A Case of Potential Violations of City & State Requirements in NYC

New York City has some of the country’s most complex laws for employers to follow. A case filed in the Southern District of New York alleges potential violations of city and state requirements.

The federal Fair Credit Reporting Act (FCRA) may be the most well-known law impacting how employers use background checks. But those that hire in the Big Apple might have to follow more than just the FCRA and may need to pay attention to city employment laws like the New York City Fair Chance Act (FCA), part of the New York City Human Rights Law (NYCHRL). There are also New York state-specific laws, including the New York State Fair Credit Reporting Act.

Allegations against Hersha Hospitality Management and Others

Like FedEx, another employer in New York City is accused of violating the NYC FCA and other allegations. In December 2021, Steven Anthony Sanchez applied for a bellperson job at the Moxy NYC Downtown hotel, a hotel owned and operated by Hersha Hospitality Management, LP, one of the Defendants named in the complaint. He was hired, but he found another person assigned to his duties shortly after beginning the role.

The general manager explained to Sanchez, “Sorry, we found out that you have a criminal background, so we’re going to let you go.” Sanchez also received an “Adverse Action Notice” around the same time.

The hotel sent Sanchez a copy of his background check showing a conviction history, and he doesn’t dispute that he received it. However, the complaint alleges that the Defendants never provided a detailed explanation of why his conviction disqualified him. Further, Sanchez claims that the Defendants never provided a copy of Article 23-A of the New York Correction Law, detailing the circumstances under which an employer may reject an applicant based on conviction history.

Based on the complaint, Sanchez claims the Defendants violated the New York City Fair Chance Act in three ways:

• Defendants completed a background check on Sanchez before extending a conditional offer of employment.
• Defendants took adverse action without a written copy of Article 23-A analysis (required by N.Y.C. Admin Code § 8-107(11-a)(b)(ii)).
• Defendants took adverse action without allowing a reasonable amount of time, of not less than least three days, to respond to the Article 23-A analysis (required by N.Y.C. Admin Code § 8-107(11-a)(b)(ii)).

In addition, Sanchez alleges the employer violated the state-level New York Fair Credit Reporting Act (“NY FCRA”). He claims the Defendants completed consumer reports without providing copies of Article 23-A of the New York Correction Law.

Class Action Proposed

Sanchez’s complaint proposes two classes for the case:

1. The NYCHRL class

“All individuals with criminal records who, during the applicable limitations period, applied for employment at any New York City hotel [owned by Defendants] and were either denied employment or terminated after Defendants conducted a background check… without first receiving (a) a conditional offer of employment and/or (b) Defendant’s Article 23-A analysis and a reasonable opportunity to respond to it.”

2. The NY FCRA class

“All individuals with criminal records who, during the applicable limitations period, applied for employment at any New York City hotel [owned by Defendants] and (a) were denied employment or terminated by Defendants, (b) had consumer reports requested about them by Defendants, and were not provided with a copy of Article 23-A of the Correction Law.”

This case is currently pending. Employers that hire in New York City or state may want to monitor the case with their legal team to understand how it may impact their practices.