Second Chance Hiring: 5 Tips from Successful Companies

The talent market is a competitive one, and employers are recognizing the value of bringing on employees from diverse backgrounds more than ever. While years ago, corporations may have shut down the prospect of hiring employees with criminal records, today, they are wise to consider second chance hiring. 

Companies that have successfully hired applicants with marks on their background checks have done so by navigating the recruitment waters with skill. At Axcet HR Solutions, we’re privileged to partner with (and help guide) quite a few of these innovative companies.

As we push toward a more diverse and inclusive workplace for all employees, now is the time to take inventory of what works—and what doesn’t—when it comes to second chance hiring. Here are 5 key lessons from employers who have successfully hired employees with criminal records. 

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Master Compliance in Employee Background Checks

As an employer of a full staff, you know that you need to juggle the best interests of many employees all at the same time. For this and other important reasons, it’s always a good idea to run a compliant background check on any applicants you’re seriously considering for an open role. Here are a few things to note about this crucial step in the hiring process: 

• Types of background checks

  You should know the answer to the question “What does a background check show?” This depends on the type of background check you run. Through a typical employee background check, you can verify professional and educational history, view an individual’s criminal record, and driving record, and even see social media details and posts that are viewable to the public. 

• Permission to run a background check

  Remember that while it is legal to run a background check on an applicant, you need to follow several steps to remain compliant. Broadly, these steps include gaining an applicant’s written permission before checking their criminal history; sharing a copy of the applicant’s report with them (if you go through a third party for the record check); and of course, refraining from using background checking in any way that could produce a discriminatory impact. 

• Know that different jurisdictions have different laws

  Understand that different jurisdictions have different laws bearing on employee background checks. While you may only have a physical office in one state, the laws of many different states (and locales) could control what you are and aren’t permitted to do when it comes to checking applicant’s backgrounds. 
  
  This comes into play if you hire employees living and working out-of-state, especially if they’re working remotely. For example, some states allow employers to check criminal history with a look-back period of up to 10 years, some draw the line at 7 years, and some impose no limit at all. 

• Understand Ban the Box laws

  Be wary of “ban the box” laws. More than half of states currently have “ban the box” laws in place, which prevent employers from prohibiting applicants with criminal records from applying for a position or from asking about convictions during an initial application or interview. 
  
  While “ban the box” laws still allow employers to conduct assessments of criminal histories, they often ban these assessments until the final stage of the hiring process, after the employer has already considered the applicant’s qualifications. 

Review Risks of Negligent Hiring 

When it comes to second chance hiring, one of the first concepts that come into play for many compliance-minded is that of the “negligent hiring” cause of action. This cause of action is typically brought by an employee or former employee (or even a third party) who has been harmed in some way by a company’s decision to hire someone they knew or should have known who had a prior history of bad acts. 

While the concept of negligent hiring puts companies on high alert for good reason, there are several protections for employers in place at the federal, state and local levels. For example, the nationwide “Federal Bonding Program” is a type of “insurance” program that protects eligible employers against losses they incurred if an employee with a criminal record has committed a crime against or on behalf of the company.

Bonds from the program are limited in the amount of up to $25,000 per employee and are not available in the event of the commission of a violent crime. 

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Maximize Second Chance Hiring Tax Benefits

There are several ways to take advantage of the tax benefits of hiring employees with criminal records. The WOTC or “Work Opportunity Tax Credit” is among the most popular. Through the WOTC program, employers who hire qualified individuals with criminal records can receive tax credits of up to $9,600 per hire. 

Several states and localities offer further tax credits. For example, New York operates “empire zones” wherein businesses operating in certain cities and districts within the state are eligible to receive tax credits for hiring individuals with criminal records.

For each eligible employee hired under the State’s specifications, employers can generate up to $3,000 annually to use against their state tax liability—or greater amounts depending on the employee’s salary. Several cities and localities have similar programs in place. Speak to a certified PEO to learn more. 

Dispell Myths About Hiring Someone with a Criminal Record

The Society for Human Resource Management reports that 82% of managers value the contributions of employees with criminal histories as high as, or higher than that of workers' records. Further, research published in the Journal of Labor Policy shows that while applicants with criminal records are much less likely than others to obtain legitimate employment, hiring these individuals leads to lower turnover rates, benefitting both employers and employees. 

Myths about employees with past convictions causing HR issues or being unreliable simply don’t hold up to what the data can tell us about these valuable members of the workforce. 

Partner with Certified PEOs for Compliant Recruitment and Retention

If you’re considering opening up your recruitment strategy to include second chance hiring, you’ll need a strong HR services partner on your side that specializes in compliance. Axcet HR Solutions is here to help. We offer guidance on compliant recruitment, retention and more.

We’re proud to take the wheel when it comes to HR compliance, while you regain the time and resources needed to focus on growing and scaling your core business. Schedule a consultation to learn more.