September 24, 2020

Volume X, Number 268

September 24, 2020

Subscribe to Latest Legal News and Analysis

September 23, 2020

Subscribe to Latest Legal News and Analysis

September 22, 2020

Subscribe to Latest Legal News and Analysis

New York Bars Insurers from Denying Commercial Crime Coverage Due to Employee’s Prior Criminal Conviction

The New York State Department of Financial Services (NYSDFS) has promulgated a regulation that requires insurance companies to provide Commercial Crime Coverage to employers who have prior knowledge of an employee’s prior criminal conviction. Commercial Crime Coverage is defined as coverage under a policy of commercial risk insurance that provides burglary and theft insurance or fidelity insurance.

NYSDFS was created in 2011, replacing the New York State Banking and Insurance Departments. It supervises many different types of financial services institutions, including insurance companies. The Department has a stated goal of guarding against fraud and financial crises, as well as modernizing regulation of financial services in New York. Its regulations can have ripple effects for companies dealing with financial services institutions and insurance companies.

The new regulation (Title 11 of the New York Codes Rules and Regulations Part 76), issued by NYSDFS on December 6, 2016, applies only to insurers whose insured has engaged in a Correction Law Article 23-A analysis.

The Correction Law forbids discriminating based upon a conviction for a previous criminal offense, unless there is a direct relationship between the criminal offense and the employment sought. The Correction Law specifies eight factors, including the public policy of the state, when analyzing whether there is a “direct relationship.”

Eight Factors

Eight factors to determine a “direct relationship” under Article 23-A:

  1. The state public policy encouraging the employment of persons previously convicted of one or more criminal offenses;

  2. The specific duties and responsibilities necessarily related to the employment sought or held by the person;

  3. The bearing, if any, the criminal offense(s) will have on the person’s fitness or ability to perform one or more such duties or responsibilities;

  4. The amount of time that elapsed since the criminal offense(s);

  5. The age of the person at the time of the criminal offense(s);

  6. The seriousness of the criminal offense(s);

  7. Any information produced by the person, or on his or her behalf, regarding rehabilitation and good conduct; and

  8. The legitimate interest of the employer in protecting property and the safety and welfare of specific individuals or the general public.

Effective Date

The regulation is effective July 1, 2017. It will be applied only prospectively to policies issued, renewed, or delivered in New York after that date.

However, insurers may properly audit employers and require them to maintain adequate records to demonstrate that the employer, in fact, conducted the full Article 23-A analysis. This process therefore may begin before the effective date for policies to be issued on or after July 1, 2017.

Next Steps

Employers in New York should be familiar with their obligations to consider the Article 23-A factors prior to denying employment. The new regulation is another incentive for keeping accurate records of the analysis, as an employer may otherwise lose the benefit of commercial crime insurance coverage.

Jackson Lewis P.C. © 2020National Law Review, Volume VII, Number 13

TRENDING LEGAL ANALYSIS


About this Author

Susan M. Corcoran, Jackson Lewis, fair credit reporting lawyer, Labor Policy Attorney
Principal

Susan M. Corcoran is a Principal in the White Plains, New York, office of Jackson Lewis, P.C. Ms. Corcoran is a seasoned employment counselor and litigator and is often thought of as the “go to” person on national workplace law issues for her clients.

She is one of the leaders of the firm’s Background Check Resource Group, and serves as a resource on fair credit reporting act issues, as well as “ban the box” strategies. She taught a graduate employment law class for many years at Manhattanville College and frequently speaks...

914-872-6871
Richard Greenberg, Jackson Lewis, workplace grievances lawyer, arbitrations litigation attorney
Principal

Richard Greenberg is a Principal in the New York City, New York, office of Jackson Lewis P.C. He advises both unionized and union-free clients on a full-range of labor and employee relations matters.

With respect to traditional labor matters, Mr. Greenberg represents clients in collective bargaining negotiations, labor disputes, grievances and arbitrations, proceedings before the National Labor Relations Board, and in state and federal court. Mr. Greenberg also advises clients on the legal aspects of remaining union-free. With respect to employee relations matters, Mr. Greenberg has extensive experience assisting clients in numerous industries with the development and maintenance of personnel policies and personnel infrastructures. In this regard, Mr. Greenberg often works on these issues with clients as business needs and culture change as a result of business transactions, such as mergers and acquisitions.

212-545-4080
David S. Greenhaus, Jackson Lewis, Title VII lawyer, employment discrimination attorney
Principal

David Greenhaus is a Principal in the Long Island, New York, office of Jackson Lewis P.C. He has a broad area of practice and responsibility with the firm.

Mr. Greenhaus regularly litigates claims for breach of noncompetition agreements, theft of trade secrets and breach of the duty of loyalty, as well as traditional Title VII employment discrimination claims. He has practiced extensively in both state and federal courts, as well as at administrative agencies and before the American Arbitration Association. Mr. Greenhaus...

631-247-4658
Christopher M. Valentino, EEOC litigation, labor attorney, Jackson Lewis Law firm, employment litigator
Office Managing Principal

Christopher M. Valentino is Office Managing Principal of the Long Island, New York, office of Jackson Lewis P.C. and is a member of the firm’s Board of Directors. Mr. Valentino represents companies in matters relating to traditional labor, equal employment opportunity, employment litigation and related matters.

Mr. Valentino has extensive experience in all matters relating to EEO compliance and workplace laws and a frequent speaker at management education programs. Since joining Jackson Lewis in September 2000, he has regularly counseled clients in the...

631-247-4653
Bradley M. Pryba, Principal, Government relations Attorney, Jackson Lewis, Law Firm
Principal

Bradley M. Pryba is a Principal in the Albany and White Plains, New York, offices of Jackson Lewis P.C.

Mr. Pryba works closely and effectively with government officials of all political persuasions in developing innovative and lasting resolutions to clients’ most complicated issues. With a combination of solid legal skills and seasoned judgment, he represents nationally and internationally recognized organizations as well as nonprofits and local businesses. Mr. Pryba offers sound and sensible strategies designed to resolve...

518-512-8700