or post-secondary education
    program
  - service to the community
  - work history in a related field since the time of conviction
    or incarceration
  - an active occupational licensure, commercial driver
licensure, or other licensure necessary to perform the specific duties of the job.
Instruction as to how the applicant or employee can exercise their right to provide evidence or explanation directly to the employer.

Anti-Retaliation Protections

The amendments provide a rebuttable presumption of retaliation if an employer takes adverse action within 90 days of an applicant or employee asserting their rights under the Fair Chance Law. Employers must demonstrate that any adverse action was taken in good faith and unrelated to the protected activity.

Why compliance matters:

Employers with operations in Philadelphia—including those hiring remote or hybrid workers—who may fall under the city’s jurisdiction, should use the time before January 6, 2026, to review their policies and prepare for implementation of the Fair Chance Law’s amended requirements. Most notably, employers should update their pre-adverse action notices to comply with the expanded notice and rebuttal rights to ensure that they are based on objective criteria that are unrelated to the applicant’s or employee’s exercise of their rights under the
Fair Chance Law.

What SI is doing:

SI provides employment-related background check reports that comply with federal, state, and local employment laws. SI stays current with changes in the laws that affect how an employer can use an individual’s personal information in an employment decision. SI’s policies and procedures will include compliance with the new Fair Chance Law amendments.

Disclaimer: This communication is for general informational purposes only and does not constitute legal advice. The summary provided in this alert does not, and cannot, cover in detail what employers need to know about the amendments to the Philadelphia Fair Chance Law or how to incorporate its requirements into their hiring process. No recipient should act or refrain from acting based on any information provided here without advice from a qualified attorney licensed in the applicable jurisdiction.

October 14th, 2025|Compliance Corner, Employment Decisions|

Do Employers Still Use Credit Reports for Hiring Decisions?

The short answer is yes, but not as often, and with certain limitations.

As hiring practices evolve, many employers are rethinking the use of credit reports in the hiring process. While still common in finance, government, and executive roles, credit checks for other positions are increasingly scrutinized for their relevance, fairness, and legal risk.

Why Some Employers Still Use Them:

To assess financial responsibility for roles involving access to money or sensitive data
To comply with industry regulations
To help mitigate fraud or identity risks

Why Many Do Not Use Them:

Credit history does not equal job performance
Risk of discrimination or bias
Growing legal restrictions at the state and local levels
FCRA compliance requirements are strict and costly if mishandled

Several states and localities have laws that limit or ban private employers from conducting employment credit checks, except in specific roles.

Best Practices for Employers:

Use credit checks only when job-relevant
Have policies in place defining what information on a credit report is disqualifying (note: credit reports do not show judgments or tax liens)
If you’re a multi-state employer, consider eliminating credit checks if laws in one or more of your locations prohibit or limit these checks
Always follow FCRA guidelines

Credit checks are no longer a default step in hiring–they’re a strategic choice that requires careful consideration.

October 3rd, 2025|Compliance Corner, Employment Decisions|

When Headlines Hit Home: Navigating Conflicting Laws on Pending Arrests in California Employment

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Your employee just made the news—hauled away in handcuffs for allegedly punching an elderly man. The incident is unsettling, and your leadership team is asking: Can we terminate him?

If your company is headquartered in Ventura County, but the employee works remotely from his home in the City of Los Angeles, the answer isn’t simple. You’re now facing a legal maze involving California state law, a Los Angeles municipal ordinance, and jurisdictional nuances tied to remote work.

California Law: Arrest ≠ Grounds for Termination

Under California Labor Code § 432.7, employers are prohibited from using arrest records that did not result in a conviction when making employment decisions. This includes pending charges. Although you may be aware of the arrest, you cannot terminate or discipline the employee solely based on it. However, California law does allow employers to:

Conduct an independent investigation into the alleged misconduct.
Take action based on a good-faith belief that the employee engaged in behavior that violates company policy or poses a risk.

Los Angeles Ordinance: Even Stricter Rules

The City of Los Angeles Fair Chance Initiative for Hiring Ordinance (FCIHO) goes further. It prohibits employers from considering a candidate’s criminal history, including pending arrests, until after a conditional offer of employment has been made. Even then, employers must:

Conduct an individualized assessment.
Provide written notice before taking adverse action.
Allow the employee to respond with mitigating information.

Because your employee works remotely from Los Angeles, these local protections apply, even if your company is based elsewhere.

Jurisdictional Conflict: Who Has Authority?

In employment law, the location where the employee performs work typically determines which laws apply. So, although your company is in Ventura County, the employee’s residence and work location in Los Angeles means:

Los Angeles municipal law applies.
California state law applies.
You must comply with both.

What Employers Should Do

Here’s how to respond:

Pause and Assess
Review all applicable laws and ordinances.
Conduct a Neutral Investigation
Gather facts, interview witnesses, and document findings. Focus on workplace impact, not the arrest itself.
Consult Legal Counsel
Jurisdictional conflicts are complex. Legal guidance is essential.
Review Remote Work Agreements
Ensure that contracts specify the applicable jurisdiction and clearly outline expectations.
Follow the Fair Chance Process
When considering a candidate’s criminal history in an employment decision, comply with both state and local requirements.

Final Thoughts

In today’s remote work environment, jurisdiction matters more than ever. Employers must navigate a patchwork of laws and ordinances that vary by city, county, and state. When an employee’s conduct raises red flags, the legal response must be measured, compliant, and well-documented. If you’re unsure how to proceed, seek legal guidance before making any employment decisions. The cost of getting it wrong could be far greater than the headline itself.

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September 11th, 2025|Compliance Corner, Employment Decisions|

The Fair Credit Reporting Act and Commercial Transactions

Does the Fair Credit Reporting Act (FCRA) apply to commercial transactions?

Although the FCRA is generally limited to consumer-purpose transactions (e.g., those primarily for personal, family, or household purposes), there is no straightforward answer regarding commercial transactions. This is because the FCRA defines a “consumer” as just an “individual.” The FCRA does not require the consumer/individual to obtain the loan specifically for a consumer purpose. Whether and how the FCRA applies depends on the facts and circumstances regarding the commercial transaction.

Commercial Loans, Personal Liability, and the Permissible Purpose Requirement

When an individual applies for a loan primarily for personal, family, or household purposes, the lender has a permissible purpose under the FCRA to obtain the individual’s consumer report.

However, a commercial transaction does not give rise to a permissible purpose except for a report on an individual – such as a sole proprietor or principal of a company – who will be personally liable for the debt. In a Federal Trade Commission (FTC) staff opinion letter dated in 2001, the FTC stated that “it is reasonable to view a business transaction in which an individual has accepted personal liability for the business debt as involving the consumer, thus providing a permissible purpose for the lender to obtain a consumer report under Section 604(a)(3)(A).”

A follow-up question is whether the commercial loan application itself is enough of a permissible purpose when the individual is only a guarantor and not otherwise related to the transaction or debtor. Another 2001 FTC opinion letter concluded that if an individual has any personal liability on a business loan, including just a guarantee, there would be a permissible purpose by means of the application for credit.

These opinion letters have been reaffirmed in subsequent FTC publications.

As a caveat, however, it is important to remember that these opinion letters are merely informal guidance and are not binding on the FTC, the courts, or other governmental regulators. That is why we think the best practice is to get written authorization from the individual (another form of permissible purpose under the FCRA) before preparing the report.

Reporting Adverse Information

When the FCRA applies to a commercial transaction, the restrictions for reporting adverse information should be followed. The restrictions generally prohibit reporting adverse information that pre-dates the report by seven years. Bankruptcies that pre-date the report by 10 years cannot be reported. Criminal convictions can be reported regardless of the date.

The FCRA also provides an important exemption to these reporting restrictions. If a credit transaction involves, or may reasonably be expected to involve, a principal amount of $150,000 or more, the restrictions on reporting adverse information do not apply.

Adverse Action Notice

When the FCRA applies to a commercial transaction, does the adverse action notice requirement apply? The general rule in the FCRA is that if the lender obtains a consumer report and takes adverse action based, in whole or in part, on any information in the report, the lender must give the consumer an adverse action notice. Therefore, in the commercial context, the lender should give the consumer an adverse action notice if the loan application is denied.

What about guarantors? Although the FCRA is silent on whether guarantors are included for purposes of an adverse action notice, the FTC clarified the issue in a 2000 advisory letter. If the consumer is only a guarantor (i.e., secondarily liable on the loan), then an adverse action notice would not be required to be provided to the guarantor. This is true even if the application is denied based on information in the guarantor’s consumer report.

February 13th, 2025|Compliance Corner, Employment Decisions|

New California Law Prohibits Employers from Telling Applicants That a Driver’s License Is Required for a Job Unless the Position Meets a Two-Part Test

What is this about?
On September 28, 2024, Governor Newsom signed Senate Bill (SB) 1100 to amend California’s Fair Employment & Housing Act (FEHA), making it an unlawful employment practice for an employer to include a statement in a job advertisement, posting, application, or other material that an applicant “must have” a driver’s license unless the employer “reasonably” anticipates driving as an essential job function that cannot be comparably performed by alternative means.

Effective Date:
The law becomes effective on January 1, 2025, as an amendment to Section 12940 of the Government Code.

Who must comply:
The new law applies to employers who regularly employ one or more persons or regularly receive the services of one or more persons providing services under a contract or any person acting as an agent of an employer, directly or indirectly, the state or any political or civil subdivision of the state, and cities.

Employer Obligations:

Starting January 1, 2025, employers must meet a two-part test before including a statement in a job advertisement, posting, application, or other material stating that an applicant must have a driver’s license:

The employer must reasonably expect driving to be one of the job functions for the position, and
The employer must reasonably believe that satisfying the job function using an alternative form of transportation (such as ride-hailing, taxi, carpooling, bicycling, or walking) would not be comparable in travel time or cost to the business

Why compliance matters:
Like other unlawful employment practices prohibited under the FEHA, employers who violate the new law could face an injunction or declaratory relief (such as being required to hire the applicant) or be held liable for compensatory damages, punitive damages, attorney’s fees, and costs.

What SI is doing:
To help ensure compliance with the new California license law, SI will modify its materials for California employers and applicants to indicate that providing driver’s license information is voluntary, not mandatory—unless the employer informs SI that the job position meets the new law’s two-part test

Employer Considerations:
If a job position does not require a driver’s license, employers may want to consider excluding a motor vehicle record from the background check.

December 26th, 2024|Compliance Corner, Employment Decisions|

Follow Up to Client Alert Regarding Compliance with the New York Clean Slate Act

Please note: Sample forms should NOT be construed as legal advice or counsel. Employers should consult their attorneys about their compliance responsibilities under the FCRA and applicable state law. Scherzer International disclaims any warranties, responsibility, or damages associated with or arising from the information provided in this form.

As highlighted in our client alert, the New York Clean Slate Act mandates that employers provide certain notices to applicants if an employment-related background screening report contains criminal record information. To assist our clients in meeting this requirement, we prepared a sample form which is linked below.

With any background report that contains a criminal record, we will include this form, the NYS Correction Law Article 23-A, and the Summary of Consumer Rights. You will need to forward the report and the notices to the applicant.

Links:

December 5th, 2024|Compliance Corner, Employment Decisions|

The New York Clean Slate Act

What is this about?
The New York State Clean Slate Act (the “Act”) will allow certain state criminal records to be sealed from public access once an individual completes their sentence and after a specified period passes without another conviction. This statewide law makes it unlawful for employers to inquire about or use sealed convictions against applicants or employees (unless required by law).

Effective Date:
November 16, 2024

What this means:
Under the Act, individuals who have completed their sentence (including probation and parole time) will have their records automatically sealed, as follows:
• Eligible misdemeanor convictions are to be sealed three years after the completion of the sentence.
• Eligible felony convictions are to be sealed eight years after the completion of the sentence.

What else:
It is still being determined whether sealed records will be removed from public access in New York. Also, delayed implementation may occur for budgetary reasons, meaning that “automatically sealed” records may still be publicly available. If criminal record information is obtained from other sources (such as disclosure by the subject, media, or motor vehicle record) we will continue to verify it with information from the relevant New York court. If no correlating court record is found, we will assume the record was sealed and is, therefore, not reportable.

NYC’s Fair Chance Act & the Two-Step Process:
The Clean Slate Act does not change a New York City employer’s obligation under the city’s Fair Chance Act (FCA), which offers more expansive protections to individuals with criminal backgrounds. Our current procedures for complying with the FCA remain unchanged.

October 15th, 2024|Compliance Corner, Employment Decisions|

LA County Fair Chance Ordinance becomes operational September 3, 2024

What is this about?
On February 27, 2024, the County of Los Angeles Board of Supervisors voted to adopt the County’s Fair Chance Ordinance for Employers (FCO). The FCO aligns with the California Fair Chance Act (FCA), also known as “Ban the Box.” However, it adds several compliance requirements when considering the applicant’s criminal record history to make an employment decision.

Effective Date:The FCO is operative on September 3, 2024.

Who must comply:
The FCO applies to any “employer” located or doing business in the unincorporated areas of Los Angeles County who employs five or more employees regardless of location. The FCO protects both applicants seeking employment and employees seeking promotions, as well as others seeking non-traditional employment, such as contract or freelance work.

New requirements:
Notice of Intent to Conduct Background Check.
This notice must be given along with any conditional offer of employment to the applicant or employee that states (1) the conditional offer is contingent upon a review of a criminal record history and (2) the employer has good cause to conduct the criminal history review “for the specific job position with supporting justification in writing.” It is not enough for the employer to merely state it reviews such information because of a generalized “safety concern.” Specific information is required.

Before employers can take any adverse action against an individual, such as rescinding a conditional job offer, the FCO requires the employer to (1) prepare a written individualized assessment of an applicant’s criminal history in the manner required by the FCO; (2) provide a form of preliminary notice of adverse action with mandatory content; (3) provide a second written individualized assessment if the individual provides information in response to the preliminary notice of adverse action; and (4) provide a final notice of adverse action if the employer makes a final decision to withdraw the conditional offer of employment or take any other adverse action (the final notice must also include mandatory content).

Why compliance matters:
The FCO authorizes public and private remedies, including civil claims. The County of Los Angeles Department of Consumer and Business Affairs (DCBA) is authorized to take appropriate steps to enforce the FCO and conduct investigations of possible violations by an employer. The DCBA may issue monetary penalties of up to $5,000 for the first violation, up to $10,000 for the second violation, and up to $20,000 for the third and subsequent violations.

How SI can help:
SI can help ensure compliance in several ways, including the timing of background checks, the distribution of mandatory and sample notices, and the monitoring of the required time periods for taking adverse action.

August 29th, 2024|Compliance Corner, Employment Decisions|

Reminder about New Requirements for California Employers When Considering Criminal History in Employment Decisions

What is this about?
On February 27, 2024, the County of Los Angeles Board of Supervisors voted to adopt the County’s Fair Chance Ordinance for Employers (FCO). The FCO aligns with the California Fair Chance Act (FCA), also known as “Ban the Box.” However, it adds several compliance requirements when considering the applicant’s criminal record history to make an employment decision.

Effective Date:
The FCO is operative on September 3, 2024.

Who must comply:
The FCO applies to any “employer” located or doing business in the unincorporated areas of Los Angeles County who employs five or more employees regardless of location. The FCO protects both applicants seeking employment and employees seeking promotions, as well as others seeking non-traditional employment, such as contract or freelance work.

New requirements:
Notice of Intent to Conduct Background Check. This notice must be given along with any conditional offer of employment to the applicant or employee that states (1) the conditional offer is contingent upon a review of a criminal record history and (2) the employer has good cause to conduct the criminal history review “for the specific job position with supporting justification in writing.” It is not enough for the employer to merely state it reviews such information because of a generalized “safety concern.” Specific information is required.

Before employers can take any adverse action against an individual, such as rescinding a conditional job offer, the FCO requires the employer to (1) prepare a written individualized assessment of an applicant’s criminal history in the manner required by the FCO, (2) provide a form of preliminary notice of adverse action with mandatory content, (3) provide a second written individualized assessment if the individual provides information in response to the preliminary notice of adverse action, and (4) provide a final notice of adverse action if the employer makes a final decision to withdraw the conditional offer of employment or take any other adverse action (the final notice must also include mandatory content).

Why compliance matters:
The FCO authorizes public and private remedies, including civil claims. The County of Los Angeles Department of Consumer and Business Affairs (DCBA) is authorized to take appropriate steps to enforce the FCO and conduct investigations of possible violations by an employer. The DCBA may issue monetary penalties of up to $5,000 for the first violation, up to $10,000 for the second violation, and up to $20,000 for the third and subsequent violations.

How SI can help:
SI can help ensure compliance in several ways, including the timing of background checks, the distribution of mandatory and sample notices, and the monitoring of the required time periods for taking adverse action.

April 18th, 2024|Compliance Corner, Employment Decisions|

County of Los Angeles Enacts Fair Chance Ordinance New Hiring Requirements for Employers

What is this about?
On February 27, 2024, the County of Los Angeles Board of Supervisors voted to adopt the County’s Fair Chance Ordinance for Employers (FCO). The FCO aligns with the California Fair Chance Act (FCA), also known as “Ban the Box.” However, it adds several compliance requirements when considering the applicant’s criminal record history to make an employment decision.

Effective Date:
The FCO is operative on September 3, 2024.

Who must comply:
The FCO applies to any “employer” located or doing business in the unincorporated areas of Los Angeles County who employs five or more employees regardless of location. The FCO protects both applicants seeking employment and employees seeking promotions, as well as others seeking non-traditional employment, such as contract or freelance work.

New requirements:
Notice of Intent to Conduct Background Check. This notice must be given along with any conditional offer of employment to the applicant or employee that states (1) the conditional offer is contingent upon a review of a criminal record history and (2) the employer has good cause to conduct the criminal history review “for the specific job position with supporting justification in writing.” It is not enough for the employer to merely state it reviews such information because of a generalized “safety concern.” Specific information is required.

Before employers can take any adverse action against an individual, such as rescinding a conditional job offer, the FCO requires the employer to (1) prepare a written individualized assessment of an applicant’s criminal history in the manner required by the FCO; (2) provide a form of preliminary notice of adverse action with mandatory content; (3) provide a second written individualized assessment if the individual provides information in response to the preliminary notice of adverse action; and (4) provide a final notice of adverse action if the employer makes a final decision to withdraw the conditional offer of employment or take any other adverse action (the final notice must also include mandatory content).

Why compliance matters:
The FCO authorizes public and private remedies, including civil claims. The County of Los Angeles Department of Consumer and Business Affairs (DCBA) is authorized to take appropriate steps to enforce the FCO and conduct investigations of possible violations by an employer. The DCBA may issue monetary penalties of up to $5,000 for the first violation, up to $10,000 for the second violation, and up to $20,000 for the third and subsequent violations.

How SI can help:
SI can help ensure compliance in several ways, including the timing of background checks, the distribution of mandatory and sample notices, and the monitoring of the required time periods for taking adverse action.

April 18th, 2024|Compliance Corner, Employment Decisions|