California employers have been subject to the California Fair Chance Act since 2018, which currently requires, among other things, that employers
- not inquire into an applicant’s criminal history until after a condition job offer is made;
- use an individual assessment process to determine if the record or records are job-related before rejecting an applicant;
- follow a 2-step adverse action process that includes identifying the record or records under consideration in the pre-adverse action notice
On July 24, 2023, the Office of Administrative Law approved modifications to the Fair Chance Act regulations as related to the use of criminal history in employment decisions. These modifications become effective October 1, 2023.
The key changes that may impact California employers are summarized below. As always, we strongly urge you to review these changes with counsel prior to October 1, 2023, to ensure your practices comply with the new regulations.
Very importantly, the definition of “applicant” has expanded to include BOTH non-employees seeking a job AND “an existing employee who is subject to a review and consideration of criminal history because of a change in ownership, management, policy or practice.”
If you run criminal background checks at any time after an initial pre-employment background check, this is a critical distinction.
TIMING OF CRIMINAL HISTORY INQUIRIES:
Employers are still prohibited from requesting and using criminal history information until after a conditional offer of employment. With the new regulations, this prohibition extends to current employees in the context of decisions regarding promotion, training, discipline, lay-off, or termination.
INDIVIDUALIZED ASSESSMENT & ADVERSE ACTION:
The regulations continue to require an employer’s individualized assessment to include consideration of (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 offense, and (c) the nature of the job held or sought.
The new regulations provide employers greater clarity when conducting this assessment by including numerous examples of evidence that may be relevant to each of the three factors. For instance, when considering the nature and gravity of the offense or conduct, the employer may consider whether a disability, trauma, domestic or dating violence, sexual assault or stalking, human trafficking, duress, or other similar factors contributed to the offense or conduct.
The regulations now require an employer to conduct an “initial” individualized assessment before sending the notice of preliminary decision. (This is a notice that is similar but not identical to a FCRA pre-adverse action notice. If you are using the Frasco Profiles hosted Adverse Action templates your California pre-adverse action notice meets the criteria for California notice of preliminary decision.) This is important because information relevant to the job-related assessment is usually not available to the employer and, thus, employers often rely on their preliminary (pre-adverse action) notice to request the information. Requiring an employer to send the preliminary notice “after conducting an initial individualized assessment” suggests that employers may either need to make initial contact with the applicant or employee before sending the first notice or gather the relevant information through some other means (i.e., criminal history self-disclosure with specific questions relevant to the assessment) before the first notice.
The regulations set out numerous examples of the types of rehabilitation or mitigating evidence, including documentary evidence, that an applicant or employee may provide, and that an employer must consider. As an example, if offered, an employer must consider whether “trauma, domestic or dating violence, sexual assault, stalking, human trafficking, duress, or other similar factors contributed to the offense or conduct” and whether “a disability, including but not limited to 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.”
Employers may neither mandate certain information nor refuse to receive and consider any information the applicant or employee presents whether by his or her own submission or by submission from others at the individual’s request. Employers also may not require an individual to disclose their status as a survivor of domestic or dating violence, sexual assault, or stalking and may not mandate that an individual produce medical records and/or disclose the existence of a disability or diagnosis.
The regulations continue to require an employer to conduct a “reassessment” if an individual provides rehabilitation or mitigating evidence in response to the preliminary decision notice, but now includes additional factors an employer may want to consider as part of this reassessment.
The preliminary decision notice still must (a) identify the criminal history that is potentially disqualifying, (b) include a copy of the conviction history report and any other document that includes information about the conviction history, and (c) notice of the right to respond before the employer makes a final decision. Applicants or employees have at least five business days from receipt of this notice to respond. The regulations remove any ambiguity over when the notice is “received” by clarifying that if an employer sends the notice through a format that does not provide a confirmation of receipt, then the notice is deemed received based on the method of delivery: (a) five calendar days if mailed within California; (b) 10 calendar days if mailed outside of California; (c) 20 calendar days if mailed outside of the United States; and (d) two business days if emailed.
The regulations still do not require an employer to disclose to the applicant or employee its specific analysis of the criminal history, although an employer can choose to do so.
The regulations expand the definition of “employer” to include, among other things, “any entity that evaluates an applicant’s conviction history on behalf of an employer, or acts as an agent of an employer, directly or indirectly.” Whether this broad definition will reach actions by consumer reporting agencies on behalf of their customers remains to be seen.
The regulations continue to require an employer to advise in the final decision letter of the individual’s “right to contest the decision by filing a complaint with the Civil Rights Department.”
Employers cannot put anything in a job advertisement or posting that indicates a person with a criminal history will not be considered.
VOLUNTEERED CRIMINAL HISTORY INFORMATION
Unless an exception applies, if an individual volunteers information about their criminal history before receiving a conditional offer, the employer may not consider the information until after it has decided whether to make a conditional employment offer.
The regulations continue to exempt employers who are required by any state, federal, or local law to conduct criminal background checks or to restrict employment based on criminal history. The regulations clarify, however, that the exemption applies only if the employer is required by law to conduct the background check—the exemption does not cover an employer if a state, federal, or local law requires another entity, such as an occupational licensing board, to conduct the background check.
OTHER STATES THAT MERIT A CLOSER LOOK:
All employers should consider a privileged review of their background screening practices by experienced counsel. Beyond California, several jurisdictions also have their own laws concerning “job relatedness” requirements for an employer’s use of criminal history information, including Illinois, New York, and Wisconsin, among others. And several have enhanced notice requirements that go beyond what the FCRA requires, including Illinois, New York City, and Seattle, among others.
LITIGATION OVER TECHNICAL VIOLATIONS IS ON THE RISE
Employers continue to be targeted in hyper-technical FCRA class action lawsuits over the forms and process they use to obtain background checks. As a result, employers are well advised to consider evaluating background check processes to ensure compliance with the FCRA, similar state fair credit reporting statutes, and substantive employment laws.
This Update is not intended to provide legal advice and is only a brief summary of the new regulations. We strongly urge you to schedule time with counsel to thoroughly review your entire criminal screening process and implement any necessary changes in advance of October 1, 2023. Portions of this update are reprinted with permission by Seyfarth Shaw LLP.
Frasco® Profiles is NOT a law firm. The information contained in this post is for general informational purposes only. We are not providing legal advice and strongly recommend consulting your legal resources before taking any action.