Collected resources on record restrictions for small business relief

On this page, we have collected a variety of materials on the restrictions related to arrest or conviction imposed by the Small Business Administration (SBA) on small business owners seeking relief under the Paycheck Protection Program and Economic Injury Disaster Loan program.  Included are letters from legislators and major organizations, articles by us and by others, and official documents related to this issue.  We hope these resources will assist those working to ensure that much-needed relief is made fairly available to small business owners and their employees.  We continue to update this page with new resources (last updated May 27).

On April 21, Secretary Mnuchin seemingly closed the door on the SBA making any changes to its exclusionary policies at this time, but we encourage him to reconsider.  But there is no reason why the SBA cannot at any time rescind the new restrictions in its Interim Final Rule for the Paycheck Protection Program, as we advocate with 25 other organizations in our public comment on the SBA’s Interim Final Rule.  We also encourage Congress to curtail the SBA’s authority to unfairly deny relief to small businesses struggling to survive this crisis.

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New efforts to channel federal relief to small business owners with a record

After Congress authorized hundreds of billions of dollars in funds for small business relief during COVID-19, the Small Business Administration (SBA) imposed restrictions on applicants with an arrest or conviction history.  These barriers, neither required nor contemplated by Congress, impede access to the two major relief programs for small businesses, nonprofits, and independent contractors during the COVID-19 crisis.  The two programs are the newly created Paycheck Protection Program (PPP) and the ramped-up Economic Injury Disaster Loan (EIDL) program.

Three developments within the past week signal major pushback against or the possible reversal of at least some of these burdensome restrictions, which unfairly deny relief to worthy applicants.

First, at least 65 organizations submitted five public comments in opposition to the SBA’s criminal history restrictions for PPP relief.  Our organization joined 25 other groups in submitting a comment asking the SBA to rescind or modify the regulation on legal and policy grounds, citing recent court decisions that suggest the SBA may lack authority to impose record-based disqualifications at all.

These comments are the most recent expression of what has become a wave of bipartisan opposition to the SBA’s exclusionary policies, and growing coverage of the issues in the press.  We have been collecting relevant documents on our small business relief resource page.

Second, Treasury Secretary Steven Mnuchin signaled in a recent conversation with key Senators that he may be open to easing restrictions on PPP applicants with felony records from the last five years.

Third, the HEROES Act, passed by the House on Friday, includes provisions that would significantly constrain the SBA’s authority to deny applicants based on a record of arrest or conviction in both the PPP and EIDL programs.  If enacted into law, these provisions would mark a turning point in how federal law deals with discrimination based on criminal record.

We discuss these developments in detail after the jump.  Read more

Bipartisan coalition calls on SBA to roll back record-related restrictions in COVID-19 small business loan programs

On April 17 a diverse bipartisan group of civil rights, advocacy, and business organizations, including CCRC, sent a letter to Treasury Secretary Mnuchin and SBA Administrator Carranza expressing concern over the restrictions imposed by the SBA on people with a record of arrest or conviction under two programs recently authorized by Congress in response to the COVID-19 crisis.  The letter points out that these unwarranted restrictions on loan programs intended to aid small businesses and non-profits will have a significant and detrimental impact in communities across the country, and a particularly harsh effect on minority business owners and employees who are disproportionately affected by the criminal legal system as a result of institutional discrimination.  It urges that federal relief be made equitably accessible to all who need it.

The letter describes how the SBA’s program restrictions based on record are

  • unnecessary and confusing
  • inconsistent with Congress’ intent in enacting the CARES Act
  • overbroad and unfair
  • racially discriminatory

In conclusion, the letter urges the SBA to take the following steps:

  • At a minimum, bring the record restrictions for PPP and EIDL programs in line with those that applied to Section 7(a) and 7(b) loans under regulations adopted prior to enactment of the CARES Act.
  • Relax existing rules and policies that restrict access to PPP or EIDL financial assistance for people with a record in the urgent circumstances presented by the pandemic, in line with the purposes of the CARES Act.
  • Ensure that the application forms for SBA financial assistance accurately reflect the eligibility requirements and are written in a clear manner.

An Appendix to the letter describes how the new rules and policies governing the Payroll Protection Program are more restrictive than those governing the 7(a) program generally, and how barriers based on arrest or conviction may also disqualify people with any sort of a record from loans under the EIDL program authorized under the SBA’s existing 7(b) disaster loan program.

The letter —available in PDF and reprinted below – was sent by the following organizations:

American Civil Liberties Union
Chicago Lawyers’ Committee for Civil Rights
Collateral Consequences Resource Center
Community Legal Services of Philadelphia
Drug Policy Alliance
FreedomWorks
Georgia Justice Project
Interfaith Action for Human Rights
Jewish Council for Public Affairs
Justice & Accountability Center of Louisiana
Justice Action Network
Leadership Conference on Civil and Human Rights
National Association of Criminal Defense Lawyers
National Employment Law Project
Public Interest Law Center
Reproductive Justice Inside
Safer Foundation
Washington Lawyers’ Committee for Civil Rights and Urban Affairs
Women Against Registry

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Organizations call on Congress to remove record-related barriers to small business relief

A bipartisan group of civil rights, advocacy, and business organizations, including CCRC, are calling on Congress to take immediate action to remove barriers based on arrest or conviction history for small business owners seeking COVID-19 federal relief.  This is an issue we have been covering in depth in recent posts.  This call to action—available in PDF and reprinted below—is issued by the following organizations (with additional sign-ons welcome; contact us here):

American Civil Liberties Union
Chicago Lawyers’ Committee for Civil Rights
Collateral Consequences Resource Center
College & Community Fellowship
Community Legal Services of Philadelphia
#cut50
Drug Policy Alliance
FreedomWorks
Georgia Justice Project
Interfaith Action for Human Rights
Jewish Council for Public Affairs
Justice & Accountability Center of Louisiana
Justice Action Network
Leadership Conference on Civil and Human Rights
Main Street Alliance
National Association of Criminal Defense Lawyers
National Employment Law Project
Out For Justice
Public Interest Law Center
Reproductive Justice Inside
Root & Rebound
Safer Foundation
Washington Lawyers’ Committee for Civil Rights and Urban Affairs
Women Against Registry

*Note: the letter was originally issued on April 10 and was last updated on April 17.

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New Jersey steps out as Reintegration Champion of 2019

Editors’ note: CCRC recently released its report on 2019 criminal record reforms, which recognized New Jersey as the “Reintegration Champion” of 2019, for having the most consequential legislative record of any state in the past year.  The following comment describes New Jersey’s laws enacted in 2019.  New Jersey’s various restoration of rights laws are further described in the state’s profile in the CCRC Restoration of Rights Project.

In December 2019, Governor Phil Murphy signed into law S4154, now L.2019, c.269, as part of his Second Chance Agenda.  The law is a strong step towards criminal justice reform, and places New Jersey on the map as a leader in expungement policy.  Along with easing access to the existing expungement process,  it creates a new “clean slate” system that provides for expungement of all but the most serious violent offenses after ten years. It additionally sets in motion a process aiming to automate all clean slate expungements.  The substantive provisions of the law are set to go into effect on June 15, 2020, and we anticipate a large increase in expungements following its implementation.

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CCRC reports on criminal record reforms in 2019

We are pleased to publish our annual report on criminal record reforms enacted during the past calendar year.  This is the fourth in a series of reports since 2016 on new laws aimed at avoiding or mitigating the collateral consequences of arrest and conviction.  This year we have included for the first time a Report Card grading the progress of the most (and least) productive state legislatures in 2019.  The press release accompanying the report is reprinted below:

Report finds record-breaking number of criminal record reforms enacted in 2019

February 17, 2020

Washington, D.C. — The Collateral Consequences Resource Center (CCRC) has released a new report documenting the astonishing number of laws passed in 2019 aimed at promoting reintegration for individuals with a criminal record.  Last year, 43 states, the District of Columbia, and the federal government enacted an extraordinary 153 laws to provide criminal record relief or to alleviate the collateral consequences of arrest and conviction, consequences that may otherwise last a lifetime and frequently have little or no public safety rationale. 

The year 2019 was the most productive legislative year since a wave of “fair chance” reforms began in 2013, a period CCRC has documented in a series of legislative reports (2013-2016, 2017, and 2018). 

CCRC’s 2019 report, titled “Pathways to Reintegration: Criminal Record Reforms in 2019,” is available here.

This report is our first to include a Report Card on how state legislatures performed during the year in advancing the goals of reintegration,” said CCRC Executive Director Margaret Love. “We wanted to recognize New Jersey as Reintegration Champion for having the most consequential legislative record in 2019, including three important new laws authorizing clean slaterecord relief, restoring voting rights, and curbing driver’s license suspensions.

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New 2019 laws on diversion and other non-conviction dispositions

This comment on new laws authorizing non-conviction dispositions is the fourth in a series of comments describing some of the 153 laws passed in 2019 restoring rights or delivering record relief.  The full report on 2019 laws is available here.

Diversionary and other non-conviction dispositions

In 2019, 18 states enacted 26 laws creating, expanding, reorganizing, or otherwise supporting diversionary and deferred dispositions, to enable individuals charged with criminal offenses to avoid a conviction record.  The 2019 enactments on diversionary dispositions reflect the clear trend across the country toward increasing opportunities to steer certain categories of individuals out of the system, through informal diversions, specialized treatment or intervention courts, or completing a deferred adjudication and probation period.  Laws enacted in 2019 extended this favorable treatment to juveniles, military service personnel and veterans, persons with mental illness, drug and alcohol users, human trafficking victims, caregivers of children, and even certain persons charged with sex offenses.

Of particular note, Colorado enacted a major revision of its juvenile records scheme, the second in three years, making almost all juvenile offenses eligible for diversion, and expungement automatic upon successful completion of diversion “without the need fora court order,” as long as the prosecutor or victim do not object.  Colorado also authorized funding for mental health diversion courts. Tennessee and Vermont also significantly expanded their programs of juvenile diversion, while Mississippi reorganized its system of specialized courts as “intervention courts.”  Oregon modified diversion to avoid deportation consequences of a guilty plea.  California enacted perhaps the most novel (and promising) diversion program we’ve seen in several years, authorizing the creation of pretrial diversion for primary caregivers of children,who are charged with a misdemeanor or non-serious felony offenses, except for offenses against the cared-after child.  These and other diversion laws are described briefly below:

  • Colorado enacted a major revision of its juvenile records scheme, the second in three years, making almost all juvenile offenses eligible for diversion, and expungement automatic upon successful completion “without the need for a court order.” See HB 1335, revising Colo. Rev. Stat. § 19-1-306(4)(b)(I). This law also authorized the court to discontinue sex offender registration.  Colorado also authorized funding for mental health diversion courts. (SB 211).   Colorado’s impressive record of legislating on criminal records issues in recent years, for adult as well as juvenile records, is described in detail in the state’s profile in the Restoration of Rights Project.
  • Tennessee addressed diversion both in the context of juveniles (HB 1319) and those charged with sex offenses (HB 624). The latter law revises provisions governing the circumstances under which a person’s name must be removed from the sex offender registry, to add successful completion of judicial diversion for certain offenses.  Juveniles will now be eligible for diversion not only after a plea, but also after an adjudication.   In its third new law affecting diversion, Tennessee rescinded the $350 filing fee for a defendant applying for expunction of an offense following the completion of a diversion program.  See HB941.
  • Vermont authorized its courts to expunge records of juvenile diversion cases after two years without a subsequent conviction, if restitution has been paid. See S105. While referral for juvenile diversion remains in the control of the district attorney, courts are authorized to impose a deferred sentence for a less serious crime even if the prosecutor objects. 13 V.S.A. § 7041.  This provision was amended by S105 to delete the age limits on the court’s authority under this section, so that it no longer applies only where the defendant is under 28 years of age.
  • Mississippi reorganized its system of specialized problem-solving courts (including drug courts, mental health courts, and veterans’ courts) as “intervention courts,” and made an Intervention Courts Advisory Committee responsible for coordinating the policies and operation of these courts through the State.  See HB 1352, Code Ann. §§ 9-23-1, 9-23-9.  These courts are primarily aimed at reducing the incidence of drug abuse as a driver of criminal behavior, but they are aimed at different populations and have differing eligibility requirements.   See, e.g., § 9-25-1 (veterans courts); § 9-27-7 (mental health courts).   These courts all offer the possibility that successful participants in their programs may avoid conviction and become eligible for expungement of the record upon successful completion.
  • Oregon enacted a law formalizing the terms of conditional discharge in controlled substance cases, specifically omitting the requirement under preexisting law that a defendant must first plead or be found guilty. (HB 3201).  Under the new law, a participant must enter into a “probation agreement” waiving various trial and appellate rights, and must agree to pay restitution and court-appointed attorney fees, with no provision for waiver, following an unfortunate practice of restricting the benefit of certain non-conviction dispositions to people who can pay for them.  The agreement “may not contain a requirement that the defendant enter a plea of guilty or no contest on any charge in the accusatory instrument,” a provision evidently intended to avoid the collateral consequences of a finding of guilt.  This law is also covered in the section on relief from immigration consequences.

In more incremental extensions of diversion:

  • California authorized the creation of pretrial diversion for primary caregivers of children,who are charged with a misdemeanor or non-serious felony offenses, except for offenses against the cared-after child. (SB 394). See Cal. Penal Code § 1001.83.
  • Missouri (HB 547) and Oregon (HB 2462) enacted laws aimed at giving service members and veterans the benefit of diversion.
  • Idaho (H78) and South Carolina (H3601) authorized diversion in DUI cases.
  • Texas expanded eligibility for deferred adjudication to victims of human trafficking (HB 2758), and created a family violence pretrial diversion pilot program in Bexar County (HB 3529), and authorized deferred adjudication for certain intoxication offenses (HB 3582).
  • Washington established a substance abuse diversion program (SB 5380), and authorized a law enforcement grant program to expand alternatives to arrest and jail processes (HB 1767).
  • Nebraska authorized restorative justice as a form or condition of diversion (LB595).
  • Nevada expanded eligibility for veterans and military service members specialty court programs (AB222).
  • Wyoming addressed diversion in its expansion of juvenile expungement in HB 44, discussed in the section on expungement.
  • Florida put in place a system of reporting for its various problem-solving courts (HB 7125).
  • Minnesota authorized cities and counties to create driver’s license reinstatement diversion programs (SF 8).
  • Rhode Island authorized superior court diversion programs (SB 962). See R.I. Gen. Laws § 8-2-39.3.
  • West Virginia established a specialized court program for military service members (SB 40).  See W. Va.Code §§ 62-16-1, et seq.

Model law proposes automatic expungement of non-conviction records

An advisory group drawn from across the criminal justice system has completed work on a model law that recommends automatic expungement of most arrests and charges that do not result in conviction.  Margaret Love and David Schlussel of the Collateral Consequences Resource Center served as reporters for the model law.  It is available in PDF and HTML formats.

“Many people may not realize how even cases that terminate in a person’s favor lead to lost opportunities and discrimination,” says Sharon Dietrich, Litigation Director of Community Legal Services of Philadelphia, and one of the advisors of the model law project.  “Over the years, my legal aid program has seen thousands of cases where non-convictions cost people jobs.”

In proposing broad restrictions on access to and use of non-conviction records, the project aims to contribute to conversations underway in legislatures across the country about how to improve opportunities for people with a criminal record.  Already in 2019, states have enacted more than 130 new laws addressing the collateral consequences of arrest and conviction.  The group regards its model as the first step in a broader law reform initiative that will address conviction records as well.

Law enforcement officials make over 10 million arrests each year, a substantial percentage of which do not lead to charges or conviction.  Records of these arrests have become widely available as a result of digitized records systems and a new commerce in background screening and data aggregation.  These checks often turn up an “open” arrest or charges without any final disposition, which may seem to an employer or landlord more ominous than a closed case.

Very few states have taken steps to deal with the high percentage of records in repositories and court systems with no final disposition indicated.  Paul McDonnell, Deputy Counsel for New York’s Office of Court Administration and a project advisor, noted: “Criminal records that include no final disposition make it appear to the untrained eye that an individual has an open, pending case, which can have serious results for that person. New York has recently made legislative progress in addressing this problem, though more can be done.”

Current state and federal laws restricting access to and use of non-conviction records have limited application and are hard to enforce.  Eligibility criteria tend to be either unclear or restrictive, and petition-based procedures tend to be burdensome, expensive, and intimidating.  In recent years, lawmakers and reform advocates have expressed a growing interest in curbing the widespread dissemination and use of non-convictions, leading some states to simplify and broaden eligibility for relief, reduce procedural and financial barriers to access, and in a handful of states to make relief automatic.

Rep. Mike Weissman, a Colorado State Representative and model law project advisor, noted that Colorado has recently overhauled its laws on criminal records with broad bipartisan support.  “It is heartening to see similar reforms underway in other states, both red and blue, as well.  I commend the practitioners and researchers who helped formulate the model law for illustrating avenues for further progress in reducing collateral consequences.”

The model law would take this wave of criminal record reforms to a new level.  It recommends that expungement be immediate and automatic where all charges are terminated in favor of an accused.  Uncharged arrests should also be automatically expunged after a brief waiting period, as should dismissed or acquitted charges in cases where other charges result in conviction.  Cases that indicate no final disposition should also be expunged, unless there is indication that they are in fact pending.

The model law also recommends that expunged non-conviction records should not be used against a person in a range of criminal justice decisions, including by law enforcement agencies.  It would prohibit commercial providers of criminal background checks from disseminating expunged and dated non-conviction records, and civil decision-makers from considering them.

David LaBahn, President of the national Association of Prosecuting Attorneys, indicated that organization’s support for the model law, stating that the collateral consequences of non-convictions “do not serve to make the community safer,” and that “the current structures in place to expunge a non-conviction record can be confusing and difficult for the layperson to navigate alone.”

This model law sets the stage for jurisdictions to address record relief for convictions more generally, and its structure and principles can be brought to bear on that important work.

The Collateral Consequences Resource Center organized this model law project.  An early draft of the model law was discussed at an August 2019 Roundtable conference at the University of Michigan that was supported by the Charles Koch Foundation.  The model law report was supported by Arnold Ventures.

Read the model law in PDF or HTML.

UPDATED: 50-State Chart on Relief from Sex Offender Registration

We have completed an overhaul of our 50-State chart on relief from sex offender registration obligations, to bring it up to date and ensure that it is thorough and accurate.  This chart documents the duration of sex offender registration requirements, as well as legal mechanisms for early termination from such requirements.

In conducting this review, we have identified a handful of states that have, since the chart was last revised in November 2017, expanded the availability of relief from sex offender registration requirements, including for people who have successfully completed diversionary dispositions, people with serious disabilities, and people who are registered based on out-of-state offenses.  These recent changes in the law, incorporated in the chart, are summarized below. Read more

Association of Prosecuting Attorneys joins Restoration of Rights Project as partner

The Collateral Consequences Resource Center is pleased to announce that the Association of Prosecuting Attorneys (APA) has joined as a partner in our Restoration of Rights Project (RRP).  The APA is a membership organization of elected and appointed prosecutors whose mission is to provide training and technical assistance to prosecutors in the United States,  and to facilitate collaboration with criminal justice partners on emerging issues related to the administration of justice.  APA President and CEO David LaBahn participated in the roundtable on non-conviction records held in August at the University of Michigan Law School, a project that relies heavily on the state law research in the RRP.  The RRP’s other partner organizations are the National Association of Criminal Defense Lawyers, National Legal Aid & Defender Association, and National HIRE Network.

The RRP describes current U.S. law and practice concerning restoration of rights and record relief following arrest or conviction in the 50 states, D.C., Puerto Rico, Virgin Islands, and federal system, in three formats: summaries of every jurisdiction, detailed profiles of each jurisdiction, and 50-state comparison charts.  Topics include sealing and expungement, employment and licensing, pardons, voting, jury service, public office, and firearms rights.   People visit the RRP more than 1,000 times every day looking for information about ways to alleviate the burdens of a criminal record.

We are very excited to have this respected national prosecutor organization as a partner in the RRP enterprise, to help bring the RRP’s resources to the prosecutor community, along with a greater awareness of the need for and availability of mechanisms to mitigate the collateral consequences of arrest and conviction.  We look forward to the new perspectives the APA can bring to bear as we work to expand the RRP and make it more useful to all those interested in restoration of rights and record relief.

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