February

Almost all retailers run background checks on prospective employees—one of the many obstacles for people who were formerly incarcerated and are now trying to find a job. For other job seekers, a drug screening for marijuana might cost them a position even in states where recreational use is legal. This summer, the Body Shop will become the first large retailer to embrace a different approach, called “open hiring.” When there’s an opening, nearly anyone who applies and meets the most basic requirements will be able to get a job, on a first-come, first-served basis.

The company piloted the practice, which was pioneered by the New York social enterprise Greyston Bakery, in its North Carolina distribution center at the end of 2019. “We’re not asking for your background check,” says Andrea Blieden, the general manager of the Body Shop for the U.S. “We’re not asking for you to be drug screened. And there’s only three questions to get a job. It’s, ‘Are you authorized to work in the U.S.? Can you stand for up to eight hours? And can you lift over 50 pounds?’ If those three questions are answered, then we will give you a chance to come work in our distribution center.”

 

At Greyston, this approach to hiring is a fundamental part of the business, which sells baked goods to customers such as Whole Foods and Ben & Jerry’s. “At the heart of it, Greyston’s mission is to impact people facing barriers to employment,” says CEO Mike Brady. The social enterprise’s slogan reads, “We don’t hire people to bake brownies, we bake brownies to hire people.” When there’s an opening, the job is filled from a list of people looking for work. New hires start as apprentices and get training in both how to do the job and basic life skills; those who decide to stay after the apprenticeship get an entry-level job and the opportunity to advance. The system works well enough that the company sold 8 million pounds of brownies in 2019, making $22 million. This year, Greyston launched a nonprofit, the Center for Open Hiring, in 2018 to help other businesses implement the same process.

“There was then a lot of momentum around business as a force for good, and we were leveraging that momentum and began to work on a strategy to scale open hiring,” Brady says. “And there’s now, as we all know, a ton of tailwind around just finding employees and getting talented people in the organization. Thankfully, people are thinking differently about how to bring good people into their business.”

Roughly a year ago, the Body Shop learned about the approach, when Greyston gave the company a presentation along with other social enterprises and activists who were invited to an internal launch of a new brand purpose—”We exist to fight for a fairer, more beautiful world.” Greyston’s talk resonated. “It really ignited all of us to think about how we can become a more inclusive employer and how we can implement open hiring practices in our business,” says Blieden.

By June, the retailer’s entire HR team in the U.S. had flown to the bakery’s manufacturing plant to see, firsthand, how the bakery hired staff and helped its employees build careers. The team visited again in September and then began meeting with supervisors at its own distribution center, saying that they wanted to move quickly and pilot the new approach by the time the center was hiring seasonal staff for the holidays. The distribution center hires more than 200 people as seasonal staff.

 

The results were striking: Monthly turnover in the distribution center dropped by 60%. In 2018, the Body Shop’s distribution center saw turnover rates of 38% in November and 43% in December. In 2019, after they began using open hiring, that decreased to 14% in November and 16% in December. The company only had to work with one temp agency instead of three.

Supervisors told Blieden that seasonal staff were approaching them to share their stories. “They said things like, ‘I’ve been struggling to find a job. This is one of the only places that would hire me, and I’m not going to mess this up,'” she says. “When you give people access to something that they’re struggling to find, they’re very committed to working hard and keeping it.”

Greyston has seen similar benefits with retention rates. A Johns Hopkins study also found that employers who “banned the box” and stopped asking applicants if they had a criminal record also had less turnover. The Body Shop also saw increases in productivity—likely not solely due to the change in staff, it says, but a sign that both internal processes and staff were improving. “That’s just a demonstration that we have these biases in our recruiting system that are preventing good people from getting into the workforce,” Brady says. At the Body Shop, the money saved in recruiting, screening résumés, interviews, and background checks will be redirected into training, employee benefits, and programs to support new employees with challenges such as transportation issues that can make it difficult for employees to get to work on time.

The Body Shop plans to expand the practice to all of its retail stores this summer, where it employs around 800 people, and as many as 1,000 during the holidays. It’s not a pilot, but a permanent shift in how it handles hiring. “I think for us, it was, if you believe in it, just go ahead and do it,” says Blieden. “The more time that you spend trying to figure out how you’re going to do it—and what is it going to look like, and what do people need to be worried about, and what do you have to prepare for—the more you hinder your company’s ability to do something like open hiring. Because you create the bias and you create the barrier. So for us, in our distribution center, the biggest learning was do it. Go fast. Try it and see what happens.”

It’s something that Greyston hopes will inspire more companies to follow. “The Body Shop acted with urgency because they saw the need,” Brady says. “And I hope other businesses that learn about this model can learn from the Body Shop’s example and act with the same level of urgency, because our community needs change. And businesses need to adopt good new business models that work for them.”

On January 29, 2020, the House of Representatives passed the Comprehensive CREDIT Act of 2020 (the “Act”), which would change federal laws pertaining to consumer reporting agencies and credit checks in a number of ways. Significantly for employers, the Act includes an amendment (originally H.R. 3614 – “Restricting Credit Checks for Employment Decisions Act”) to the Fair Credit Reporting Act (“FCRA”), which would restrict the use of credit information for most employment decisions.

Currently, the FCRA does not expressly prohibit employers from using credit checks when making employment decisions. The Act would amend Section 604 of the FCRA by precluding employers from requesting a consumer report bearing on the creditworthiness, credit standing, or credit capacity of an individual for employment purposes, except in limited circumstances where:

• the employer is required to obtain the report by federal, state, or local law or regulation;

• the information contained in the report is being used with respect to a national security investigation; or

• the report is necessary for a background check or related investigation of financial information that is required by federal, state, or local law or regulation.

Under the Act, if an employer intends to invoke one of these exceptions, the employer must disclose to the candidate the reason as well as a citation to the applicable law.

Note that this amendment of the FCRA would not impact other aspects of obtaining consumer reports for employment purposes, so employers would still be able to conduct background checks (subject to state and local restrictions).

The final vote of 221-189 on the Act largely split along party lines. Republican House members expressed concern about H.R. 3614 in committee review of the original bill, noting that the legislation could have unintended and undesirable consequences—particularly in the financial services industry.  Members observed that an employee’s “financial history is particularly important in the financial services industry, where employees routinely have access to vast amounts of personal and financial information.”

As of last year, 11 states – including California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington – and the District of Columbia have enacted laws that restrict the use of credit reports in employment decisions. Cities such as Philadelphia, New York City and Chicago have also passed laws regarding the use of credit checks in employment settings. While state and local laws differ in some respects, many do include narrow exceptions allowing credit checks for banks and financial institutions, positions with access to specified personal information, and positions that involve access to assets above a certain threshold, or that have signatory authority.

The Act now heads to the Senate, where it seems unlikely to pass in its current form, given the partisan divide regarding various provisions contained within the 197-page bill.  We will continue to monitor the legislation.

California's affordable housing nightmare is well known: More than 40% of residents are now classified as housing cost-burdened, the highest proportion of any state. In many cities in the San Francisco Bay Area, the nation's tightest housing market, the median rent for a one-bedroom apartment now exceeds $2,500, a figure that contributes to a growing homelessness problem, exacerbates gentrification and pinches ostensibly middle-class professionals like teachers and police officers as well as those even higher up the income ladder.

For one demographic the crisis is amplified. "I was born and raised in Oakland," Lee "Taqwaa" Bonner, a former felon turned advocate, said at a recent news conference. "I am employed in Oakland. … However, I cannot live in Oakland based solely on my criminal record, which happened 30 years ago." Excluded from the rental market, Bonner has often resorted to living in his car. Others have fared worse, spiraling into permanent homelessness, drug addiction and even death.

On Feb. 4, Oakland's City Council passed a new ordinance designed as a remedy, prohibiting public and private landlords from inquiring about potential tenants' criminal histories. The new law, called the Oakland Fair Chance Housing Ordinance, is the most expansive of its kind in California and among the first for major American cities. Decades after the start of the "ban the box" movement, which aims to stop employers from discriminating against the formerly incarcerated, proponents hope it will also act as a new catalyst in the battle to secure equal opportunity for the more than 70 million Americans burdened by criminal records.

"With more and more people returning home from the criminal justice system, housing is really the most basic need that people [have] in order to get back on their feet," says Council member Nikki Fortunato Bas, a co-sponsor. "It's really going to help create more opportunity and sort of level the playing field."

For decades criminal justice experts have highlighted the rampant stigma and discrimination that stifles former prisoners as they attempt to re-enter society – a phenomenon accelerated by the recent ubiquity of online background checks, an invesitgative tool critics point out is often incomplete or seriously flawed. And while the criminal justice system disproportionately impacts black men, it's also black men who, after their release, are often excluded from jobs, apartments, public benefits, and even vocational licensing on the basis of a conviction they've already served time for. "The real punishments begin," as one African American man who spent 17 years behind bars told The Washington Post, "when we are released from prison."

In 1998, Hawaii became the first state in the United States to pass legislation aimed at easing the burden, with a "ban the box" law that restricted both public and private employers from considering a prospective employee's criminal history until after a job offer was made. Since then, 35 states and more than 150 cities and counties have adopted similar "ban the box" employment discrimination laws. (Most apply only to public employers, although 13 states and 18 cities and counties have extended the legislation to the private sector. Some laws also apply to public contractors.)

Laws aimed at easing housing discrimination have come only recently, despite an overwhelming need: In one national survey of people affected by incarceration, nearly 80% of former inmates reported being denied housing because of prior convictions. In some cases whole families were evicted because a formerly incarcerated family member returned to the home; other respondents told of being forced to settle for substandard conditions.

"All of the places that I wanted to live – that were nice and where I could raise kids told me 'no,'" one study participant from Kansas told researchers from the California-based Ella Baker Center for Human Rights and elsewhere. "So I ended where I am now, in a rundown four-plex that's a slum with moldy walls."

Oakland's new law has various predecessors. In 2017, Seattle passed what advocates hailed as the country's most progressive "ban the box" housing law, an ordinance that prohibited most private landlords from considering applicants' criminal histories at all. The new law was promptly challenged by the city's real estate industry, which argued that it compromised safety and violated landlords' exercise of free speech. Critics also suggested council members had the wrong target. "If the city of Seattle is serious about reforming the criminal justice system, it should focus on reforming the criminal justice system," William Shadbolt, board president of the Rental Housing Association of Washington, said at a news conference. (In November, a Washington state Supreme Court judge ruled favorably toward the law, although a federal decision remains pending.)

Other cities, including Detroit, Chicago and Minneapolis, have also recently passed similar but less sweeping measures, stipulating that landlords cannot perform background checks until the end of the application process or that they can only consider more recent convictions. Two Bay Area cities, Richmond and San Francisco, have passed ordinances that apply only to affordable or municipally-subsidized housing.

But Oakland's new law, which became effective immediately, represents the state's first to apply more broadly to nearly all city rentals, allowing exceptions only for landlord-occupied units. Landlords also do not have to accept tenants on the federal lifetime sex offender list; affordable housing rentals are also permitted to exclude tenants with prior convictions related to manufacturing meth. Proponents argue the new law will help reduce recidivism and ease the area's homelessness crisis, as well as set off a new wave of municipal protections: Nearby Berkeley is expected to vote on a similar measure within weeks.

"Those of us who worked on this legislation are hoping that this is sort of the next frontier of this particular movement," says Bas, who previously worked on various "ban the box" employment policies.

Yet even supporters concede that the legislation amounts to a kind of Band-Aid for a far larger problem. America's structural racism continues to disadvantage people of color in virtually every segment of society, with the very need for "ban the box" laws serving as further evidence of the rampant overcriminalization and segregation of black men, says Andre Perry, a fellow in the Metropolitan Policy Program at The Brookings Institution, a Washington, D.C.-based think tank. In some cases the laws can even prove counterproductive, as employers or landlords simply find other, more generalized ways to discriminate against former prisoners and people of color, like excluding applicants with long gaps in their resumes or names that people associate with African Americans, he adds.

"I'm for banning the box, but it's insufficient as a tool when you're dealing with disrcimination," he says, where the real change needed is an adjustment in the underlying culture. "And that requires leadership. It requires investment in black communities. It requires hiring people."

Bas agrees. But with an already overcrowded local shelter system and increasing numbers of formerly incarcerated residents returning to a city where they can't find housing, Oakland is already facing an urgent crisis. "And if we don't address that," she says, "people's lives will be lost."