CALIFORNIA ROLLS OUT UPDATED BACKGROUND CHECK RULES AND ONLINE GUIDE

In 2018, California enacted the Fair Chance Act (“FCA”) to make it illegal for employers with five or more employees to ask applicants to self-report or perform a background check of the applicant’s criminal record before a job offer is made. Employers must now update their background check and criminal history review process to comply with new FCA regulations. Additionally, the Civil Rights Department (“CRD”) announced the launch of a new online interactive guide to help individuals better understand when the FCA’s protections apply.

1. Expanded Definition Of Employer

The new FCA regulations amend Title 2, Section 11017.1 of the California Code of Regulations. They expand the definition of “employer” to include more than a direct employer or labor contractor. The definition now applies to “any direct or 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.”

2. Expanded Definition Of Applicant

An “applicant” includes any individual who files a written application or who otherwise indicates a specific desire to be considered for employment. It also includes the following: (1) existing employees who have applied for or indicated a specific desire to be considered for a different position with their current employer; and (2) existing employees who are subjected to a review and consideration of criminal history because of a change in ownership, management, policy or practice.

3. Changes To Job Posting Language And Use Of Voluntary Disclosures

The new regulations made two changes that impact previous “work-arounds” that employers may have used to circumvent the FCA’s requirements: (1) employers are prohibited from including statements that no persons with criminal history will be considered for hire (e.g., employers cannot state “No Felons” or “Must Have Clean Record.”) in job advertisements, postings, applications, or other materials; and (2) employers cannot consider any criminal history information that an applicant voluntarily discloses prior to receiving a conditional offer.

4. Changes To Individualized Assessment Process

Under the FCA, if an employer intends to rescind a conditional employment offer based solely or in part on the applicant’s conviction history, the employer must first conduct an individual assessment of whether the applicant’s conviction history has a direct and adverse relationship with the specific duties of the job that justify denying the applicant the position. The employer’s assessment must consider the following three factors with regard to any criminal history:

• The nature and gravity of the offense or conduct;

• The amount of time that has passed since the offense or conduct and/or completion of the sentence; and

• The nature of the job held or sought.

In addition to clarifying that the assessment must be a “reasoned, evidence-based determination,” the new regulations require employers to perform a more in-depth analysis before making a decision based on an individual’s criminal conviction history. The new regulations added the following guidance for each of the above three factors regarding specific items that employers should consider:

The Nature and gravity of the offense or conduct: Consideration of this factor now may include but is not limited to:

o The specific personal conduct of the applicant that resulted in the conviction;

o Whether the harm was to property or people;

o The degree of the harm (e.g., amount of loss in theft);

o The permanence of the harm;

o The context in which the offense occurred;

o Whether a disability, including but not limited to a past drug addiction or mental impairment, contributed to the offense or conduct, and if so, whether the likelihood of harm arising from similar conduct could be sufficiently mitigated or eliminated by a reasonable accommodation, or whether the disability has been mitigated or eliminated by treatment or otherwise;

o Whether trauma, domestic or dating violence, sexual assault, stalking, human trafficking, duress, or other similar factors contributed to the offense or conduct; and/or

o The age of the applicant when the conduct occurred.

The amount of time that has passed since the offense or conduct and/or completion of the sentence: Consideration of this factor now may include but is not limited to:

o The amount of time that has passed since the conduct underlying the conviction, which may significantly predate the conviction itself; and/or

o When the conviction led to incarceration, the amount of time that has passed since the applicant’s release from incarceration.

The nature of the job held or sought: Consideration of this factor now may include but is not limited to:

o The specific duties of the job;

o Whether the context in which the conviction occurred is likely to arise in the workplace; and/or

o Whether the type or degree of harm that resulted from the conviction is likely to occur in the workplace.

The new regulations also require employers to consider as part of their individualized assessment “any evidence of rehabilitation or mitigating circumstances” that “is voluntarily provided by the applicant or by another party at the applicant’s request, before or during the initial individualized assessment.

Because some of the information above may not be readily available, employers should consider requesting any pertinent information upon learning of a past criminal conviction and before conducting the initial individualized assessment. If any requested information is provided, the employer should ensure it reviews and considers that information when making its determination.

5. Updates To Notification Process

The FCA requires that if an employer is considering rescinding an offer after completing its initial individualized assessment, it must notify the applicant in writing and give the applicant at least five business days to respond with additional information and documents, including rehabilitation efforts or mitigating circumstances. The new regulations provide employers with the following guidelines to determine when the five business day period starts in situations where the employer cannot establish when the letter was received:

• If the notice is sent by email, it is deemed received two business days after it was sent.

• If the notice is sent by mail, the notice is deemed received as follows:

o 5 calendar days from the mailing date if sent to a California address;

o 10 calendar days from the mailing date if sent to a U.S. address outside of California; and

o 20 calendar days from the mailing date if sent to an address outside of the U.S.

Although the FCA already required employers to consider evidence of rehabilitation and mitigating circumstances provided from the individual, the new regulations contain an extensive list of examples of such evidence that employers should consider. If, after receiving and considering any new information or a lack of response, the employer decides not to hire the individual, it must send a written notice to the applicant regarding its decision and notify the applicant of their rights, including the right to file a charge with the CRD.

6. CRD’s New Online Interactive Guide To The FCA

On September 6, 2023, the CRD launched its new online interactive guide. The guide allows users to anonymously assess whether they may have experienced a violation of the FCA by asking detailed questions to help users understand whether the type of job they are applying for is covered under the FCA and whether their experience may have violated FCA regulations. The guide creates an individualized downloadable report with general information about the FCA, a list of possible violations based on the specific responses provided, and information on how to get support and file a charge with the CRD.

7. Next Steps

In light of these new changes, employers should reexamine related forms, policies and materials. This should include a review of job postings and advertisements, applications, background check authorization forms, and other documents that are part of the applicant screening and background check process to ensure they remain compliant.

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About The Author

Robert K. Foster is an Associate with Sheppard, Mullin, Richter & Hampton LLP in the firm’s San Diego (Del Mar) Office. Mr. Foster represents employers in various types of employment litigation, including class action wage and hour claims; PAGA claims; and discrimination, wrongful termination, harassment and retaliation lawsuits. In addition, he also provides strategic advice to employers on a wide range of employment issues, including wage and hour compliance, employee classification, and OSHA matters. He is a frequent contributor to the California Labor and Employment ALERT Newsletter and several other articles and is a contributing author to the Employer’s Guide to COVID-19 and Emerging Workplace Issues.

Robert litigates actions involving trade secret claims, unfair competition and enforcement of restrictive covenants and non-competes. He also handles various commercial litigation disputes, including breach of contract, breach of fiduciary duty, fraud, tortious interference with contract, unfair competition and shareholder derivative claims.