Is the Fair Chance Hiring Banking Act Working?
77 million Americans have incredible barriers to finding jobs. Some banks are working to make it easier, but much more can be done.
THE SITUATION
Americans with arrest records represent one of the largest untapped talent pools – an essential resource as companies seek to close workforce gaps and address long-term labor shortages. Currently, an estimated 77 million Americans have an arrest record – a number that, unfortunately, is expected to rise in the coming decade. Fair chance hiring is one of the most effective ways to help formerly incarcerated individuals re-enter the workforce.
Fair chance hiring, sometimes referred to as second-chance hiring, is a set of policies and measures that employers can use to consider job applicants with histories of arrest or incarceration fairly and equitably. It allows candidates to be assessed solely on their qualifications, rather than their arrest record. Companies can implement fair chance hiring policies in several different ways. One method is “banning the box” - removing questions about arrest history from initial job applications, so candidates aren’t automatically disqualified at the outset. Companies can also approach fair chance hiring in a more hands-on approach by training currently or formerly incarcerated individuals to reenter the general workforce.
Financial institutions, despite historically rigid hiring policies and involvement in the prison-industrial complex, have recently emerged as unexpected leaders in this movement. Firms such as JPMorgan Chase, Capital One, and Bank of America have all made headway in opening doors for justice-involved applicants.
ANALYSIS
Fair chance hiring initiatives and efforts can benefit not only employers and justice-involved applicants but also the broader society. Companies that participate have access to a larger pool of talent and are at a lower risk of labor shortages. This hiring initiative has the potential to create a more dedicated workforce and drive overall economic growth. Over the past few years, there has been an uptick in the participation of financial institutions in both external partnerships and internal hiring programs. The three institutions highlighted in this article are J.P. Morgan Chase, Bank of America, and Capital One. All three companies received scores greater than 40 out of 50 in the FreeCap dataset through different forms of fair chance hiring.
JPMorgan Chase first began participating in fair chance hiring by implementing a “ban the box” policy, which removes the requirement for applicants to disclose their arrest history on initial job applications. Furthermore, JPMorgan Chase co-launched the Second Chance Business Coalition (SCBC) in 2021, which provides companies with tools and guidance to implement fair chance hiring policies. Aside from welcoming applicants with justice-involved backgrounds to apply to the company, JPMorgan adjusted its internal background check process for applicants. JPMC’s background checks are now only administered after an offer of employment has been extended, and they do not consider an arrest record as a disqualifier if it is irrelevant to the job functions in question.
These three efforts have resulted in approximately 10% of JPMC’s annual new hires being justice-involved individuals. Beyond in-house hiring, JPMorgan has engaged in broader corporate responsibility efforts, such as creating expungement clinics for eligible justice-involved individuals, collaborating with state and federal legislatures to pass second chance policies, and donating part of a $5 million donation to the NAACP’s Center for Opportunity, Race, and Justice. While these measures represent meaningful progress toward inclusive hiring, JPMorgan is one of only a few companies that so strongly support and recruit justice-involved individuals. There is an ongoing need for more comprehensive efforts to reduce systemic barriers and fully realize the potential of fair chance employment.
Bank of America is another financial institution that FreeCap recognizes as a supporter of fair chance hiring. Like JPMorgan, BofA is a member of the Second Chance Business Coalition and supports workforce development programs that train formerly incarcerated workers. Bank of America encourages job applications from candidates with arrest records. Aside from this, BoFA has taken a more external approach to support justice-involved candidates. The company makes capital investments in nonprofits and local governments, which provide job training, housing, and education to these individuals. Together, these internal and external initiatives demonstrate Bank of America’s commitment to creating long-term opportunities and reducing recidivism by addressing the systemic challenges faced by individuals involved in the justice system.
While Capital One is not yet a member of the SCBC and has not implemented the ban-the-box policy, it has taken some significant steps towards fair chance hiring. Capital One’s hiring policy actively encourages applicants with arrest records to apply, unlike other companies that do not comment on the topic. Internally, Capital One’s background check policy states that background checks will only be conducted after an offer of employment has been made. Applicants will then only be rejected if the record is relevant to the job function.
Outside of its own hiring process, Capital One has formed strategic partnerships to support workers with arrest records. In 2020, the company partnered with the Association for Enterprise Opportunity to launch a program titled Endeavor Ready. Endeavor Ready works to prepare incarcerated individuals returning to the workforce for careers in entrepreneurship, providing them with an easier path to economic mobility and wealth creation. In addition, Capital One financially supports the Ladies Empowerment & Action Program (LEAP), which gives women the tools they need to successfully start their own businesses after release. Capital One’s efforts reflect a glowing recognition of the importance of providing second chances and supporting economic reintegration.
KEY TAKEAWAYS
These three companies’ combination of internal hiring reforms and community partnerships makes them leaders in the fair chance hiring movement. Their initiatives, however, are unique, as fair chance hiring is less prevalent in the financial industry due to strict regulations on hiring individuals impacted by the criminal legal system. Since banking jobs rely on trust, background checks on job applicants are extensive, and individuals with arrest records are more likely to be rejected for employment.
Thankfully, in 2022, the Fair Hiring in Banking Act was enacted. Several crimes were removed from the list of offenses that constitute outright rejection of a job applicant. The offenses that are now exempt from the prohibition on participating in banking include those committed by individuals 21 years or younger, relatively minor offenses, and older offenses. The FDIC modified its regulations in late 2024 to reflect this new Act. However, there needs to be significantly more transparency across the industry to understand if these policy shifts are leading to increased employment opportunities for people with arrest records.
JPMorgan reports that 10% of their new hires over the past 5 years hold an arrest record, indicating significant progress in fair chance hiring. However, remembering that one-third of all Americans are justice-involved suggests that there is still much room for growth. We hope that this modification will bring in more workers with arrest histories to the financial sector.
Companies should strongly consider the benefits of fair chance hiring on their retention rates and employee loyalty. Simple adjustments in recruitment language to welcome justice-involved applicants can create an influx of new talent. By dismantling these long-standing barriers for justice-involved individuals, we can help aid their reentry process.
If you’re interested in identifying companies with the strongest fair chance hiring practices, check out our index FREEIN, the first and only index to track the performance of companies that support criminal justice reform.