February 26th, 2024 | Angela Preston, Associate General Counsel, Corporate Ethics and Compliance, Sterling

3 Compliance Trends Set to Impact Employers in 2024

Reading time: About 4 minutes

Top Takeaways:  

1. Examine your existing policies that define how your organization handles criminal history inquiries and consider making any necessary changes concerning background screening and hiring decisions.
2. Carefully review your current policies in order to help ensure compliance and avoid bias during the hiring process.
3. If your organization leverages AI and automation as part of the hiring process, review the current EEOC guidance and state or city requirements to ensure alignment.  

With 2024 already well underway, employers everywhere are wondering how new laws will affect their hiring this year. Since so many regulatory developments concerning employment decisions have occurred in just the last few years, hiring laws can be a difficult area for HR professionals to monitor.

As a result, many organizations are grappling with the challenge of staying in-the-know with laws and best practices. What are the most recent changes to today’s regulatory landscape? Specifically, what legislative trends are most likely to impact employers this year?

We’ve identified the top three hiring trends employers should closely follow in 2024 in order to help ensure they’re hiring and screening candidates in a compliant manner. Also be sure to sign up for our Compliance Roundup to keep up-to-date on these evolving trends and what they could mean for your business.

Compliance Trend #1: AI and Automation Tools

Our top trend to follow this year will come as no surprise to employers: AI and automated employment decision tools (AEDTs) are increasingly being used in the hiring process.

While AI laws are relatively recent, they’ve only increased in pace as more organizations consider harnessing AI efficiency gains. As a result, employers everywhere are busy designing policies concerning the use of AI and similar technology when making hiring decisions.

Why do organizations see an urgent need to draft AI policy?

Employers need to consider drafting an AI policy that takes into account the use of AI, particularly when used in any AEDTs, for compliance with existing federal and state anti-discrimination laws and new laws which are targeting the need for bias testing to prevent discrimination. By implementing policies and good practices to evaluate new technology, employers can mitigate the risk of violating laws when AI is part of the hiring process.

If employers don’t already have an AI policy in place, where should they start? 

• It’s essential for organizations in all industries to stay knowledgeable about upcoming regulatory and legislative developments. Two important authorities releasing mandates and guidance include the FTC (Federal Trade Commission) and the EEOC (Equal Employment Opportunity Commission). We anticipate that these and other regulatory bodies are poised to oversee employers’ use of AI and AEDTs in 2024 and beyond.
• Ivneet Kaur, EVP, Chief Information Technology Officer at Sterling, offers this insight: “We believe AI capabilities are going to be a game-changer for our clients and candidates. It all starts with policy creation and best practices, while viewing HR holistically in your organization, not just as a productivity driver.” 

Compliance Trend #2: Clean Slate Laws

“Clean slate” legislation is a fast-growing legal initiative to watch in 2024, inspiring laws at both the state and local levels.

As a legislative policy model, clean slate laws allow the removal of specific types of criminal records from the public court record. The laws allow candidates to have a fresh start by allowing the sealing or expungement of certain types of records, in some cases after a specified length of time. This means that (where these laws are applicable) employers may not have access to certain record types which formerly had been available during a criminal background check.

Since clean slate laws have recently grown in popularity, employers are reviewing their current hiring policies with an eye toward how they may impact the way companies make hiring decisions. Employers might find it difficult to keep in-the-know about clean slate laws since they vary from state to state.

How should employers approach clean slate laws when designing and re-examining policy in their own organizations? 

1. Employers can address the impact of clean slate laws by asking themselves how they want to treat the information they find during criminal background checks. Employers can also proactively identify which specific categories of offenses might impact employment, bearing in mind certain job requirements and the need to foster a culture of trust and safety.
2. In some cases, employers may want to tailor their criminal screening requirements for specific positions, and take into account what type of information is relevant and job-related, and likely to be available when conducting criminal searches in specific locations.  

Compliance Trend #3: Fair Chance Laws  

“Fair chance” laws are another growing area employers should follow in 2024. These laws are named because they aim to give candidates with previous criminal history a fair chance by creating new requirements to give them a fresh start in the hiring process.

As with clean slate laws, fair chance laws can be challenging to monitor because they can vary from state to state. Fair chance laws generally require more robust notification to candidates about the results of a criminal background check, sometimes requiring specific forms and giving candidates sufficient opportunities to respond. They may also impact the timing of when, in the hiring process, a criminal search may occur. 

California recently updated its fair chance statute, creating some new considerations for employers. To cite just one recent example, California employers are now required to perform a preliminary initial assessment of criminal history information before they begin the adverse action process with their candidates.

Your organization may already be following fair chance requirements. These laws present an opportunity to re-examine your criminal background check practices and policies together with your legal counsel. Be sure to document your policies and practices, and maintain records that demonstrate your compliance.

A candidate’s first interaction with your business is often their last step before being hired. What steps can HR teams take toward maintaining fair chance compliance? How might fair chance laws apply to your organization?

While our Fair Chance blog post covers this issue in more depth, here are a few initial considerations for employers: 

• Fair chance laws vary when applied to different roles and jobs. Since some jobs require occupational licensing, for example, some states have created a formal process allowing individuals to petition a licensing board to decide whether their criminal history would disqualify them prior to the application for licensure. Meanwhile, other laws require the licensing boards to provide individuals with a written response explaining the reason why their criminal history prohibits them from obtaining a license.
• Some states and cities have exemptions for certain roles where the laws may not be applicable.
• Closely monitor state legislative activity focusing on fair chance in order to proactively identify laws that could potentially impact your background screening programs. Also carefully consider when you conduct a criminal check, and how you should treat information uncovered during a criminal background check. 

Keeping Tabs on Clean Slate, Fair Chance, and AI Legislation 

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Organizations working to hire at scale and leverage AI may find it challenging to keep up with the ever-evolving regulatory landscape. Becoming more familiar with these hiring law trends helps employers hire compliantly while mitigating the risk of hiring bias.

Meanwhile, compliance and HR professionals should carefully monitor emerging legislation at the federal, state, and local levels. By creating strong hiring policies and processes, employers can improve the candidate experience, reduce time-to-hire, and help to keep discrimination out of the hiring process.

Closing Thoughts

The right background screening partner can help you find the best fit between your new hires and your company culture. Sterling’s global compliance team closely monitors hiring laws and other developing compliance trends for our clients. Our deep verticalized expertise enables companies to receive vetted strategies for background and identity services inclusive of nuanced laws, regulations, location restrictions, and more. 

For additional compliance insights, sign up for our Compliance Roundup newsletter to receive compliance content along with information on what these trends may mean for your business.

Author Bio:

Angela Preston, JD, CCEP, is Associate General Counsel, Corporate Ethics and Compliance at Sterling, a global provider of background screening and identity services. Angela is a recognized legal expert in compliance and ethics, with a concentration in background screening. She is a past Chair of the Board of Directors of the Professional Background Screening Association (PBSA), the professional trade association of background screening. She has represented the association in meetings with the FTC, the EEOC, and members of Congress. As a Certified Compliance and Ethics Professional, she has been an active member of the Society for Corporate Compliance and Ethics.

Sterling is not a law firm. This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.