United States: California's Tightened Regulations On Considering Criminal History In Employment Decisions Take Effect July 1, 2017

Authord by Julie Totten, Jessica R. L. James and Alexandra Heifetz

Last year, the California Fair Employment and Housing Council proposed new regulations on an employer's consideration of criminal history in making employment decisions. Those regulations were approved this year by the Office of Administrative Law after a period of public comment and are due to become effective on July 1.

New Clarification on Adverse Impact Claims

While the new regulations do not categorically prohibit an employer from using criminal records in employment decisions (e.g., an employer's decision to hire, promote, train, discipline, or terminate an employee), they will impose serious limitations.  In particular, the regulations bring California in alignment with federal law and clarify that an employer is prohibited from using criminal history if doing so has an adverse impact on the prospective or current employee.  The new regulations permit an employee to establish adverse impact through use of criminal conviction statistics, explaining that state or national statistics of disparities in criminal convictions of a protected category "are presumptively sufficient to establish an adverse impact."

Once a claim is established, the burden shifts to an employer to show the policy or practice is "job-related and consistent with business necessity" and adequately tailored to a variety of circumstances.  Specifically, to support a defense based on  job-relatedness and business necessity under the new regulations, the employer must show the policy or practice is tailored considering, inter alia, the nature and gravity of the criminal offense and the amount of time that has passed since the offense or completion of the sentence.  A policy or practice that considers convictions older than seven years is subject to a rebuttable presumption that it is not sufficiently narrowly tailored. Furthermore, policies or practices using bright-line disqualifications are subject to heightened requirements.  If an employer uses bright-line conviction disqualifications, it must demonstrate that such a practice can properly distinguish between employees who do and do not pose a risk, and that the conviction has a negative impact on the current or prospective employee's ability to perform his or her job duties.  If the employer establishes a defense, the burden then shifts back to the employee to demonstrate a less discriminatory alternative means of achieving those ends effectively.

Expansion of Prohibitions and Notice Requirements Regarding Criminal History

Finally, the new regulations expand on criminal history information employers are prohibited from considering or inquiring about, regardless of adverse impact, and include heighted requirements for providing notice to an applicant.  Under the new regulations, employers may no longer consider: an arrest that did not result in a conviction; pre- or post-trial diversion, a dismissed, sealed, or expunged conviction; certain juvenile criminal history; and non-felony convictions for possession of marijuana that are older than two years.  Where a disqualifying conviction is obtained from a source other than the application, the new regulations also require an employer to provide notice of a disqualifying conviction, prior to making an adverse action, and allow the applicant reasonable opportunity to present evidence of factual inaccuracy.  Employers should take heed that this notice and opportunity-to-respond requirement differs sharply from obligations under the Fair Credit Reporting Act ("FCRA") and existing "ban the box" ordinances in California.

These and other provisions of the new regulations make it increasingly risky for a California employer to use criminal history inquiries in the course of making employment decisions and employers are encouraged to review their policies before July 1, 2017. In particular, California employers should:

  • reassess the use of bright-line disqualifications;
  • update policies and procedures to insure that no disqualifications are in use that are now prohibited;
  • if the assistance of a consumer reporting agency is used to screen applicants, check that the agency is properly implementing the new regulations;
  • create new policies and procedures for providing notice of disqualifying conviction, as required.
  • California employers are also cautioned to remain aware of federal and local regulations that impose additional limitations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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