Quest Diagnostics Inc. will pay a $70,000 penalty and no longer automatically disqualify job applicants with prior arrests or criminal convictions as part of a settlement agreement with the New York attorney general's office.

New York Attorney General Eric T. Schneiderman said in a statement Thursday that Madison, N.J.-based Quest Diagnostics — which is one of the world's largest providers of medical diagnostic testing, information and services, with 200 New York locations — has agreed to follow laws prohibiting automatic job disqualification based solely on criminal history.

The statement said that, after receiving a complaint, the attorney general's office conducted an investigation and determined that Quest had deemed ineligible or automatically disqualified job applicants with a criminal history.

The investigation found that some applicants were rejected for employment regardless of their qualifications or experience, even where the prior convictions were years old and the applicant had shown evidence of rehabilitation and a clean record since, said the New York Attorney General's office in the statement.

The statement said the investigation also revealed that Quest subsidiary ExamOne Worldwide had contracted with insurers and violated New York law by imposing a blanket ban on hiring job applicants who had a criminal conviction within the past seven years.

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Under terms of the settlement, Quest will modify its policies and conduct training for its employees on this issue, said the statement.

New York law requires that employers consider mitigating factors in making hiring decisions based on criminal history, including the nature and gravity of the conviction; the job's responsibilities; the time that has elapsed since the conviction; the age of the applicant at the time the offense was committed; and evidence of rehabilitation, said the statement.

Mr. Schneiderman said in the statement, “My office is committing to ensuring equal access to employment opportunities for New Yorkers across our state. Those who have paid their debt to society deserve a fair chance to make an honest living. It's illegal under New York law to discriminate against job applicants based solely on their history of criminal conviction and, with this settlement, Quest has now agreed to needed reform to ensure its job applicants are treated fairly. The law is specifically designed to protect those who are otherwise qualified for the jobs they are applying for.”

The company said in a statement, "Quest Diagnostics is committed to complying with the laws and regulations governing our business, including state and federal employment law. We have fully cooperated with the Attorney General’s investigation and reached a resolution aimed at providing the Attorney General with objective evidence of our commitment to abide by New York state employment law regarding individuals with criminal record histories. Our ExamOne paramedical examiners have direct patient access, traveling to the homes and businesses of applicants to collect specimens and other biometric information. As always, we remain firmly focused on putting patients first and serving their needs."

Employers have been advised against having blanket exclusion on hiring people with criminal backgrounds in response to the U.S. Equal Employment Opportunity's guidance on the issue, which was released last year.