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Hiring Personnel in New York: Dos and Don’ts – Part 2: Offer Letters and Background Checks

In a previous article, we addressed certain pitfalls for numerous foreign employers seeking to hire personnel in New York State (see Part 1 regarding advertising and interviewing for a job). This article is the second and last in a two-part series, which will now discuss sensitive New York laws concerning (1) offer letters and (2) background checks.

Drafting an Offer Letter

Once an employer has decided to extend an offer of employment to an applicant, many use offer letters to communicate key terms of employment for the candidate’s consideration. Offer letters are a valuable tool in setting expectations and creating a relationship with a prospective employee. If not carefully drafted, however, offer letters can also be construed as an employment contract or agreement for a fixed term of employment, creating unintended obligations on the employer’s behalf. In New York, the default employment relationship is “at will,” meaning that either the employee or the employer can terminate the relationship at any time, with or without cause and with or without notice. To preserve this relationship status while accurately describing employment terms, employers should observe the following basic requirements when drafting offer letters:

What to Include in an Offer Letter:

  • Basic information about the position, such as the position or title, starting date, and reporting line;

  • Whether the position is full- or part-time, and a basic work schedule;

  • A statement that the employee will be employed on an “at will” basis (unless the employee will be subject to a contract that alters this arrangement);

  • Terms of compensation, including salary or hourly rate, whether the employee will be exempt or non-exempt from overtime pay, and eligibility for bonuses or commissions, if any;

  • The employee’s eligibility for participation in employer benefit plans;

  • The employee’s eligibility for vacation or paid time off and, if so, how much;

  • A statement of whether the offer is contingent upon anything (i.e., a satisfactory background or reference check, execution of a confidentiality agreement, etc.);

  • If the employee’s employment will be subject to more detailed terms in an employment agreement, a statement that such agreement is forthcoming and must be signed as a condition of employment.

What to Avoid in an Offer Letter:

  • Language that implies that employment will be for a fixed term or that contemplates an indefinite future of employment (i.e., any statements regarding “job security,” or statements such as “we look forward to a long relationship”);

  • Language that implies that the offer letter is a contract for continued employment; and

  • Promises of future earnings or guaranteed bonuses.

Conducting a Background Check

Conducting a background check in New York can be an incredibly complex process, with significant legal implications. To avoid costly litigation or financial penalties, New York employers must closely abide by several key statutes when conducting background checks. These statutes include the federal laws that are not summarized here, such as the Fair Credit Reporting Act (which we will not summarize here) and job-specific laws that may not apply to all employers. Beyond those laws, New York employers must also comply with state and local statutes, including: (i) the New York State Human Rights Law (“NYSHRL”); and (iii) for New York City employers, the New York City Fair Chance Act (the “NYCFCA”), the Stop Credit Discrimination in Employment Act (the “SCDEA”), and the New York City Human Rights Law (“NYCHRL”) (together, the “NYC Acts”). While analyzing New York’s various background check laws could be a two-part post in itself, the summary below is a non-exhaustive initial guide of basic requirements that employers who hire in New York should be aware of.

NYSHRL

The NYSHRL permits employers to conduct background checks, but places certain restrictions on how employers may use this information in employment decisions. Employers are only permitted to inquire about convictions, rather than arrests or charges that did not lead to a conviction. The NYSHRL also prohibits employers from denying employment unless: (i) there is a direct relationship between the conviction and the employment sought; and (ii) granting the employment would involve an unreasonable risk to property or the safety or welfare of others. This requires employers to analyze the conviction by applying factors set forth in Article 23-A of the New York Corrections Law (“Article 23-A”).

To comply with the NYSHRL, employers must: (i) include a copy of Article 23-A, available here, with any background check authorization form; and (ii) conduct an Article 23-A analysis when making employment decisions based on an applicant’s conviction record.

NYC Acts

Finally, New York City employers must comply with the NYC Acts, as summarized below:

  • The NYCFCA prohibits employers from conducting any background check that may concern criminal history until after a conditional offer of employment is made. In the event that an employer wishes to take an adverse employment action after reviewing an applicant’s criminal history, it must also provide the applicant with, among other things: (i) a copy of the inquiry; (ii) a copy of Article 23-A; and (iii) a copy of the employer’s written Article 23-A analysis at least three days before taking the action.

  • The SCDEA prohibits most employers in New York from conducting credit history inquiries in connection with employment.

  • The NYCHRL prohibits employers from making any inquiries regarding an applicant’s salary history at his or her previous job.

Employers should also be aware of various restrictions on conducting social media searches in the hiring process, which we will discuss in greater detail in a forthcoming post.

Foreign employers doing business in New York (city and or state) must be aware of the many differences that exist between their country of origin and New York when it comes to draft an offer letter and run a background check for a prospective employee.  New York laws offer some of the most significant protections for prospective employees nationwide.  Seeking legal advice prior to hiring your U.S. personnel will educate and protect you from the common—and potentially very expensive—pitfalls in the hiring process.

*Karl Buhler assisted with this post.

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.

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About this Author

Associate

Lindsay Colvin Stone is an associate in the Labor and Employment Practice Group in the firm's New York office.

Areas of Practice

Ms. Stone is experienced in representing employers in a wide array of labor and employment matters in judicial, arbitral and agency forums, including disputes related to restrictive covenant and non-competition agreements, misappropriation of trade secrets, wage and hour issues, wrongful termination, and discrimination and harassment. Ms. Stone also regularly counsels clients on matters relating to internal...

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