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How criminal justice reform can offer employers a labor shortage solution

John Koufos  President / Cottage Four

· 5 minute read

John Koufos  President / Cottage Four

· 5 minute read

Expanding employment opportunities to those qualified candidates who may have a criminal record could go a long way to alleviating national labor shortages in key roles

One possible solution to some of the labor shortages affecting businesses across the country is to hire qualified people who happen to have a criminal record. This may sound like a charitable endeavor best left to the Corporate Social Responsibility team, but this is not charity.

Indeed, “Second Chance” or “Fair Chance” hiring — when done right — is good for business. Companies can fill workforce gaps and reduce turnover, increasing productivity and cutting on-boarding costs. This practice also has community benefits and is a place where corporate value and social values dovetail. When people with criminal records are employed, economic activity and new tax bases are created, and public safety increases.

A 2021 survey of human resources professionals found that 81% believed that the quality of workers with criminal records is generally the same or better than workers without records, with nearly identical hiring costs. Studies have also shown that retention rates are higher, turnover is lower, and employees with criminal records are more loyal to their employers once hired.

Recent job openings reports from the U.S. Bureau of Labor Statistics showed thousands of open positions in accommodation and food services and in manufacturing — just two of the many industries in which talented people who happen to have criminal records could fill the labor gap.

Offering a second chance

Second-chance hiring is good for employers’ bottom lines in whatever industry they operate. Fortunately, many more business leaders are also recognizing the significant value in second-chance hiring. The Second Chance Business Coalition, led by Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co., and Craig Arnold, Chairman and CEO of Eaton, has brought large businesses into the space.  Corporations such as Walmart, McDonalds, Verizon, Accenture, and Koch Industries are among more than three dozen companies that have been brought together by the coalition to work on this issue.

When I was incarcerated, no one asked me for money, but nearly everyone asked me to help them get a job after they were released. Today, I work with businesses to help them develop organizational and risk management strategies to better recruit and retain people with criminal records.

A 2021 report from the Alliance for Safety and Justice estimates that one-third of American adults — roughly 78 million people — have a criminal record. The problem is even worse for Black men. A University of Georgia study found that, as of 2010, 33% of Black men had a felony conviction compared to 8% for all adults.

Unemployment also has been an inescapable by-product of a criminal record. The Prison Policy Initiative calculated that the unemployment rate for people with criminal records is over 27%. By contrast, the country’s overall unemployment rate currently stands at just 3.5%.

Expungement as a risk management tool

Expungement, or record-clearing, is a powerful risk management tool for businesses, but the system can vary drastically among states. For example, a minor drug offense in Florida can stay on a person’s criminal record for life, while a much more serious offense that involved prison time may be expunged in another state. When an employer performs a background check, the Florida person who never served a day in jail will be classified as a “felon” while the person who did years in prison will not.

Fourteen states now broadly allow felonies and misdemeanors to be expunged, while another 23 states have narrower expungement criteria for felonies and misdemeanors. Five other states allow expungement only for pardoned felonies and certain misdemeanors, and three states and the District of Columbia allow only misdemeanor expungement. Five states and the federal system have no expungement law. Without broad record-clearing laws, a person with even a minor criminal conviction will always wear that scarlet letter.

Broader expungement laws have risk management benefits as well. This creates additional issues for chief human resources officers, corporate general counsels, and employment lawyers. Most businesses will never learn of an expunged record, which generally adds additional protections against negligent hiring cases and creates no additional work for corporate staff. In contrast, when a background check has a criminal conviction, the business may have to take additional steps before it can hire the person under the Fair Credit Reporting Act, applicable state laws, and its own risk management strategy.

Without expungement, the risk management landscape is largely governed by state law. For example, Colorado law prohibits an employee’s criminal record from being introduced as evidence in a lawsuit against an employer unless there is a direct relationship between the criminal history and the underlying facts of the claim (Colo. Rev. Stat. Ann. § 8-2-201(2)(a)(I)). Florida — a state without a record-clearing process — protects employers from a negligent-hiring presumption in cases in which the criminal-records check “did not reveal any information that reasonably demonstrated the unsuitability of the prospective employee” (§ 768.096, Fla. Stat.).

Hiring and retention are core business functions and are not an option for companies to achieve success. Unlocking this relatively untapped talent pool can help businesses grow and thrive, creating profits for the business and benefits for its stakeholders, employees, and surrounding community.

Hear more about John’s work, his former legal career, and his journey from prison to expert on re-entry into society after prison on Episode 108 of The Hearing: A Legal Podcast from Thomson Reuters.

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