| March 14, 2014 |

Important Compliance Update Regarding Report Grading

On March 13, the New York Attorney General’s office announced the result of an initiative it undertook with the four leading background screening companies in the US. GIS is one of the companies participating in this initiative. The result of this initiative was an agreement between each of the background screening companies and the New York Attorney General’s office that the decision to disqualify an applicant must be made by employers. Therefore, GIS is changing our processes to not allow the evaluation by GIS of any reports for the purposes of disqualifying any applicant for a job in New York.

The background for this initiative is Article 23-A of the New York Corrections Law. This law prohibits employers from discriminating based on a criminal background. The law allows employers to make a decision based on a criminal background – without committing illegal discrimination – by first considering eight factors that the law lists.

The New York Attorney General’s office has interpreted the law to mean that the criteria that background screening companies use to evaluate background reports (sometimes called grading, scoring, or adjudication) are not sufficient for their employer customers to fulfill the requirements of Article 23-A. The logic behind this position is that the evaluation of the eight factors requires consideration of individual- and position-based nuances that written criteria cannot capture. Therefore, the Attorney General’s interpretation requires background screening companies to return the responsibility for evaluating applicants with criminal history back to their customers, since background screening companies do not have the knowledge of the individual or position required to perform the evaluation.

Like the rest of the industry, GIS will adhere to the Attorney General’s interpretation of Article 23-A. As stated above, GIS is in the process of implementing this agreement. We will continue to provide regular updates on the GIS process changes and when they will take effect.

GIS recommends that its New York employer customers review the effect of this change, including how to create and staff a process to consider the Article 23-A factors. GIS can currently assist New York employer customers who need a method of asking applicants for information that employers can use in the eight-factor process through our individualized assessment process, recording the decision, and (for adverse decisions) sending the adverse-action notice required by the federal Fair Credit Reporting Act.

For more specific information, the law is at: public.leginfo.state.ny.us/LAWSSEAF.cgi?QUERYDATA=@SLCOR0A23-A.

If you have any questions, please contact your client relations representative.

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