Recent legislation in Indiana mandates that a court expunge records concerning misdemeanor convictions and minor Class D felony convictions under certain circumstances, and allows the court to expunge records concerning certain more serious felony conviction in others. Notably, employers must be aware that the newly-enacted House Enrolled Act (HEA) 1482 also extends to the employment context, making it unlawful to discriminate against any person who has a conviction or arrest record that is expunged or sealed under the new law. Employers must seek to comply with the state law, but should also be careful to continue to comply with any federal laws that may preempt it.
According to HEA 1482, it is unlawful to suspend, expel, refuse to employ, refuse to grant a license or permit, or otherwise discriminate against a person because of a conviction or arrest record expunged or sealed under the law. In short, “[a] person whose record is expunged shall be treated as if the person had never been convicted of the offense.” Job applications are specifically targeted in the statute, as it warns that “a person may be questioned about a previous criminal record only in terms that exclude expunged convictions or arrests, such as: ‘Have you ever been arrested for or convicted of a crime that has not been expunged by a court?'” Any person who violates HEA 1482 by unlawfully discriminating against a person based on an expunged criminal record commits a Class C infraction and may be held in contempt of court. A person who is discriminated against is also entitled to injunctive relief.
In an apparent attempt to address concerns about lawsuits for negligent hiring of individuals with criminal records, the law allows an order of expungement to be introduced as evidence of an employer’s exercise of due care in hiring and retaining a person with an expunged criminal record. Furthermore, a conviction that has been expunged is not admissible as evidence in an action for negligent hiring, admission, or licensure against a person or entity that relied on the order.
In light of HEA 1482, which will go into effect on July 1, 2013, employers will need to examine their employment applications and practices to assure that they are in compliance with the new state law. Just as importantly, employers must also be cognizant of federal laws that may preempt the state law.
For example, Section 19 of the Federal Deposit Insurance Act prohibits FDIC (Federal Deposit Insurance Corporation)-insured institutions from employing a person convicted of any criminal offense involving dishonesty, breach of trust, or money laundering without the prior written consent of the FDIC. Under the FDIC statement of policy, a conviction which has been completely expunged is not considered a conviction of record and does not require a bank to seek a written waiver from the FDIC. However, to qualify as a complete expungement under the FDIC policy, no one, including law enforcement, can be permitted access to the record even by court order. In contrast, HEA 1482 does not go that far, as it disallows the release of a person’s records that have been ordered expunged, but contemplates that such records may be accessible by court order. Thus, expungement for purposes of HEA 1482 would not necessarily be considered expungement for purposes of Section 19.
As a result, banks and other employers subject to conflicting state and federal requirements vis-à-vis criminal background checks may wish to work with counsel to assure compliance with their federal obligations within the context of the narrowest possible pre-emption of the new Indiana law permitted by the federal law at issue. And all employers in Indiana should review their background check policies and applicant inquiries to assure compliance with the new law prior to July 1, 2013. If you have further questions about HEA 1482 and its application to your business, please contact your Bose McKinney & Evans labor and employment attorney.