Ban-the-Box Laws: Criminal History Restrictions in US Hiring Processes

International businesses expanding to the United States face an increasingly complex web of employment regulations, but few are as misunderstood—or as potentially costly—as ban-the-box laws. These “fair chance” hiring regulations now govern when and how employers can inquire about criminal history, affecting talent acquisition strategies across 37 states and over 150 cities and counties nationwide.

For foreign employers, ban-the-box compliance represents both a significant legal obligation and an unexpected competitive advantage. Companies that master these requirements gain access to broader talent pools while positioning themselves as progressive employers. Those that ignore them face escalating penalties, litigation exposure, and missed opportunities in America’s evolving employment landscape.

More than four-fifths of the U.S. population—over 267 million people—live in a jurisdiction with some form of ban-the-box or fair-chance policy, making compliance unavoidable for most international businesses seeking American market entry.

Understanding Ban-the-Box: What International Employers Need to Know

“Ban the box” policies arose from a belief that employers should consider a job candidate’s qualifications first—without the stigma of a conviction or arrest record. The term originated from the checkbox on job applications asking candidates about criminal history.

These laws—also known as “Fair Chance” hiring policies—fundamentally alter traditional hiring timelines by:

• Prohibiting criminal history questions on initial job applications
• Delaying background checks until later in the hiring process
• Requiring individualized assessments when criminal history is discovered
• Mandating specific notice and response procedures for adverse employment decisions

Employment is a key factor in reducing the risk of reoffending. Ban the Box laws give people with criminal convictions access to more equal employment opportunities, creating broader talent pools for employers willing to embrace fair chance hiring practices.

Federal Requirements: The Fair Chance to Compete for Jobs Act

The federal government established the framework through the Fair Chance to Compete for Jobs Act of 2019, which became effective December 20, 2021. The Fair Chance Act prohibits Federal agencies and Federal contractors acting on their behalf from requesting that an applicant for Federal employment disclose criminal history record information before the agency makes a conditional offer of employment to that applicant.

Federal Contractor Obligations

Beginning December 20, 2021, federal contractors must comply with the federal Fair Chance Act (FCA), which prohibits contractors from inquiring about a job applicant’s criminal background in certain cases in the initial stages of the application process.

The law applies to positions “related to” work under federal contracts, though this definition remains broadly interpreted. How to determine whether the position is to perform work “related to” work under the federal contract is unclear. The FCA does not define this. Consequently, this requirement has resulted in a broad interpretation of the positions encompassed.

Key Exemptions:

• Positions requiring access to classified information
• Sensitive national security duties
• Federal law enforcement roles
• Dual-status military technician positions

Federal Enforcement

Compliance with the FCA should be a priority for current and prospective federal contractors. The first violation of the FCA may result in a written warning and a requirement to remedy the violation, but subsequent violations may have more significant ramifications. For instance, under the FCA, the contractor can be deemed ineligible to receive future federal contracts and the government can suspend payment for work completed on an existing contract until the contractor demonstrates compliance.

State-Level Implementation for Private Employers

Fifteen states have mandated the removal of conviction history questions from job applications for private employers—California, Colorado, Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, and Washington.

California: The Most Complex Jurisdiction

California’s Fair Chance Act represents one of the most comprehensive state-level ban-the-box laws. California’s Ban-the-Box law applies to employers with five or more employees and is one of the most comprehensive in the country. Employers are prohibited from asking about a candidate’s criminal history until after a conditional offer of employment is made.

Los Angeles County Expansion (2024): Los Angeles County employers with five or more employees in unincorporated areas of LA County now must be mindful of additional requirements under the County’s new Fair Chance Ordinance for Employers starting March 28, 2024.

The county ordinance requires specific language in job postings: A statement that “qualified Applicants with arrest or conviction records will be considered for Employment in accordance with the Los Angeles County Fair Chance Ordinance for Employers and the California Fair Chance Act”.

Multi-State Compliance Requirements

Individualized Assessment Standards

When criminal history is discovered after conditional offers, most jurisdictions require comprehensive individualized assessments considering:

1. Nature and gravity of the offense: Direct relationship to job responsibilities
2. Time elapsed: Sufficient time for rehabilitation and behavior change
3. Job relatedness: Essential connection to position duties and business necessity

California requires employers to perform an individualized assessment and send a pre-adverse action notice if they plan to rescind the offer due to criminal history.

Notice and Response Procedures

Advanced notice requirements vary significantly by jurisdiction. Los Angeles County requires that applicants must then be given at least ten business days to either (i) respond to the preliminary notice if the applicant notifies the employer that they dispute the accuracy of the background check and is taking steps to obtain evidence, or (ii) present evidence of rehabilitation or mitigating circumstances orally at a meeting between the applicant and the employer.

EEOC Guidance and Federal Anti-Discrimination Framework

The Equal Employment Opportunity Commission’s Enforcement Guidance provides critical context for international employers. The EEOC enforces Title VII, which prohibits employment discrimination based on race, color, religion, sex, or national origin. Having a criminal record is not listed as a protected basis in Title VII.

Disparate Impact Concerns

For example, employers should not use a policy or practice that excludes people with certain criminal records if the policy or practice significantly disadvantages individuals of a particular race, national origin, or another protected characteristic, and does not accurately predict who will be a responsible, reliable, or safe employee.

EEOC Best Practices for International Employers:

• Treat applicants with similar criminal records consistently
• If you ask applicants for criminal history information, consider waiting until later in the hiring process to do so
• Determine how the applicant’s criminal history relates to the risks and responsibilities of the job

Enforcement and Penalties: Financial Reality for International Companies

California Penalty Structure

Los Angeles County empowers the County’s Department of Consumer and Business Affairs to investigate and issue $5K, $10K, and $20K penalties for each progressive violation of these requirements. Moreover, private civil litigation is expressly authorized.

Corporate Enforcement Examples

In 2016, Big Lots and Marshalls paid substantial penalties totaling $195,000 for violating Buffalo’s ban-the-box ordinance by including criminal history inquiries on their job applications at their Buffalo stores. Big Lots agreed to pay a $100,000 fine, while Marshalls paid a $95,000 penalty.

New York State Attorney General Eric T. Schneiderman’s investigation found that both retailers had distributed employment applications that made inquiries into the criminal history of prospective applicants at their Buffalo stores. Beyond the financial penalties, both companies agreed to remove criminal history inquiries from applications to all their stores across New York State—Big Lots from 64 stores and Marshalls from 75 stores.

Both retailers also agreed to step up their efforts to recruit applicants with criminal histories by working with an organization that has expertise in training workers who were once incarcerated. The companies were also required to implement new policies, training, and reporting requirements to the Attorney General’s Office.

This enforcement action demonstrates the cascading compliance requirements that can result from ban-the-box violations—what began as a local Buffalo ordinance violation resulted in statewide policy changes across 139 combined store locations and ongoing regulatory oversight.

Industry-Specific Considerations for International Businesses

Federal Contractors

International companies securing federal contracts face dual compliance obligations under both the federal Fair Chance Act and applicable state/local ban-the-box laws.

Under the FCA, federal employers and contractors cannot ask about arrests, indictments, formal criminal charges, sentencing, or sealed or expunged records on an application form or during the interview process. However, key exemptions exist for positions requiring access to classified information, national security duties, or law enforcement roles.

Financial Services Industry

The financial services sector experienced significant changes with the Fair Hiring in Banking Act (FHBA), signed into law December 23, 2022. The FHBA substantially revised Section 19 of the Federal Deposit Insurance Act to reduce hiring barriers within the financial services sector.

Previously, Section 19 prohibited individuals convicted of any criminal offense involving dishonesty, breach of trust, or money laundering from working at FDIC-insured institutions without prior written consent. The FHBA created several key exemptions:

• Older offenses: Certain offenses committed more than seven years ago
• Youth offenses: Offenses committed by individuals 21 or younger
• Minor offenses: De minimis crimes with minimal waiting periods
• Drug possession: Simple possession of controlled substances

As the penalties for non-compliance are substantial (including fines of $1,000,000 per day), FDIC-insured institutions should review their policies and practices to ensure consideration of Section 19 when assessing candidates’ conviction and program entry history.

Healthcare and Childcare Sectors

Healthcare employers face a unique dilemma balancing Ban-the-Box laws requiring fair hiring practices with safety standards protecting patients and staff. In healthcare, this presents challenges, as roles may require rigorous background checks due to the sensitive nature of the work.

Many jurisdictions provide exemptions when other laws require criminal history screening. Ban the Box regulations also provide exemptions in specific circumstances. Ban the Box laws don’t apply in many states if a different law requires or allows you to ask candidates about criminal records. For example, numerous state laws require employers to ask about criminal convictions when hiring for positions in the health, childcare, and financial industries.

Key Healthcare Compliance Requirements:

• Individualized Assessments: Employers must evaluate factors such as the nature of the offense, its relevance to the job, and whether the candidate has demonstrated rehabilitation
• Adverse Action Requirements: Specific procedures for pre-adverse action notices and waiting periods
• State-Specific Variations: For example, Prince George’s Countyequires a seven-day waiting period before final adverse action

Best Practices for International Compliance

Policy Development

Creating an internal policy that details your organization’s approach to criminal records during the hiring process. Your policy should identify specific offenses that may indicate a candidate is unfit to perform the job requirements and require hiring managers to conduct individualized assessments for each candidate.

Consistent Implementation

If you voluntarily introduce a Ban the Box policy, you must apply it consistently. If you inquire about applicants’ criminal histories later in the hiring process, you should ask all candidates under consideration for the role. Only asking specific candidates could amount to discrimination.

Documentation Requirements

Maintain detailed records of:

• Individualized assessment factors and decisions
• Notice timelines and candidate responses
• Business necessity justifications for adverse actions
• Training provided to hiring personnel

How Foothold America Supports Your Ban-the-Box Strategy

At Foothold America, we’ve successfully helped international companies navigate US expansion challenges since 2015. While we don’t provide legal advice, our comprehensive US expansion services support your hiring strategy through compliant, efficient talent acquisition processes.

Our US Expansion Support:

• Exclusive Talent Acquisition (ETA) Service – Our dedicated talent acquisition team understands the challenges international companies face when hiring employees in the United States. We handle all time-consuming recruitment aspects, from developing job descriptions and screening resumes to conducting first-round interviews and negotiating offers.
• Compliant Recruitment Practices – We strictly adhere to Equal Employment Opportunity Commission (EEOC) hiring regulations using a compliant Applicant Tracking System (ATS). With diversity as one of our corporate core values, we search multiple resources for a variety of candidates.
• Cultural Bridge Building – We set candidate expectations for working with international companies and highlight your company strengths to US workers who want professional growth and may be hesitant to work for non-US companies.
• Comprehensive Employment Solutions – Available to our EOR, PEO+, Entity Setup, and PPS clients, our ETA service integrates seamlessly with your chosen employment structure, providing one trusted partner for all US HR needs.
• Performance Guarantee – With our tried and tested process, we help you avoid hiring mistakes. For rare instances where the chosen candidate doesn’t work out, we offer a performance guarantee to replace the candidate with someone who is a better fit.

Your success in the American market depends on finding the right talent while navigating complex employment regulations. Our ETA service delivers significant value through expanded talent access, below-market costs (up to 50% savings on talent acquisition fees), and a six-month payment plan that spreads recruitment costs over time.

For legal guidance on specific ban-the-box compliance requirements, we recommend consulting with qualified employment law attorneys who specialize in fair chance hiring legislation.

Conclusion: Strategic Compliance for Market Success

Ban-the-box laws represent a fundamental shift in American employment practices that international companies cannot afford to ignore. These regulations affect hiring processes across most major US markets, creating both compliance obligations and strategic opportunities for accessing diverse talent pools.

Companies that proactively embrace fair chance hiring principles position themselves advantageously in competitive talent markets while demonstrating commitment to inclusive employment practices. Those that treat ban-the-box as merely regulatory compliance miss opportunities to differentiate their employer brands and access motivated candidate pools.

The regulatory landscape continues evolving rapidly, with additional jurisdictions implementing requirements throughout 2024 and beyond. International companies establishing comprehensive ban-the-box frameworks now avoid costly compliance failures while building sustainable competitive advantages in American talent acquisition.

Ready to transform ban-the-box compliance from regulatory challenge into competitive advantage? Contact our team of US expansion specialists today to discover how Foothold America can support your fair chance hiring strategy and accelerate your American market success.