California Modifies Regulation for Considering Criminal History in Employment Decisions

The California Civil Rights Department recently modified the regulation (2 CCR § 11017.1) associated with California’s Fair Chance Act.  The regulation addresses an employer’s restrictions and obligations for considering an applicant or employee’s criminal history.  The modified regulation took effect on October 1, 2023.

Employers should be aware of the modifications to this regulation, and should review their current hiring policies and practices and make any necessary or appropriate revisions.  We discuss some of the key modifications and clarifications below.

Modifications & Clarifications to the Individualized Assessment

California’s Fair Chance Act generally prohibits employers from inquiring about or using an applicant’s criminal history before the employer makes the applicant a conditional offer of employment, with some limited exceptions.

When an employer intends to deny an applicant due to conviction history (either solely or in part) a position it conditionally offered to the applicant, the employer must first conduct an individualized assessment of whether the applicant’s conviction history has a direct and adverse relationship with the specific duties of the job that justify denying the applicant the position.  As part of the individualized assessment, the employer must consider, at minimum, the following factors:

1. 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.

The modified regulation provides examples of the types of information that employers may consider for each of the above factors.  First, consideration of the nature and gravity of the offense or conduct may include:

• • The specific personal conduct of the applicant that resulted in the conviction;
  • Whether the harm was to property or people;
  • The degree of the harm (e.g., amount of loss in theft);
  • The permanence of the harm;
  • The context in which the offense occurred;
  • Whether a disability, including but not limited to a 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;
  • Whether trauma, domestic or dating violence, sexual assault, stalking, human trafficking, duress, or other similar factors contributed to the offense or conduct; and/or
  • The age of the applicant when the conduct occurred.

Second, consideration of the time that has passed since the offense or conduct and/or completion of the sentence may include:

• • The amount of time that has passed since the conduct underlying the conviction, which may significantly predate the conviction itself; and/or
  • When the conviction led to incarceration, the amount of time that has passed since the applicant’s release from incarceration.

Third, consideration of the nature of the job held or sought may include:

• • The specific duties of the job;
  • Whether the context in which the conviction occurred is likely to arise in the workplace; and/or
  • Whether the type or degree of harm that resulted from the conviction is likely to occur in the workplace.

The modified regulation states that an applicant’s possession of a benefit, privilege, or right required for the performance of a job by a licensing, regulatory, or government agency or board is probative of the applicant’s conviction history not being directly and adversely related to the specific duties of that job.

The modified regulation also requires employers to consider any evidence of rehabilitation or mitigating circumstances that is voluntarily provided by the applicant, or by another party at the applicant’s request, before or during the individualized assessment.

Modifications & Clarifications to Employer’s Notice Obligations

The modified regulations also amend and expand upon an employer’s notice obligations when, after conducting the individualized assessment, the employer makes a preliminary decision that the applicant’s conviction history disqualifies the applicant from the employment conditionally offered.  In that event, an employer is required to provide written notice to the applicant that contains all of the following:

1. 1. Notice of the disqualifying conviction or convictions that are the basis for the preliminary decision to rescind the offer.
   2. A copy of the conviction history report utilized or relied on by the employer, if any (e.g., consumer reports, credit reports, public records, results of internet searches, news articles, or any other writing containing information related to the conviction history that was utilized or relied upon by the employer).
   3. Notice of the applicant’s right to respond to the notice before the preliminary decision rescinding the offer of employment becomes final.
   4. An explanation informing the applicant that, if the applicant chooses to respond, the response may include submission of (a) evidence challenging the accuracy of the conviction history report that is the basis for the preliminary decision to rescind the offer, or (b) evidence of rehabilitation or mitigating circumstances.
   5. Notice of the deadline for the applicant to respond, if the applicant chooses to do so, which must be at least five business days from the date of the applicant’s receipt of the notice (the modified regulation provides direction on determining when notice is received based on various methods of transmission).

The modified regulation provides a number of examples of evidence, including documentary evidence, of rehabilitation or mitigating circumstances that applicants may provide.  Employers cannot require applicants to provide evidence of rehabilitation or mitigating circumstances.  If, however, applicants choose to provide that information, employers must accept it.

The modified regulation further prohibits employers from taking a number of actions during this process, including:

1. 1. Requiring an applicant to provide a specific type of documentary evidence (e.g., a police report as evidence of domestic or dating violence);
   2. Disqualifying an applicant from the employment conditionally offered for failing to provide any specific type of documents or other evidence;
   3. Requiring an applicant to disclose their status as a survivor of domestic or dating violence, sexual assault, stalking, or comparable statuses; and/or
   4. Requiring an applicant to produce medical records and/or disclose the existence of a disability or diagnosis.

As under the prior regulation, if an applicant provides timely written notice to the employer that the applicant disputes the accuracy of the conviction history and is taking specific steps to obtain evidence supporting the applicant’s assertion, then the applicant must receive at least five additional business days to respond before the employer’s decision to rescind the conditional employment offer becomes final.

Also as under the prior regulation, employers must consider any information submitted by the applicant before making a final decision regarding whether or not to rescind the conditional offer of employment.  The modified regulation, however, provides that when considering evidence of rehabilitation or mitigating circumstances, employers may consider the following factors in addition to those set forth above as part of the individualized assessment:

1. 1. When the conviction led to incarceration, the applicant’s conduct during incarceration, including participation in work and educational or rehabilitative programming and other prosocial conduct;
   2. The applicant’s employment history since the conviction or completion of sentence;
   3. The applicant’s community service and engagement since the conviction or completion of sentence, including but not limited to volunteer work for a community organization, engagement with a religious group or organization, participation in a support or recovery group, and other types of civic participation; and/or
   4. The applicant’s other rehabilitative efforts since the completion of sentence or conviction or mitigating factors.

Employers remain obligated to provide written notice to an applicant when the employer makes a final decision to rescind the conditional offer and deny an application based solely or in part on the applicant’s conviction history.  Employers may use the sample Final Notice to Revoke Job Offer form, and other forms, from the California Civil Rights Department.

Expanded Definition of “Applicant”

The modified regulation expands the definition of “applicant” to generally include:

1. 1. Any individual who files a written application or, where an employer or other covered entity does not provide an application form, any individual who otherwise indicates a specific desire to an employer or other covered entity to be considered for employment;
   2. Individuals who have been conditionally offered employment, even if they have commenced employment when the employer undertakes a post-conditional offer review and consideration of criminal history;
   3. Existing employees who have applied or indicated a specific desire to be considered for a different position with their current employer; and
   4. An existing employee who is subjected to a review and consideration of criminal history because of a change in ownership, management, policy, or practice.

Certain Positions Remain Exempt from the Pre-Conditional Offer Inquiry/Use Prohibition

Under the modified regulations, certain positions continue to be exempt from the prohibition on pre-conditional offer criminal history inquiry and use.  For example, employers may continue to inquire about or use criminal history before a conditional offer of employment for positions with criminal justice agencies, or for positions for which a state, federal, or local law requires an employer to conduct criminal background checks or to restrict employment based on criminal history.

The modified regulations do, however, clarify that in order for the exemption to apply for positions for which a state, federal, or local law requires an employer to conduct criminal background checks or to restrict employment based on criminal history, the applicable law must require that the employer – and not another entity (e.g., an occupational licensing board) – conduct the criminal background check.

Modifications & Clarifications to the “Job Related and Consistent with Business Necessity” Burden Shifting

If an applicant or employee demonstrates that an employer’s policy or practice of considering criminal convictions creates an adverse impact on applicants or employees based on classifications protected by the Fair Employment and Housing Act, the burden shifts to the employer to establish that the policy or practice is nonetheless justifiable because it is job-related and consistent with business necessity.  In doing so, the employer must take into account at least the following factors:

1. 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.

The modified regulation clarifies that if an employer demonstrates that its policy or practice of considering criminal convictions is job-related and consistent with business necessity, adversely impacted employees or applicants may still prevail in a claim against the employer if they can demonstrate that there is a less discriminatory policy or practice that serves the employer’s goals as effectively as the challenged policy or practice, such as 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.

Final Note

As this article does not address every aspect of the modified regulation, employers are encouraged to contact trusted legal counsel to assist with fully understanding all of the modifications and their impact on the employer’s hiring policies and practices.