California’s Fair Chance Act, which is also known as the “ban the box” law, generally prohibits California employers from asking job candidates about their criminal history prior to making a conditional job offer. It also imposes several other requirements on employers that consider criminal history information when making employment decisions.

In December 2022, the California Civil Rights Council proposed significant modifications to the regulations regarding the Fair Chance Act. On July 24, 2023, California’s Office of Administrative Law approved several of the proposed modifications. Specifically, the Civil Rights Council approved amendments to regulations: (1) pertaining to the consideration of conviction history prior to a conditional offer of employment; (2) pertaining to consideration of certain types of conviction records; (3) governing what employers must do when they intend to rely on criminal records to rescind a conditional job offer; (4) covering labor contractors, union hiring halls, and client employers; (5) prohibiting disparate treatment; (6) used to determine adverse impact; (7) outlining procedural requirements; (8) covering situations when an employer seeks the Work Opportunity Tax Credit provided under Section 51 of the Internal Revenue Code; and (9) defining terms used in Section 11017.1 of Title 2 of the California Code of Regulations.

The new regulations take effect October 1, 2023. The key modifications are summarized below:

Expanded Definition Of “Applicant” – Employers are prohibited from inquiring into and considering criminal history information of an applicant until after the employer has made a conditional offer of employment. The new regulations clarify that “applicant” includes “existing employees who have applied or indicated a specific desire to be considered for a different position with their current employer; and an existing employee who is subjected to a review and consideration of criminal history because of a change in ownership, management, policy, or practice.”

Expanded Definition Of “Employer” – The new regulations clarify that “employer” includes “any direct and joint employer; any entity that evaluates the applicant’s conviction history on behalf of an employer, or acts as an agent of an employer, directly or indirectly; any staffing agency; and any entity that selects, obtains, or is provided workers from a pool or availability list.”

Job Advertisements – Employers cannot state in job advertisements, postings, applications or other materials that individuals with a criminal history will not be considered for hire.

Exemption – The regulations currently exempt employers who are required by law to conduct a criminal background check. However, the new regulations clarify that the exemption does not apply if the law requires another entity, such as an occupational licensing board, to conduct the criminal background check.

Voluntary Disclosure Of Criminal History May Not Be Considered – If an applicant voluntarily discloses their criminal history prior to receiving a conditional offer, the employer must not consider the information. Additionally, an employer is prohibited from considering any other conviction history information until after making a conditional offer of employment, unless an exception applies.

Individualized Assessment Factors – The current law requires an employer’s individualized assessment to include consideration of the following factors: (a) the nature and gravity of the offense or conduct, (b) the time that has passed since the offense or conduct and/or completion of the sentence, and (c) the nature of the job held or sought. The new regulations provide clarity regarding these factors by listing several examples of what may be considered as part of the assessment.

Consideration Of Rehabilitation/Mitigating Circumstances – Currently, the law requires employers to consider evidence of rehabilitation or mitigating circumstances, if the individual provides such evidence. The new regulations provide a broad list of examples of such evidence.

Time Period To Respond To Pre-Adverse Action Notice – If an employer sends a written notice of the employer’s preliminary decision (e.g., pre-adverse action letter) to the applicant or employee, the applicant or employee has at least 5 days from the date of receipt of the notice to respond. The new regulations clarify that if the notice if transmitted through a format that does not provide a confirmation of receipt (e.g., mailing the notice without tracking delivery), the notice shall be deemed received 5 calendar days after the mailing is deposited for delivery for California addresses, 10 calendar days after the mailing for addresses outside of California, and 20 calendar days for addresses outside of the United States. If notice is provided through email, the notice is deemed received 2 business days after it is sent.

Work Opportunity Tax Credit – An employer seeking the Work Opportunity Tax Credit (“WOTC”) is not exempt from the regulations. An employer may require an applicant to complete IRS form 8850 (“Pre-Screening Notice and Certification Request for the Work Opportunity Credit”) before making a conditional offer, as long as the information gathered is only used for the purpose of applying for the WOTC. Additionally, an employer may not inquire as to an applicant’s basis of their qualification for the WOTC. An employer may require an applicant to complete the U.S. Department of Labor Employment and Training Administration form 9061 (“Individual Characteristics Form (ICF) Work Opportunity Tax Credit”) only after a conditional offer has been made. Any information relating to the WOTC application must be maintained in a confidential file separate from the personnel file.

With the October 1, 2023 effective date fast approaching, California employers should consult with their legal counsel to review their policies, procedures and new-hire documentation and applications and update them accordingly in order to comport with the new regulations, which add many new restrictions for employers and expand the reach of the Fair Chance Act.

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About The Author

Bryanne Lewis is an attorney in the law firm of Sheppard, Mullin, Richter & Hampton LLP in Los Angeles. She represents employers in employment matters, including wage and hour class and representative actions, and discrimination, harassment, retaliation and wrongful termination actions. Bryanne also counsels employers on a broad range of employment-related issues, including wage and hour issues, leaves of absence and accommodations, and personnel decisions. Ms. Lewis received her B.A. from Loyola Marymount University and her J.D. from Loyola Law School, cum laude, Order of the Coif.

Bryanne is a frequent contributor to the ALERT Newsletter as well as Sheppard Mullin's Labor and Employment Law Blog.