Retailer Bed Bath & Beyond Inc. has agreed to pay $125,000 to settle charges that it allegedly automatically disqualified job applicants with criminal convictions, according to New York Attorney General Eric Schneiderman.

Mr. Schneiderman said in a statement Tuesday that his office conducted an investigation after a human resources manager for the Union, N.J.-based chain, which has 62 New York stores, disseminated information at a job fair that the company did not hire individuals with felony convictions, regardless of any evidence of rehabilitation.

Under New York law, employers must conduct an individualized evaluation of applicants' criminal records by considering factors including the nature and gravity of the job sought, the time that has elapsed since the conviction, the age of the applicant at the time the offense was committed, and evidence of rehabilitation, according to the statement.

Under terms of the settlement, the company agreed to take new steps that will ensure compliance with New York state laws, which prohibit the automatic disqualification of job candidates with criminal convictions and require that candidates with criminal records be given individualized consideration, according to the statement.

The company has also agreed to conduct training of all if its employees on these new policies, to preserve records of its hiring decisions and any complaints related to criminal history discrimination, and to provide periodic reports to the attorney general's civil rights bureau to ensure compliance with the law.

Of the $125,000 settlement, $40,000 will be awarded as restitution to individuals who were unlawfully denied employment with the company, and $15,000 will be paid to three organizations that provide job training and placement services, said the attorney general's statement.

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“My office is committed to ensuring equal access to employment opportunities for all New Yorkers,” Mr. Schneiderman said in the statement. “The law in our state prohibits the automatic disqualification of job candidates with criminal backgrounds, and this agreement puts employers on notice that slamming the door on job seekers based on past conduct without deciding whether that conduct is relevant to the current job is not only wrong — it's unlawful.”

Bed, Bath & Beyond said in a statement it “is committed to complying with the laws and regulations governing our business, including state and federal employment law. Although the settlement does not include any admission that we violated any of these laws, we are in agreement with the Attorney General that employment opportunities should remain open to individuals with criminal histories that have been rehabilitated.

“In advancement of that goal, we fully cooperated with the Attorney General's investigation and as part of our agreement will continue to share information with the Attorney General that demonstrates our continued compliance with these laws. Our employees are working directly with our customers every day, whose needs we put first, to deliver the best shopping experience possible.”

A survey released earlier this month found that most employers continue to ask candidates to self-disclose past criminal convictions on job applications, even though the U.S. Equal Employment Opportunity Commission recommends against it and there are state and municipal laws that outright ban the practice.