The California Fair Employment and Housing Act (FEHA), as amended in 2018, restricts a covered employer's ability to make hiring decisions based on an individual's criminal history, including but not limited to court records disclosed in a criminal background check. Employers with workers in California, including employers that are specifically prohibited from hiring certain ex-offenders, must be mindful of the FEHA and new regulations, effective October 1, 2020. A new Fair Chance Act FAQ document, among other things, is bringing renewed and substantial attention to how employers use criminal records in hiring and personnel decisions.
The Fair Chance Act
Summarizing, the FEHA makes it unlawful for covered California employers with at least five employees to:
- Include on any application for employment any question that seeks the disclosure of an applicant's conviction history;
- Inquire into or consider the conviction history of an applicant before the applicant receives a conditional offer of employment; and
- Consider, distribute, or disseminate information about any of the following while conducting a criminal history background check in connection with any application for employment: (1) an arrest that did not result in a conviction, subject to the exceptions in Labor Code § 432.7(a)(1) and (f); (2) referral to or participation in a pretrial or posttrial diversion program; and (3) convictions that have been sealed, dismissed, expunged or statutorily eradicated pursuant to law.
Once an offer has been made and the criminal history obtained, the FEHA further provides that the employer cannot deny an applicant a position solely or in part because of conviction history until the employer performs an individualized assessment. This assessment must justify denying the applicant the position by linking relevant conviction history with specific job duties of the position sought. In particular, the assessment must consider:
- The nature and gravity of the offense and conduct;
- The time that has passed since the offense or conduct and completion of the sentence; and
- The nature of the job held or sought.
Once the employer makes a preliminary decision that the applicant's conviction history is disqualifying, the employer must notify the applicant of this preliminary decision in writing. However, the employer is not required to justify or explain to the applicant its reasoning for making the preliminary decision. But, the employer must:
- Provide the written notice of the disqualifying conviction or convictions that are the basis for the preliminary decision to rescind the offer;
- Include a copy of the conviction history report, if any; and
- Provide an explanation that the applicant has the right to respond to the notice within at least five business days, and that the response may include submission of evidence challenging the accuracy of the conviction record, or evidence of rehabilitation or mitigating circumstances or both.
The employer cannot make any final determination based on conviction history during this five-business-day period. If the applicant timely notifies the employer in writing that they are disputing the conviction history and are taking steps to obtain evidence to support this, the employer must provide five additional business days to respond to the notice. The employer must also consider any additional evidence or documents the applicant provides in response to the notice before making a final decision.
If the employer ultimately decides to deny an applicant based on the conviction history, the employer must notify the applicant of this in writing, and include notification of any existing procedure the employer has to challenge the decision, as well as notification of the applicant's right to file a complaint with the Department of Fair Employment and Housing.
The regulations state that an "applicant" now includes individuals who begin work before, but are still subject to, the employer's review of their criminal history. The regulations state: "An employer cannot evade the requirements of [the FEHA] or this regulation by having an individual lose their status as an 'applicant' by working before undertaking a post-conditional offer review of the individual's criminal history." This amendment is especially relevant in light of the pandemic. Court closures have resulted in considerable backlogs and staffing shortages. As a result, some employers have allowed applicants to begin work before receiving criminal background check reports. Under the amended regulation, such individuals are entitled to the FEHA's protections.
The regulations also clarify the obligations the FEHA imposes on employers that are required by law to conduct criminal background checks for employment purposes or to restrict employment based on criminal history (for example, employers employing individuals at health facilities where they will have regular access to patients, and employers employing individuals at pharmacies where they will have access to medication or controlled substances). Such employers do not have a wholesale exemption from the FEHA. Rather, they are exempt from the prohibition on inquiring into an individual's criminal history without first making a conditional job offer. Such employers still must not inquire about criminal records that are off limits by law, such as arrest records, unless the law specifically allows the employer to conduct such an inquiry (e.g., for specific positions at health facilities). Such employers also remain subject to the standards for justifying a policy or practice of considering criminal convictions that creates an "adverse impact" on a basis protected by the FEHA, i.e., for establishing the policy or practice is "job-related and consistent with business necessity." However, the regulations do state: "Compliance with federal or state laws or regulations that mandate particular criminal history screening processes, or requiring that an employee or applicant possess or obtain any required occupational licenses constitute rebuttable defenses to an adverse impact claim under the Act." It remains to be seen whether federal law will preempt the FEHA.
The regulations also indicate that employers must adhere to related laws, including California's version of the Fair Credit Reporting Act (FCRA) and local ban-the-box laws (e.g., ordinances in Los Angeles and San Francisco).
Criminal record screening policies continue to attract considerable attention on numerous fronts,1 including regulators in California and under federal law. Several high-profile and nationwide discrimination settlements have sparked renewed and significant interest by the plaintiff's bar.2 Class action lawsuits under the FCRA are also clearly spiking.3 As a result, employers that use criminal records to screen applicants or employees should consider a privileged review of all of the various policies, procedures, and other documents related to the screening process (e.g., job applications, offer letters, guidelines for recruiters, guidelines for interviews, guidelines for adjudicating background checks, template notices, etc.). At the very least, employers should take measures to ensure such policies, procedures and other documents are complete and up to date.
1. See, e.g., Rod M. Fliegel, Hawaii Amends its Ban the Box Law to Fortify Protections for Ex-Offenders, Littler ASAP (Sept. 16, 2020); Alison Hightower and Rod Fliegel, New Year, New Local Ban-the-Box Restrictions on Background Checks, Littler Insight (Feb. 12, 2020).
2. See, e.g., Rod Fliegel and Molly Shah, Dollar General Reaches Settlement with the EEOC in Years-Long Background Check Bias Suit, Littler Insight (Nov. 1, 2019); Rod Fliegel, Criminal Record Screening Policies Continue to Raise Important Compliance Issues, Littler ASAP (Apr. 6, 2018).
3. See Rod M. Fliegel, Ninth Circuit Reinforces Prohibition Against "Extraneous" Information In Background Check Disclosures, Littler ASAP (Mar. 21, 2020); The Ninth Circuit Adopts an Expansive Reading of the FCRA's Provision Governing Background Check Disclosures, Littler ASAP (Jan. 29, 2019); Rod M. Fliegel, Jennifer Mora and William Simmons, The Swelling Tide of Fair Credit Reporting Act (FCRA) Class Actions: Practical Risk-Mitigating Measures for Employers, Littler Report (Aug. 1, 2014).
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.