CA Employers: New Requirements When Using Criminal History in Employment Decisions

Employers in California who use criminal background checks to make business decisions (such as hiring, promoting or terminating) will soon be faced with additional rules. Effective July 1, 2017, the California Department of Fair Employment and Housing (FEHC) will impose new restrictions as described below.

While California employers will still be permitted to consider criminal information when making employment related decisions, they should be sure that a business-related need exists to use this information. 

Under current law, California employers are prohibited from considering the following:

  • Arrests that did not result in a conviction;
  • “Certain” marijuana related infractions and non-felony convictions older than two years (the new regulations expand this to include “any” non-felony marijuana convictions instead of “certain”);
  • Referral to or participation in a pre-trial or post-trial diversion program;
  • Arrest, detention, processing, diversion, supervision, adjudication, or court disposition while a person was in juvenile court; and
  • Any convictions that have been sealed, judicially dismissed, expunged, or statutorily eradicated by law.

The new regulations also prohibit California employers from using criminal information when making employment decisions if doing so would result in an adverse impact (such as failure to hire, decline to promote, or termination of employment) on individuals within a protected class such as race, national origin or gender. While “ex-offender” is not considered a protected class by federal or California law, a candidate or employee could file a discrimination suit against the employer if the criminal information would result in an adverse impact on a class of individuals that are protected.

If a discrimination complaint is filed, the initial burden is the candidate or employee’s to prove that the employer’s criminal background check policy has an adverse impact on a protected class. To do this, the candidate could provide conviction statistics or other evidence that shows an adverse impact exists.

If the candidate or employee is successful in proving the adverse impact, the burden then shifts to the employer to show that the policy exists for job-related reasons as a business necessity. An employer must consider the nature and gravity of the criminal record, the amount of time that has passed since the offense and/or completion of sentence, and the nature of the job held or sought.

Employers can either perform individualized assessments of convictions or have a “bright-line” conviction disqualification rule.

A “bright-line” disqualification is defined by the FEHC to mean that the employer does not take into account the candidate or employee’s “individualized circumstances” when making a decision based on the criminal background check.

Conversely, the employer can perform an individualized assessment which takes into account the candidate or employee’s specific circumstances and qualifications before an employment decision is made.

Employers must provide candidates and employees that have criminal records that may warrant adverse action with a notice of the potential adverse action due to the criminal record. The candidate or employee must be given a reasonable amount of time to explain why the action should not e taken in their particular circumstance. Then the employer must determine whether any information provided by the candidate or employee should prevent the adverse action from taking place.

If the employer meets its burden of proving business necessity, the employee then has one final chance of prevailing if he or she can show that there is a less discriminatory practice or policy that could be implemented that would help the employer obtain the same goal as effectively as the policy or practice being challenged.

Prior to an employer taking an adverse action based on criminal records, the new regulations require that the employer provides the candidate or employee with notice of the disqualifying criminal record and an opportunity to present proof that the record is inaccurate. If proof is provided that the record is inaccurate, then the employer cannot use the record when making the employment decision. Note: This notice is only required if the employer obtains the criminal record from ANY source other than through the candidate or employee directly. This differs from the federal requirement under the Fair Credit Reporting Act (FCRA) which only requires notice if the information is obtained from a third party background check report. This is also different from some local notice requirements such as those in Los Angeles or San Francisco.

The FEHC regulations do recognize that some employers may be subject to state or federal laws or regulations that prohibit individuals with certain criminal records from holding certain positions, require a background screening process before hiring for certain positions, or affect eligibility for occupational licenses. In these situations, compliance with the state or federal laws or regulations can constitute as a defense to adverse impact claims under California law.

Employers in California who currently use criminal background checks to make employment decisions should review their policies to ensure compliance with not only the new FEHC regulations but also federal regulations and any applicable local regulations.