Negligent Hiring: Recidivism and Employment with a Criminal Record

This paper tackles a difficult legal and policy challenge—reducing the impact of criminal justice records on job applicants’ chances in a manner that does not spur more discrimination—by looking at how another area of law, tort liability, impacts employers’ decision-making. It uses theoretical and empirical methods to study the most common reason employers report being reluctant to hire workers with a criminal record: legal liability generated by the tort of negligent hiring. While the purpose of the tort is ostensibly to protect and make whole those harmed when an employee misbehaves in a foreseeable manner, I show that, in practice, the tort generates additional criminal behavior and worsens employment outcomes. I first provide a survey of the current doctrine across the states and trace the origins of the tort through the common law. I show that widespread adoption of negligent hiring increased the number of property criminal offenses by over seven percent. Next, I examine state legislation clarifying the negligent hiring standard and reducing the likelihood that an employer will be found liable. I use newly constructed administrative data from over a dozen states to compare employment and recidivism rates in the states that changed their negligent hiring law to otherwise similar states that did not (a difference-in-differences analysis). I show that the laws increase employment by nine percent, wages by twenty-five to thirty-five percent, and lower reincarceration for a new criminal offense by twenty-five percent. Throughout the paper, I also address the impact of related policies by presenting new data and analysis of the effects of legislation restricting the timing of inquiries into criminal histories (Ban-the-Box legislation) and the use of hiring credits (the Work Opportunity Tax Credit)