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Decoding Criminal Case Dispositions – Part II

In the previous piece about decoding criminal case dispositions, we listed the most common dispositions (e.g., guilty, not guilty, dismissal, not prosecuted). Here is a list of less common criminal case dispositions, some of which may be only found in one jurisdiction:

Suspended Sentence: This means the court has delayed the sentencing for an offense pending the successful completion of a period of probation or successful completion of a treatment program. If the defendant does not break the law during that period and fulfills the conditions of the probation, the judge usually reduces the degree of the offense or may dismiss the case entirely. Until the sentence is reduced or dismissed, the case is considered pending.

Diversion/Deferred Prosecution: The court has delayed prosecution pending the successful completion of probation conditions, at which point the charges will be dismissed. Until charges are dismissed, they remain pending.

Adjudication Withheld: The judge orders probation but does not formally convict the defendant of a criminal offense.

Probation Before Judgment: In Maryland, probation before judgment (PBJ) is one type of disposition in a criminal case. For a defendant to receive a PBJ as a disposition, the defendant must make a plea of guilty; however, the court stays the finding of guilt and places the defendant on probation. If the defendant satisfactorily completes the probation terms, the guilty plea is stricken. PBJ is not a conviction in Maryland.

Stet Docket: The prosecutor may place the case on the stet docket. This is an indefinite postponement of a criminal case for up to three years. It is not a conviction. In Illinois, it is called “stricken off leave.”

ARD Program: Common in Pennsylvania, it stands for “Accelerated Rehabilitative Disposition Program.” This program is given to the defendant in place of adjudication. If the defendant completes the program, the case is closed.

Conditional Discharge: In New York, a conditional discharge is part of a sentence. When the judge sentences the defendant to a conditional discharge, the judge will indicate the conditions that the defendant must meet for the sentence to be successfully completed.

In New Jersey, a conditional discharge is a type of diversionary treatment program offered to individuals charged with a disorderly person’s offense involving controlled dangerous substances (e.g., heroin, Xanax, Oxycontin, or drug paraphernalia). Upon completion of the terms and conditions of the treatment program, the treatment is terminated and the proceedings against the defendant are dismissed.

Civil Case Dispositions – Dismissals

A dismissal also can take one of two forms:

  • With prejudice – which means the plaintiff is barred from filing a new lawsuit based on the same claim.
  • Without prejudice – which means the plaintiff can still file a new lawsuit based on the same claim, such as when the defendant does not carry through on the terms of the settlement.

A dismissal can be made by the court, the plaintiff, or an agreement between both the plaintiff and defendant.

  • The court can dismiss a plaintiff’s case if the judge concludes the plaintiff’s case is without merit – often referred to as an involuntary dismissal.
  • A plaintiff can also dismiss a case – referred to as a voluntary dismissal.
  • When there is an out-of-court settlement, a dismissal will be filed by one of the parties stating the case is settled – often called a stipulation for dismissal or notice of dismissal. In New York, it is called a notice of discontinuance. (Settlement dismissals usually contain little or no information about the details of the settlement.)

Decoding Criminal Case Dispositions

A “disposition” is the final outcome of a case, regardless of what it is called. Here is a list of typical criminal case dispositions.

Guilty or Conviction: This is the worst possible disposition if you are the defendant. It means that the case was heard and decided against you. With a conviction, the court will impose a sentence that may include jail time, probation, and paying a fine and court fees.

Not Guilty: The case actually proceeds to a trial, where a jury (or a judge in certain types of cases) decides that the evidence against the defendant was insufficient for a conviction. It does not mean the defendant was innocent – just that the case was heard and decided in the defendant’s favor.

Dismissal: A dismissal is entered when the court determines that the case should not move forward for some reason. There are many reasons for dismissals. For instance, there can be procedural errors, a lack of proper jurisdiction over the type of case, or the prosecutor decides to dismiss the charges (see below).

Nolle Prosequi or Nolle Prosse: A Latin phrase meaning “no more prosecution.” This is another way of saying that a case is dismissed by the prosecutor. This approach is often used when a defendant may agree to plead guilty to a lesser offense that guarantees the prosecution a conviction for a related offense, in exchange for the prosecutor “dismissing” the more serious charge.

Reporting Disclosed Criminal Convictions

Job applicants often disclose criminal convictions during the application process. It may seem logical that we can include the disclosed record in our background reports. After all, we are simply verifying what the subject already disclosed, right? 

Actually, it’s wrong. The subject’s disclosure of a criminal conviction does not affect our reporting obligations under the federal Fair Credit Reporting Act (FCRA) or similar state laws. Our background reports must always comply with these laws regardless of what is disclosed to us. Under the FCRA, convictions can appear in a report regardless of when they occurred. Most states follow this rule, but several do not. California, Kansas, Maryland, Massachusetts, Montana, New Mexico, New York, New Hampshire, and Washington, all limit the reporting of a criminal conviction to seven years after the conviction occurred. The District of Columbia sets a 10-year reporting limit. 

Arrest record but no charges

Typically, an arrest record will show the date, arresting agency, and the subject’s name (and other identifiers such as DOB and address), without specifying the charge or charges. The reason for this is twofold: (1) until the district attorney (“DA”) files a criminal case, there are no charges; and (2) the charges filed by the DA may be different than the charges on which the arresting officer based the arrest. An “arrest” and “being charged with a crime” are different things (although obviously related).  An “arrest” means that a person is taken into custody because they have been accused either by a warrant or by probable cause of committing a crime. Once in custody, the prosecutor’s office will decide whether the person will be charged with a crime. The person will then be given a charging document (complaint or information) that will state what charges they are facing.

A record will never show that an arrest was “dropped.” At best, you can infer that no charges were filed after an arrest if there is no corresponding court case.

New Jersey Crime Categories

As explained in our previous posts, the most serious offenses are categorized as “felonies” and less serious as “misdemeanors.”  While this is true in nearly every state, there is an exception (of course) and that exception is New Jersey.

In New Jersey, crimes are not categorized as felonies and misdemeanors but as “indictable crimes,” “disorderly person offenses,” and “petty disorderly person offenses.”

According to New Jersey law, indictable offenses are the equivalent of felonies in other states. Courts classify charges into first, second, third, and fourth-degree charges. A first-degree offense is the most serious of all charges. “Indictable” means that a grand jury has found enough evidence against the defendant to make them face trial.

“Disorderly person offenses” and “petty disorderly person offenses” (sometimes referred to as “DP offenses”) are the equivalent of misdemeanors in other states because they are less serious offenses and are punishable by less than one year in jail.

Civil Cases and Garnishees

A common occurrence when searching civil case records for a company is to locate a record that identifies the company’s role in the case as a “garnishee.” What’s a garnishee and should these cases be included in background reports?

A garnishee can be any company (or person) who holds property (including money) owed to a debtor – that is, someone who has an unpaid judgment against them.

Employers often become a garnishee because they hold wages to be paid to an employee who is a debtor. A creditor can use a procedure called a wage garnishment, which is a court order, that requires the debtor’s employer to hold the debtor’s wages to pay the creditor. The employer as garnishee simply pays the employee-debtor’s wages to the court.

Because a garnishee’s involvement in a civil case is neither negative nor noteworthy, it typically should not be included in the report.  

Reporting Disclosed Criminal Records — Non-Convictions

Previously, we emphasized the limitations that several states and the District of Columbia place on reporting criminal convictions even though a job applicant discloses the conviction during the application process. What about limitations on reporting disclosed criminal records that do not result a conviction? Criminal records of non-convictions include: 

  • Arrest record (no charges filed) 
  • Dismissed charges 
  • Not guilty verdicts 
  • Deferred prosecution (no plea entered, and charges dismissed if conditions met) 
  • Nolle prosequi or nolle prosse (not prosecuted) 

Although the federal Fair Credit Reporting Act (FCRA) permits convictions to be reported regardless of when the conviction occurred, the FCRA limits the time for reporting non-convictions. Records of non-convictions are reportable for seven years from the earliest file date for the record and can appear on a background report for seven years. After seven years, the record cannot be reported unless the candidate is or will be earning more than $75k annually.

The FCRA seven-year rule applies in all states except California, Kentucky, New York, and New Mexico. These states prohibit reporting any records non-convictions, regardless of date of the record. California, New York, and New Mexico provide an exception for records of pending criminal cases. 

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.

Tips for Employers on IRS’ Payroll Tax Deferral

Last month, the IRS issued guidance (notice 2020-65) on the President’s recent executive order to defer certain payroll tax obligations. Specifically, employers could offer to suspend their workers’ Social Security payroll taxes from Sept. 1 through Dec. 31, 2020. This deferral would apply only to employees whose wages are less than $4,000 for a biweekly pay period, including salaried workers earning less than $104,000 per year.

When determining whether suspend collection of eligible employees’ Social Security payroll taxes, here are a few things that employers must consider:

As a tax deferral, the Social Security payroll tax obligations are not eliminated; they are merely delayed. Employees would need to repay the deferred payroll taxes during the first four months of 2021. And the responsibility falls on the employers to ensure that the previously deferred payroll taxes are collected from workers’ paychecks. Some employees may not understand that the payroll tax suspension is not permanent and requires future repayment. If employers do not return the previously deferred tax amounts to the IRS by April 30, 2021, penalties and interest will begin to accrue on tax amounts that have not been repaid.

Therefore, if a company does indeed decide to defer some of its employee’s payroll taxes, it would be wise for the employer to create an agreement with employees acknowledging that the deferral is short-term and that they will pay the money back beginning 2021, even if they leave the company.  

Even if an employee requests the payroll tax deferral, the employer is not required to provide deferral. It is up to the employer to determine whether to provide the relief, but they are not obligated to do so. If, however, an employer does decide to offer temporary tax suspension, the employer may want to provide employees with an opt-in or opt-out option, as some may choose not to defer a portion of their taxes.

Since the deferral period ends at the end of 2020, employers should decide soon if they want to offer the option to their employees. There a number of considerations that may go into an employers’ decision, such as working with vendors to make payroll system changes and budgeting for the repayment of taxes in the event collection from employees is not possible. Employers do not need to decide right away if they want to implement the program, but they should not wait too long. The deferral only lasts until the end of the year and taxes are not retroactive, meaning that employers cannot adjust payrolls processed in the past. For example, if an employer begins the deferral in October, they cannot refund employees for amounts that were deducted for Social Security taxes in September.

All in all, whether an employer decides to offer the deferral to its employees, the employer should monitor for additional guidance from Treasury, the IRS, and legislative bodies. There have been discussions of forgiving the deferral, but, ultimately, only time will tell.