FCRA stands for Fair Credit Reporting Act, a federal law that regulates how consumer credit reports are collected, used, and shared1. It aims to protect consumers from inaccurate or unfair information in their credit reports

Minnesota Petty Misdemeanors and How to Report Them

Although nearly all state laws include criminal offense levels divided into two types – felonies and misdemeanors – there are many states with offense levels peculiar to their state law. One such peculiarity is Minnesota’s petty misdemeanor offense level.

In Minnesota, a petty misdemeanor is the lowest level of offense. Many but not all Minnesota traffic violations are petty misdemeanors. The unique aspect of a petty misdemeanor is that it is not considered a crime. (See for yourself here: Minn. Stat. § 609.02, subd. 4a or the accompanying attachment.) A petty misdemeanor does not carry a jail sentence but can result in a fine of up to $300.

Reporting Criminal Convictions, the FCRA, and State Laws

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Under the Fair Credit Reporting Act (FCRA), criminal convictions can appear in a background report regardless of when they occurred. It does not matter how old the conviction is. However, some states have passed their own legislation similar to the FCRA that does place restrictions on reporting criminal convictions.

Which states restrict reporting on convictions?

California, Colorado, Hawaii, Kansas, Maryland, Massachusetts, Montana, New Mexico, New York, New Hampshire, Texas, and Washington all have laws that limit the scope of reporting criminal convictions to seven years. In Hawaii, the seven-year limit is for felonies only; the reporting of misdemeanors is limited to five years. The District of Columbia limits the reporting of criminal convictions to 10 years.

All states not listed above follow the FCRA rule that criminal convictions can appear in a background report regardless of when they occurred.

The Salary Exception States

Seven of the states listed above allow an exception to their rule of limiting reporting criminal convictions to seven years. The exception is based on the salary the candidate is expected to make. If the salary exceeds a certain threshold, the seven-year limitation does not apply, and criminal convictions can appear in the candidate’s background report regardless of when they occurred.

Salary Exception StatesCandidate’s Potential Salary Threshold
Colorado$75,000
Kansas$20,000
Maryland$20,000
New Hampshire$20,000
New York$25,000
Texas$75,000
Washington$20,000

District of Columbia: Limitations on Reporting Negative Information in Background Checks Used for Employment Purposes

Although several states have laws analogous to the federal Fair Credit Reporting Act (FCRA), the District of Columbia does not. As a rule, the District of Columbia follows the federal FCRA regarding the limitations on reporting negative information in background check reports used for employment purposes. However, there are three notable exceptions where district law differs from the FCRA regarding reporting criminal records:

(1)        Records of arrests or criminal accusations that did not result in a conviction cannot be reported (unless the charges are pending);

(2)        Inquiries about criminal convictions cannot be made unless a conditional offer of employment is made; and

(3)        Convictions with a completed sentence that is more than 10 years old cannot be reported.

The first two exceptions are found in the district’s Fair Criminal Record Screening Amendment Act of 2014 codified at Sections 32-1341 – 32-1346 of the Code of District of Columbia, and the third exception is found in Section 2–1402.66 of the district’s Human Rights Law.

Legal considerations when recruiting, hiring out-of-state WFH employees

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Since the COVID-19 pandemic, employees working from home (WFH) have created a host of new wrinkles for employers, many of which are still being ironed out.

For employees, the WFH option can be safer (less chances of contracting COVID) and easier (no more commute); for employers, WFH reduces the cost of overhead and can result in happier, more productive employees.

While it may sound easy to simply hire a worker on the other side of the country, there are several legal questions for employers who want to recruit and hire an out-of-state employee who will WFH. The following are some of the important issues that employers should consider.  

  • Recruiting. Looking for a new employee beyond state lines appears to present a limitless supply of potential new workers. But employers need to familiarize themselves with the laws of the state where the applicant lives, particularly with regard to issues such as background checks, criminal record searches and compensation.

Several states – including New Jersey and New York – prohibit employers from inquiring about a job applicant’s salary, benefits and other compensation history.

Other factors may make certain locations a more advantageous space to find new WFH hires.

Some states offer financial incentives to remote workers. Alabama, Georgia, Oklahoma, and West Virginia offer bonuses to entice remote workers, ranging from reimbursement of moving expenses to $12,000 in cash (West Virginia will pay $10,000 divided over the course of 12 months with $2,000 paid at the end of the second year in residence).

  • Employee benefits and protections. Once an out-of-state employee has been hired to WFH, employers have a whole new list of individual state laws to learn. Each state has its own variations on employee benefits as well as legal protections – and in many cases, additional differences at the county and/or municipal level.

These differences can present the possibility of additional liability for employers on issues such as paid sick leave, paid family leave, minimum wage, disability, unemployment and vacation days, among others. 

State laws on minimum wage vary widely, along with differences for tip credits and minimum salary thresholds for exemptions. The current minimum wage in Texas is $7.25 per hour, for example, while New York’s minimum wage is $11.00.

Paid family leave is now mandatory (or will be soon) in California, Colorado, Connecticut, Massachusetts, New Jersey, New York, Oregon, Rhode Island, Washington, and Washington, D.C.

As for overtime, most states follow the standard payment of time-and-a-half for hours worked over 40 in a workweek, but a handful (including California) have more stringent requirements, while some states (California again) mandate that earned vacation days never expire. 

Without a physical location in the state where a WFH employee resides and a breakroom to hang various notices, an employer must still remember to fulfill poster and notification obligations as well as various mandatory training. Remote employees do not need to tape posters up on their walls to satisfy state laws, but employers do need to provide certain information and documentation to out-of-state WFH employees to achieve compliance by sharing – and updating – federal, state, and local notices.

Even if an employer has a single WFH employee in another state, workers’ compensation insurance is necessary, along with registration with the appropriate state agency. Some states have their own fund that employers must contribute into, while a third-party insurance company will suffice in others.

In addition, each state has different laws on employee protections, sometimes with variations at the local level. Employers should be careful to consider state, county and/or municipal statutes and regulations with regard to non-compete agreements, discrimination and retaliation protections and the requirements to legally terminate an employee.

  • Tax implications. Employees must be registered for tax purposes in the state where they reside, which means the company itself needs to register its presence in those states for tax purposes. That potentially newfound “tax nexus” to another state may mean sales and use taxes, income taxes and franchise taxes for the employer as well, depending on the requirements of the other state. The failure to properly register and pay the appropriate taxes can result in fines and penalties.

The registration process requires paperwork, time and patience, as it can take several weeks for an employee and the employer to be property registered. And some states – Pennsylvania, for example – also have local city or township registration requirements in addition to those at the state level.

Employers may also be subject to higher corporate income tax rates, which is calculated in part based on the employee’s role and seniority. So a WFH executive in a state with a high tax rate may cost an employer more money than a lower-level WFH employee in that state.

WFH employees themselves may face a tax conundrum with the “convenience of employer” rule that applies in seven states. In Arkansas, Connecticut, Delaware, Massachusetts, Nebraska, New York and Pennsylvania, if an employee works in a different state than her employer by choice – not because the job mandates – then the employer’s state has the right to tax her, and the employer would be required to withhold taxes from her paycheck in both her home state and the employer’s.

Alternatively, some states have reciprocity agreements that expressly forbid this double taxation. A total of 16 states and Washington, D.C. have such deals, where an employee who lives in Wisconsin and works for an Illinois employer, for example, only pays income taxes in Wisconsin. States that have reached such agreements typically share a border, although Arizona has gone above and beyond, with reciprocity in California, Indiana, Oregon and Virginia.

One additional complication: some states have issued temporary guidance to deal with the out-of-state WFH situation during COVID. Alabama and Georgia stated that they would not enforce payroll withholding requirements for employees who are temporarily working from home due to government-mandated stay-at-home orders; Connecticut said that employees WFH due to the pandemic is a necessity for work but New York reached the opposite conclusion, stating that it is for the employee’s convenience.

Employers should consider all of the legal ramifications before hiring an out-of-state WFH employee.

The challenges of employment applications for multi-state employers

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One of the hottest trends in employment in recent years has been the passage of “ban-the-box” and salary inquiry prohibitions in states and cities across the country.

Limitations on salary inquiry have popped up in recent years as part of the legislative fight against wage discrimination and the gender pay gap. Proponents of such prohibitions argue that salary history questions feed into the discrepancy between what male and female employees are paid by continuously repeating history.

Currently, California, Delaware, Massachusetts, Oregon and Puerto Rico have banned inquiries about prior salary, as have cities including New Orleans, New York and Philadelphia, with dozens of other states and local governments considering such measures.

The colloquial term “ban-the-box” refers to a box that applicants check to indicate they have a criminal record on standardized application forms. About 20 states and more than 150 local entities have already enacted legislation addressing inquiries into criminal history. The trend even went federal in 2015 with the Fair Chance Act introduced in Congress. Although the measure did not pass, it demonstrated the popularity of the movement.

The proposed federal legislation also shined a light on the situation facing multistate employers, with different laws in different states and in some situations, different laws in different cities or municipalities within the same state. One law may contain an outright ban on inquiries into salary or criminal history while another may place restrictions on the timing of the questions. Some laws define covered employers to include businesses with five or more employees; another may not apply its limitations to employers with less than 50 workers.

As an example, although the state already limited employers’ ability to ask job applicants about any juvenile court matters, the California legislature broadened its ban-the-box protections for employees with a new law in 2017. Employers in the state are restricted from making hiring decisions based on an applicant’s convictions records and forbidden from considering conviction history until a conditional offer of employment has been extended.

If an employer elects not to hire an applicant because of a prior conviction, the employer is required to conduct an individualized assessment to determine whether the history has a “direct and adverse relationship” with the job duties that justifies denial of the position. Written notice must be provided to an applicant that his/her conviction history has disqualified the applicant from employment, along with five days to respond and dispute the decision. A second notice must be provided with the final decision not to hire.

In contrast, Vermont’s ban-the-box measure takes a different approach, allowing employers to question applicants about their criminal records during the job interview, albeit providing an applicant with the opportunity to explain their record. And under New York City’s law, an employer commits a per se violation of the statute by using recruiting materials of any kind (including advertisements, solicitations or applications) that express, directly or indirectly, any limitation or specification regarding criminal history.

While the overarching principle remains consistent, the details of the laws vary from jurisdiction to jurisdiction. For multi-state employers, coping with such a patchwork of legal requirements poses a serious challenge.

As the number of state and local jurisdictions with laws addressing salary inquiries or criminal history continues to expand, multi-state employers should brace themselves for a giant compliance puzzle – and consider getting help from an expert.