United States: New FEHA Regulations To Limit Employer Consideration Of California Applicant/Employee Criminal Histories

Linda Auerbach Allderdice is a partner, John H. Haney and Juan M. Rodriguez are attorney's at Holland & Knight's Los Angeles office

HIGHLIGHTS:

  • New California Fair Employment and Housing Act (FEHA) regulations go into effect on July 1, 2017, which relate to an employer's consideration of California applicant/employee criminal histories when making employment decisions.
  • Under the regulations, if an employer's policies or practices of considering criminal histories create an "adverse impact" on individuals on the basis of a FEHA protected class, this may, but not necessarily, constitute a FEHA violation.
  • The regulations set forth detailed burden-shifting procedures for determining whether there is a FEHA violation, as well as defenses available to employers.
  • While the regulations do not prohibit consideration of criminal histories, the California Legislature is considering a statewide "ban-the-box" bill – AB 1008 – which would set forth numerous prohibitions and procedural requirements regarding the collection and consideration of criminal histories when making employment decisions.

New regulations under the California Fair Employment and Housing Act (FEHA) take effect on July 1, 2017, which relate to an employer's consideration of California applicant/employee criminal histories when making employment decisions.1 Employers covered by the FEHA, i.e., employers with five or more employees, should closely evaluate current policies and practices for California applicants/employees to ensure compliance with these new regulations.

Current Restrictions Regarding Consideration of Applicant/Employee Criminal Histories

Currently, employers are prohibited from collecting or considering the following types of criminal histories when making employment decisions for California applicants/employees:

  • an arrest or a detention that did not result in a conviction2
  • referral to or participation in a pre-trial or post-trial diversion program3
  • a conviction that has been judicially dismissed, sealed, expunged or statutorily eradicated pursuant to law4
  • an arrest, detention, processing, diversion, supervision, adjudication or court disposition that occurred while a person was subject to the process and jurisdiction of a juvenile court law5
  • certain marijuana-related convictions, as specified in California Labor Code section 432.8, that are older than two years6

New Restrictions Regarding Consideration of Applicant/Employee Criminal Histories

If an employer's policies or practices of considering criminal histories of California applicants/employees create an "adverse impact" on individuals on the basis of a FEHA protected class7, this may, but not necessarily, constitute a FEHA violation.8 The new regulations, which begin July 1, 2017, set forth detailed burden-shifting procedures for determining whether there is a FEHA violation, as well as defenses available to employers.

Applicant/Employee Bears Initial Burden of Proving "Adverse Impact"

An applicant/employee bears the initial burden of demonstrating that an employer policy or practice of considering certain criminal convictions has an "adverse impact" on individuals on the basis of a FEHA protected class.9

For purposes of the new regulations, "adverse impact" is defined as "[a] substantially different rate of selection in hiring, promotion, or other employment decision which works to the disadvantage of members of a race, sex, or ethnic group", which definition is borrowed from the Equal Employment Opportunity Commission's (EEOC) Uniform Guidelines on Employee Selection and Procedures, 29 C.F.R. 1607 (1978).10

An applicant/employee may establish an "adverse impact" through 1) using state- or national-level conviction statistics showing substantial disparities in the conviction records or one or more FEHA protected classes, or 2) offering "any other evidence that establishes an adverse impact." State- or national-level conviction statistics are presumptively sufficient to establish an adverse impact. However, this presumption can be rebutted if the employer can show that there is a reason to expect a markedly different result after accounting for any particularized circumstances such as the geographic area encompassed by the applicant/employee pool, the particular types of convictions being considered, or the particular job at issue.11

If Applicant/Employee Proves "Adverse Impact," Burden Shifts to Employer

If the applicant/employee proves an "adverse impact", the burden shifts to the employer to establish that the policy or practice is justifiable because it is "job-related and consistent with business necessity."12

As an initial matter, this requires the policy or practice to bear a demonstrable relationship to successful performance on the job and in the workplace, and measure the person's fitness for the specific position(s), not merely to evaluate the person in the abstract.13

More specifically, an employer must be able to demonstrate that the policy or practice which has an adverse impact is "appropriately tailored," considering at least the following: 1) the nature and gravity of the offense or conduct, 2) the time that has passed since the offense or conduct and/or completion of the sentence, and 3) the nature of the job held or sought.14

If the employer uses "bright-line" policies or practices, i.e. which do not consider individualized circumstances, an employer must show that 1) these policies or practices distinguish between applicants/employees that do and do not pose an unacceptable level of risk, and 2) the convictions being used to disqualify, or otherwise adversely impact the status of the applicant/employee, have a direct and specific negative bearing on the person's ability to perform the duties or responsibilities necessarily related to the position.15

If the employer does not use "bright-line" policies or practices, then the employer must conduct an individualized assessment of the circumstances and qualifications of the applicants/employees excluded by the conviction screen. The assessment must involve the following: 1) notice to the adversely impacted employees/applicants, before an adverse action is taken, that they have been screened out due to a criminal conviction, 2) a reasonable opportunity for the individuals to demonstrate that the exclusions should not be applied due to their particular circumstances, and 3) the employer's consideration of additional information that might warrant an exception to the exclusion.16

Special Notice Requirements

Before taking an adverse employment action against an adversely impacted individual based on criminal histories obtained by a source other than the applicant/employee, the employer must give the impacted individual notice of the disqualifying conviction and a reasonable opportunity to present evidence that the information is factually inaccurate.17

Rebuttable Defense

The regulations provide for a rebuttable defense that the employer complied with federal or state laws or regulations that prohibit individuals with certain criminal records from holding certain positions or mandate a screening process employers are required or permitted to utilize before employing individuals in such positions.18

Less Discriminatory Alternatives

Even if an employer demonstrates that its policies or practices are job-related and consistent with business necessity, adversely impacted employees/applicants may still prevail if they can show that there is a less discriminatory policy or practice that serves the employer's goals as effectively as the challenged policy or practice.19 The regulations provide the following potential examples of less discriminatory alternatives: a more narrowly targeted list of convictions, or another form of inquiry that evaluates job qualification or risk as accurately without significantly increasing the cost or burden on the employer.

California Legislature Considering Statewide Ban-the-Box Law

Notably, while the new regulations do not provide for an outright prohibition on considering criminal histories, the California legislature is considering a statewide "ban-the-box" bill – AB 1008 – which would set forth numerous prohibitions and procedural requirements regarding the collection and consideration of criminal histories when making employment decisions. Employers with California employees should closely monitor this bill which, if enacted, would require a further assessment of policies and practices to ensure compliance.

Footnotes

1 The new regulations, known as the "Consideration of Criminal History in Employment Decisions Regulations," were developed by the California Fair Employment and Housing Council (FEHC) beginning in 2016, and were approved by the California Office of Administrative Law earlier this year.

2 Cal. Lab. Code §432.7.

3 Id.

4 Id.

5 Id.

6 Cal. Lab. Code §432.8. 

7 The FEHA protected classes are as follows: race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status of any person.  See Cal. Gov. Code §12940(a).

8 2 Cal. Code Reg. §11017.1(a).

9 2 Cal. Code Reg. §11017.1(d).

10 Id.

11 Id.

12 2 Cal. Code Reg. §11017.1(e)(1).

13 Id.

14 Id.

15 2 Cal. Code Reg. §11017.1(e)(2)(A).

16 2 Cal. Code Reg. §11017.1(e)(2)(B).

17 2 Cal. Code Reg. §11017.1(e)(3).

18 2 Cal. Code Reg. §11017.1(f).

19 2 Cal. Code Reg. §11017.1(g).

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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