What Austin Employers Need to Know About Fair Chance Hiring Ordinance

By Robert G. Chadwick, Jr., Managing Member,  Seltzer Chadwick Soefje & Ladik, PLLC.

Austin’s Fair Chance Hiring Ordinance remains the only Texas municipal “ban the box” ordinance restricting the ability of a private employer to consider a job candidate’s criminal history in a hiring decision.  There is no corresponding Texas state law which sets forth a similar restriction.

What Employers are Covered by the Ordinance?

The ordinance applies to any “person, company, corporation, firm, labor organization, or association that employs at least fifteen individuals whose primary work location is in the City for each working day in each of 20 or more calendar weeks in the current or preceding calendar year.”  The ordinance does not apply to (1) the United States; (2) a corporation wholly owned by the government of the United States; (3) a bona fide private membership club (other than a labor organization) that is exempt from taxation under Section 501© of the Internal Revenue Code; (4) the state or a state agency; or (5) a political subdivision of the state.

What Jobs are Covered by the Ordinance?

The ordinance applies to all jobs other those for which a federal, state or local law, or compliance with a legally mandated insurance or bond requirement disqualifies an individual based on criminal history.

What Criminal History is Protected by the Ordinance?

The criminal history protected by the ordinance includes an arrest, conviction, plea of nolo contender, or deferred adjudication arising from a felony or Class A or B misdemeanor criminal accusation made under Texas law, federal law, or a comparable law of another U.S. state.

What Does the Ordinance Prohibit?

The Ordinance makes it unlawful for an employer to:

• Publish or cause to be published information about a job that states or implies that an individual’s criminal history automatically disqualifies the individual from consideration for the job.
• Solicit or otherwise inquire about the criminal history of an individual in a job application.
• Solicit criminal history information about an individual or otherwise consider an individual’s criminal history unless the employer has first made a conditional offer of employment to the individual.  This prohibition broadly includes solicitation of criminal history information directly from the individual or indirectly from a third-party source, such as the Texas Department of Public Safety.
• Refuse to consider hiring an individual because the individual did not provide criminal history information before the individual received a conditional employment offer.
• Refuse to hire, or otherwise take adverse action against, an individual because of the individual’s criminal history unless the employer has determined that the individual is unsuitable for the job based on an individualized assessment conducted by the employer.
• Take adverse action against an individual because the individual has reported a violation of the ordinance by the employer, or has participated in an administrative proceeding under the ordinance.

What is a Conditional Employment Offer?

A conditional employment offer means an oral or written offer by an employer to employ an individual in a job, or placement in a staffing agency’s staffing pool, that is conditioned solely (1) on the employer’s evaluation of the individual’s criminal history, and/or (2) any pre-employment medical examinations authorized under the Americans with Disabilities Act (“ADA”).

Can a Conditional Employment Offer be Withdrawn?

The ability of an employer to withdraw a conditional employment offer, based upon an evaluation of the candidate’s criminal history, is limited.  A conditional employment offer may be withdrawn only if the employer does so after evaluating (1) the nature and gravity of any offenses in the individual’s criminal history; (2) the length of time since the offense and the completion of the sentence; and (3) the nature of the job duties for which the individual has applied.  If a conditional employer offer is withdrawn, or any other adverse action is taken against an individual based on the individual’s criminal history, the employer must so inform the individual in writing.

Does the Ordinance Provide any Relief to Austin Employers under Texas Law?

No. Austin employers enjoy no immunity from civil liability for negligent hiring or negligent failure to provide a safe workplace.

What Does the Ordinance Allow?

The ordinance expressly allows:

• An employer to explain to job applicants, in writing, the individualized assessment system that the employer uses to consider criminal history.
• A staffing agency to solicit criminal history information about an individual and to make an individualized assessment of an individual’s criminal history when the staffing agency has identified a job to which the individual will be employed or placed in a job pool.
• An employer to withdraw a conditional employment offer for any lawful reason.

Does the Ordinance Provide Aggrieved Individuals with a Private Right of Action?

No.  For violations, the ordinance only provides for a civil penalty assessed by the City.

What is the Civil Penalty for Violation of the Ordinance?                           

No civil penalty may be assessed prior to April 4, 2017.  Thereafter, an employer who fails to cease a violation by the end of the 10^th business day after the employer receives written notice of the violation from the City is liable to the City for a civil penalty of up to $500 for that violation. An employer is liable for no more than one civil penalty for each job to which the violation relates.

What Does the Ordinance Mean for Austin Employers?

Austin employers must remain mindful of the legal risks of hiring or retaining employees with criminal background histories. After all, such legal risks dwarf those presented by the Fair Chance Hiring Ordinance.  To avoid civil penalties, however, Austin employers must conform their hiring processes to the standards set forth in the ordinance.