Arrest Record Discrimination Laws in North Carolina

The Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., is the primary federal law governing arrest records in employment. The FCRA applies to all employers nationwide who use third-party consumer reporting agencies (background check companies) to obtain arrest or criminal history information. Under the FCRA, employers must provide written notice to candidates before obtaining a background report, and if the employer takes adverse action based on that report, the employer must provide a copy of the report and written notice of the right to dispute inaccuracies.

Additionally, Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, prohibits employment discrimination based on race, color, religion, sex, or national origin. Courts have recognized that blanket policies excluding all individuals with arrest records disproportionately impact African American and Latino workers, creating potential Title VII liability even if the policy is facially race-neutral.

The Equal Employment Opportunity Commission (EEOC) enforces both Title VII and the FCRA in employment contexts. Under federal law, employers may consider conviction records if the conviction is directly related to the job duties and the employer has considered the nature of the offense, time elapsed since conviction, and job rehabilitation potential. Arrests not resulting in conviction generally cannot be used to deny employment under federal law unless the employer can demonstrate a specific business justification.

North Carolina General Statute § 149-5.1 establishes state-level protections beyond the federal baseline. The statute prohibits employers from inquiring about or considering arrests that did not result in conviction during the initial application and interview process. This is stronger than federal law in several respects: (1) it creates an affirmative ban on asking about non-conviction arrests at the application stage, whereas the FCRA focuses on disclosure and dispute rights rather than prohibition; (2) it applies to employers with 15 or more employees, not just those using third-party background check companies.

Under N.C. Gen. Stat. § 12-3.1, employers may consider conviction records only if the offense is directly related to the functions of the job for which the person is applying or has been hired, and the employer has conducted an individualized assessment considering the nature of the offense, the time that has passed since conviction, and the applicant's evidence of rehabilitation. This statute codifies the "direct relationship" and "business necessity" standard similar to federal guidance but with explicit statutory protection.

A key state difference: North Carolina does not require employers to include a "ban the box" disclosure on job applications, unlike states such as California or New York, but the statute effectively bans the box by prohibiting inquiry about non-conviction arrests. Employers who violate § 149-5.1 may face liability under the state's employment discrimination laws. Additionally, the North Carolina Department of Commerce oversees compliance, and the statute allows for civil penalties.

Unlike some states that completely prohibit consideration of older convictions, North Carolina does not establish specific time bars for how old a conviction must be before it can be considered, but employers are expected to apply the factors listed in § 12-3.1 consistently. Private employers (not government agencies) are covered. Union employers must also comply, and no collective bargaining exemption exists.

North Carolina law contains several important exceptions and limitations to arrest record protections. First, the prohibition on inquiring about non-conviction arrests applies only during the initial application and interview stage; after an offer of employment is made, employers may conduct a more comprehensive background check. This means an employer can wait until after offering the job to ask detailed questions about arrest history, creating a practical loophole.

Second, the statute explicitly allows consideration of convictions (not arrests without conviction) if the conviction is directly related to the job. Employers are not prohibited from considering conviction records and may evaluate them using the business necessity standard under § 12-3.1. Certain positions, such as childcare workers, healthcare workers, or financial positions, may have legitimate justifications for excluding individuals with specific conviction histories.

Third, the statute does not apply to government employers or law enforcement agencies, which retain broader authority to consider arrest records due to special statutory exemptions in state law. Government contractors performing sensitive work may have carve-outs depending on federal requirements.

Fourth, the FCRA allows employers to use arrest records obtained through background check companies if proper notice and dispute procedures are followed, even if the arrest did not result in conviction. The key federal requirement is transparency and opportunity to dispute, not absolute prohibition. If an applicant can prove the arrest record is inaccurate (e.g., the arrest was expunged or dismissed), the FCRA provides a remedy.

Fifth, at-will employment doctrine still applies in North Carolina, meaning an employer can decline to hire or can terminate an employee for many reasons unrelated to the arrest record. An employee cannot sue simply because they were not hired; they must prove the negative employment decision was based specifically on the arrest record and violated § 149-5.1 or Title VII.

Sixth, if an arrest has been expunged or judicially declared not guilty, the employer has no lawful basis to consider it, and the applicant may legally answer "no" to questions about arrests. However, North Carolina does not have a broad "right to lie" statute; applicants must determine whether the arrest is legally expunged before denying it occurred.

Step 1 — Document Everything: Keep copies of the job application you submitted, any emails or written communications from the employer, and written notes documenting when the employer asked about your arrest record. If the employer asked about arrests on the application form, photograph or save the application. Record dates, times, names of people who asked questions, and exactly what was asked. If you have witnesses (e.g., someone present during the interview), get their names and contact information. Save any rejection letters, emails declining your application, or explanations for why you were not hired. Obtain your background check report from the background screening company if you know which company was used; you have a right to request this under the FCRA.

Step 2 — Understand the Internal Complaint Process: Before filing an external complaint, consider whether the employer has an internal complaint or grievance procedure. However, North Carolina does not require exhaustion of internal remedies before filing a state or federal complaint. If you were hired and then terminated based on arrest record discovery, immediately notify your HR department in writing that you believe the termination violates N.C. Gen. Stat. § 149-5.1 or Title VII. Keep a copy of any written complaint you submit internally. This internal step is optional but creates a paper trail and may preserve settlement opportunities. Do not rely on oral complaints; use email or written correspondence.

Step 3 — File a Charge with the Right Agency: You have two options, which can be pursued simultaneously. Option A: File with the North Carolina Department of Labor (NCDOL) under N.C. Gen. Stat. § 149-5.1 for violations of state law prohibiting inquiry about non-conviction arrests. Send a written complaint to: North Carolina Department of Labor, Employment Discrimination Division, 4 West Edenton Street, Raleigh, NC 27601. Include your name, contact information, employer name and address, date of alleged violation, description of what the employer asked or did, and any supporting documents. There is no strict filing deadline in the statute, but file within one year to be safe; the sooner the better. Option B: File with the EEOC (Equal Employment Opportunity Commission) if the discrimination involved a protected class (race, color, religion, sex, national origin, or disability). File electronically at eeoc.gov or in person at the EEOC Charlotte District Office, 129 West Trade Street, Suite 400, Charlotte, NC 28202. Phone: (704) 344-6682. The federal deadline is 180 days from the alleged violation in non-deferral states, but North Carolina is a "deferral state," meaning you must wait 60 days after filing with NCDOL before pursuing federal remedies, or you can file with the EEOC directly and they will defer to state agency if required. Provide the same documentation: name, dates, employer details, description of actions, and copies of application, rejection letter, background report if available, and any written communications.

Step 4 — Expect the Investigation Process: After filing with NCDOL, the state agency will acknowledge receipt and assign an investigator. The investigator will contact the employer and request documentation, including the job description, job application, hiring criteria, background check order, background check results, notes from the hiring manager, and the reason for rejection or termination. The employer will likely claim the decision was based on other factors (qualifications, fit, etc.). The investigation typically takes 60 to 120 days. You may be asked to provide a detailed statement and answer follow-up questions. The investigator will compare the job posting and requirements against the employer's stated reason for rejection to determine if the arrest record was a factor. If filing federally with the EEOC, expect a similar process; the EEOC may attempt conciliation (settlement negotiation) if probable cause is found. Keep your contact information current with both agencies.

Step 5 — Consult an Attorney: If you are not hired or are terminated, and you believe it is related to your arrest record, consult an employment attorney immediately. This is especially important if the arrest was non-conviction related or if you can show the employer has discriminated against others with arrest records. An employment attorney can help you assess whether you have a viable claim under N.C. Gen. Stat. § 149-5.1, Title VII (if race or another protected class is involved), or the FCRA. Many employment attorneys work on contingency, meaning you pay no upfront fee; attorney fees are paid from the settlement or judgment if you win. An attorney can also help you obtain the background check report through formal discovery if you file a lawsuit, which is critical evidence. Contact the North Carolina State Bar Lawyer Referral Service (919) 828-4620 or visit ncbar.org to find an employment law specialist in your area. Do not wait; statutes of limitations and agency filing deadlines are finite.