California Modifies Regulations Regarding Employment Background Checks

Recently, the California Office of Administrative Law (OAL) approved the California Civil Rights Council’s (CRD’s) modifications to the state’s Fair Chance Act (FCA or “Ban the Box”) and related regulations that pertain to employment background checks in California. Under the FCA, most employers in California may not ask an applicant about their conviction history before making a conditional job offer. Laws in California often pave the way for similar legislation in other states. Meanwhile, California minimum wage increases take place annually. Numerous city and county minimum wage rate increases in the state took effect on July 1st, 2023.

Overview of California’s Fair Chance Act

The Fair Chance Act (FCA), also known as “Ban the Box,” prohibits employers with five or more employees from asking an applicant about their conviction history before making a conditional job offer. Only after a job offer can California employers run employment background checks. The FCA went into effect on January 1st, 2018, and applies to both private and government employees. Limited exceptions to the FCA include:

• employers with less than five employees, and
• employees applying for specific positions like those that require background checks by law.

After a covered employer makes a conditional job offer, they may run a background check. If an employment background check brings up a conviction, they may rescind the job offer after conducting an individualized assessment that considers the time since the conviction and whether the conviction is directly and adversely related to specific job duties. Additionally, the employer must notify the applicant in writing and allow them at least five days to respond. Besides state laws that may prohibit employers from inquiring about an applicant’s conviction history, employers must also be aware of specific federally illegal interview questions that may lead to hiring discrimination.

Modified Regulations on California Employment Background Checks

The CRD’s modifications to the Fair Chance Act’s employment background checks regulations clarify several provisions and requirements under the FCA. As discussed previously, if an employer makes a preliminary decision after an individual assessment that an applicant’s conviction history disqualifies them, the employer must notify the applicant in writing. Modifications to the FCA state that such written notice must include a notice of the disqualifying conviction, a copy of the conviction history report, notice of the applicant’s right to respond before finalizing the decision, the type of evidence an applicant may submit to challenge the conviction history or show rehabilitation, and the response deadline. Other modifications affecting employment background checks include the following:

• Individualized assessments must be reasoned, evidence-based determinations that provide details on what specifically in a conviction history has a direct and adverse relation to specific job duties.
• Evidence of rehabilitation or mitigation is optional.
• Examples of evidence an employer may consider include an applicant’s conduct during incarceration, subsequent employment history since their conviction, community service, and other rehabilitative efforts.

Finally, the modifications add labor contractors, union hiring halls, and client employers to the covered employers under the FCA. Employers may also require applicants to complete IRS Form 8850 before making a conditional offer only if the information is specifically used to apply for a work opportunity tax credit. These modifications to California employment background checks take effect on October 1st, 2023.