The Fair Chance Act: What You Need to Know

Legislation to level the playing field on job applications isn’t new. Ban the box laws, prohibiting tick-box questions about criminal history records on applications, have proliferated for years. Other rules that require individual assessment of each record have also spread. At the time of publishing, 37 states and more than 150 cities have some form of background check laws on the books. Many of these apply only to public employers, but many more also apply to private companies. These laws all exist on a local level only. However, the federal Fair Chance Act began to change that.

Passed into law in 2021, this ban the box law applies only to the federal government and those who work with its agencies. However, the law represented a considerable shift, as it is the first time Congress has explored banning the box. Let’s consider the facts about this landmark background check regulation.

What is the Fair Chance to Compete Act? 

Officially titled the Fair Chance to Compete for Jobs Act of 2019, this law is a federal version of the ban the box framework commonly used in many cities, counties, and states. For employment opportunities within the federal government, the law creates new rules and guidelines regarding when agencies may begin asking about criminal history data. It also bans the box for federal jobs, which means that most federal job applications no longer contain any questions about criminal convictions.

The law aimed to expand the available hiring pool for agencies and their contractors. This move aligns with the goal of the ban the box movement, which is to increase opportunities and decrease the stigma and long-term effects of a criminal conviction. In the years since the law’s enactment, the Office of Personnel Management (OPM) has released several rounds of clarifications about the background check policy that is now in place. 

Who Does the Law Apply to Today?

The law applies to all federal agencies, contractors, and human resources that act on their behalf. A number of federal contractors are private companies that also serve contracts unrelated to the government. These businesses must comply with the law by creating a hiring process that aligns with the Fair Chance employment process. Agencies and contractors can’t ask questions on their job applications. Likewise, best practice is to delay criminal background checks until after making a conditional offer of employment.

Are There Exceptions to the Federal Fair Chance Act?

There are some exceptions and exemptions from the Fair Chance Act’s rules about background checks for employment. These exceptions have evolved and become more detailed over time as OPM continues to study the law and formulate more guidelines. OPM issued additional clarifications in 2024 to guide agencies and their contractors on exceptions. Currently, OPM indicates the following reasons make it permissible to ask about criminal history sooner:

• The position is for federal law enforcement as defined by specific statutes.
• The job role has a sensitive position designation as defined by the Director of National Intelligence and an OPM system.
• The role is a military-technical position, and the job candidate is on active duty.
• When the law requires agencies to background check applicants early.
• When the job involves applying for a security clearance.

Contractors who may work with the federal government should review these exceptions and monitor OPM bulletins for future changes.

What is the Penalty for Violating the Law?

The Fair Chance to Compete Act is not a toothless law. There are consequences for agencies, their employees, and contractors if someone violates an applicant’s rights under the law. These violations may include:

• A written warning to serve as a record of corrective action and to provide evidence in the event of any future violations.
• Suspension without pay. A federal employee who knowingly violates the act may be suspended for a time.
• Civil penalties. These are separate from a suspension without pay and may involve the agency employee or contractor facing a monetary fine.

Contracting employers should exercise caution when filling positions covered by the law.

Does This Law Affect Private Employers in the States?

Remember, this law applies only to federal government agencies and their contractors. It does not influence or impact state or local background check laws, supersede or overrule regulations for private employers hiring their own employees, or affect the average business owner in any given state.

However, some contractors that also provide services to private businesses or local governments may be subject to additional rules where they operate. Creating a standardized procedure that can comply with the full range of today’s fair chance legislation is a simple way to meet all your obligations.

The Future of Fair Chance Legislation

Will the federal government ever move to enact a nationwide Fair Chance Act that applies to all private employers? While possible, there has been no additional push for such efforts at a high level. Instead, the government will likely continue to allow states and other locales to dictate the regulations for hiring in their areas. In recent years, a few additional cities and states have banned the box. More may yet arise in the future. It is essential for employers to stay current on these changes and understand the law for each hiring decision. To find out more about the Fair Chance Act, read our white paper on the subject. For other regulations and information, visit our Resource Center.