Fair chance hiring expands opportunity for millions of people impacted by the criminal legal system—people who deserve to work, contribute, and build stability for themselves and their families. Yet barriers remain, and one of the most persistent issues is employers’ aversion to risk.
Employer insurance may provide a mechanism to overcome that barrier.
This is one of four case studies featured in our latest report on Fair Chance Hiring.
By shifting risk from individual employers to a shared pool, it could help make inclusive hiring both feasible at scale and sustainable over time, creating benefits that ripple beyond the workplace into communities and local economies.
The Risk Perception Barrier
Employers frequently identify risk as a primary concern when considering candidates whose profiles may reflect a record of prior interaction with the criminal legal system. Our research, based on interviews with leaders who work closely with employers and employers reflecting on their initial journey into fair chance hiring, shows that concerns persist about legal liability, theft, or uncertainty about future candidate behavior.
As one intermediary noted:
“We believe that if someone is the best person for the job, you should always hire them. People inherently understand that. But in corporate structures, managers face other considerations: if I hire someone who later assaults a colleague, will it reflect poorly on me, my team, or my company? And higher up, legal teams are often focused on brand reputation and the risk of catastrophic loss.”
Employers want clarity about legal obligations, insurance coverage, and actual risk, but what they face is ambiguity and costly information. These factors influence hiring practices: when clarity is lacking and too costly, individual employers often fall back on blanket exclusions, screening out candidate whose profiles may reflect a record regardless of qualifications. As a result, motivated and qualified talent is overlooked, and employers narrow their pipelines.
Actual Risk and Ambiguity
Cases where employers are found liable for negligent hiring are rare, and current research shows that hiring people with records does not increase liability exposure. Some states have even enacted laws protecting employers who hire candidates whose profiles reflect a record of prior criminal legal system interaction. Yet ambiguity persists, and employers continue to express concerns about risks.
In many cases, the issue isn’t only about measurable risk. It’s uncertainty. One criminal legal system expert shared:
“The known data about negligent hiring does not suggest that hiring someone with a felony conviction has a lot of risk. The actual data just doesn’t bear that out.”
Our research did not establish negligent hiring risk as either clearly significant or insignificant, leaving employers in a zone of uncertainty. The evidence also suggests a lack of clarity about which risks are covered and what, if any, exposure employers would have.
Several interviewees highlighted that misperceptions about coverage and program eligibility reinforce uncertainty:
“We hear it all the time from employers—especially in schools and medical systems—that ‘our insurance won’t let us hire’ or ‘we’re not allowed to hire.’ That’s not actually true, but the perception persists. We’ve found it helpful to bring in insurance brokers to explain what’s really covered and connect employers to experts who can answer their questions.”
Others noted challenges with fair chance hiring incentive programs:
“The problem isn’t a lack of insurance products. It’s awareness. These tools exist to help employers feel more secure hiring people with records, but they’re underused because most companies don’t even know they’re out there,” said another intermediary.
Use and Awareness of Existing Tools
Programs such as Federal Bonding (FBP) , the Work Opportunity Tax Credit (WOTC), and Certificates of Rehabilitation exist to help employers reduce financial or legal barriers to fair chance hiring. Uptake, however, remains limited. Employers may be uncertain how to access these programs, which apply in their context, or whether coverage aligns with their existing insurance and liability frameworks.
Research and interviews indicate that even when information is provided about these programs, adoption can be incremental:
“I came armed with Federal Bonding and Work Opportunity Tax Credit information, thinking it would calm employers’ fears. But it didn’t matter; the resistance is emotional. From a practical standpoint, incidents of poor employee behavior—putting it broadly—almost never happen.”
The gap between available programs and employer uptake suggests a role for structural supports, such as insurance models or centralized guidance systems, that help employers turn awareness of existing programs into actionable steps.
Insurance as a Potential Tool for Structural Change
Employer insurance could change the equation. By creating a pooled mechanism to cover potential liabilities, insurance reframes the issue from fear of the unknown to manageable, bounded risk.
The prospect that insurance could be an effective tool to address employers’ concerns came up frequently in our interviews.
“I have flood insurance and fire insurance,” one employer network leader said. “Those things rarely happen, but if they do, it’s devastating. The same logic applies to negligent hiring.”
While actuarial evidence does not indicate heightened risk, our research and that of others (see Cullen and Hoffman, 2023 and Bushway and Pickett, 2023), suggest that insurance may reduce uncertainty rather than risk per se. A well-designed policy could provide clarity, confidence, and structure.
As one intermediary explained:
“If companies knew they were covered, it would be big… Risk is a critical issue, but it hasn’t been tackled head-on. Many employers see the process as cumbersome or costly, and there aren’t easy resources or clear messaging on how to manage it. Often, they rely on assumptions or one-size-fits-all approaches to background checks, without understanding the coverage or protections in place.”
If risks associated with fair chance hiring, such as negligent hiring, are as small as many suggest, there is an additional benefit: insurance coverage may be effective in reducing uncertainty while remaining inexpensive.
Reducing Uncertainty, Building Confidence
Fair chance hiring requires both mindset shifts and structural tools. Employers need more than moral arguments; they need clarity, risk mitigation, and accessible systems. Insurance is one potential structural tool in that toolbox.
“You have to get people past the fear barrier. When people sit across from someone who has been incarcerated for years and realize they never had a fair first chance, that experience is deeply humanizing. You realize they have come a long way and done work in the most difficult possible circumstances, and now they are here, and they are looking for a fair chance, and I’m going to give them an opportunity. That’s how we change this. There are no shortcuts.”
Evidence from our research suggests that insurance could have a role in reframing uncertainties around hiring by identifying actionable, bounded risk. This could reduce hesitation, enabling employers to act with confidence and move beyond fear in hiring decisions.
Summary
Employer insurance may not eliminate risk, but it could help make risk legible. By providing clarity where ambiguity currently dominates, insurance may reduce uncertainty, helping employers more confidently hire a wider range of qualified candidates and support more stable employment pathways.