California Changes Background Check Procedures

The California Civil Rights Council recently amended the regulations interpreting California’s 2018 Fair Chance Act, which go into effect October 1, 2023. The new regulations add restrictions, make clarifications, and significantly change the California background check process.

Quick Hits

• On July 24, 2023, California’s Office of Administrative Law approved the Civil Rights Council’s amendments to the regulations regarding the Fair Chance Act, which is the state’s ban-the-box law.
• The amendments affect, among others, provisions of the law relating to the consideration of conviction history prior to and after a conditional offer of employment and employers’ obligations when taking adverse action because of conviction history.
• Amendments to California’s Fair Chance Act go into effect on October 1, 2023.

Current Law

The current California Fair Chance Act requires employers considering taking post-offer adverse action based on an applicant’s conviction history to conduct “an … 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.” In conducting this assessment, employers must consider three initial factors:  (1) the nature and gravity of the offense or conduct; (2) the time that has passed since the offense or conduct and completion of the sentence; and (3) the nature of the job held or sought.

After completing the assessment, the existing law requires an employer to send a written notice (a pre-adverse action letter) to the applicant of the potential adverse action; allow at least five business days for the applicant to respond with additional information, including evidence of the applicant’s rehabilitation and/or mitigating circumstances; and consider any new information before making a final decision. If the employer ultimately decides to revoke its conditional offer based upon criminal history information, it must send a letter (an adverse action letter) notifying the applicant of the decision.

More Expansive Coverage

The revised regulations also expand the existing law’s coverage by clarifying that the law applies not just to applicants and current employees seeking another position within the company, but also to employees whose backgrounds are checked in connection with a change in control of the company or a change in the employer’s policies or practices. The new regulations also expressly indicate that employers may not consider criminal offense information received directly from applicants or employees prior to a conditional offer. Finally, under the new regulations, employers are prohibited from advertising or including in any recruiting materials that they will not consider applicants with criminal histories.

Changes to the Pre-Adverse Action Process

The amended regulations stand to change the pre-adverse action process in the following ways.

Consideration of Information Likely Not in Employer’s Possession

The Fair Chance Act requires employers to conduct an analysis on California applicants and employee-applicants at two different stages based upon evidence in the employer’s possession: (1) an initial assessment and (2) reassessment based on any information provided in response to a written pre-adverse action notice specifying the potentially disqualifying offense.

The new regulations redefine and greatly expand the scope of the initial assessment to be completed by listing sub-factors that employers must consider, including but not limited to, the following:

• “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;
• the age of the applicant when the conduct occurred;

…

• 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;

…

• 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.”

Some of these factors touch on protected characteristics, creating some tension between these requirements and other federal and state law protections.

Because employers are unlikely to possess much of this evidence at the time of the initial assessment, employers may want to consider sending a letter inviting the applicant or employee to provide information, before sending the pre-adverse action letter. Note that the new regulations expressly prohibit employers from (1) mandating that individuals provide this information or (2) refusing to consider any information provided.

Increased Employer Waiting Periods

The time period within which an applicant may provide information in response to any pre-adverse action letter is longer under the new regulations. The Civil Rights Council has clarified the former five-business-day period as five business days after the applicant has received the pre-adverse action letter.

The new regulations dictate that an employer must either (a) send the letter using a method with delivery receipt or (b) wait a specific number of days before receipt may be assumed to have occurred: two business days after sending via email; five calendar days after mailing to a California address; ten calendar days after mailing to an address elsewhere in the United States; and twenty calendar days after mailing outside of the United States.

Further Defined Evidence of Rehabilitation and Mitigating Circumstances

Also during the pre-adverse action process, the current law requires employers to consider evidence of rehabilitation or mitigating circumstances, if the individual provides it. The new regulations set forth a broad list of the types of such evidence, including but not limited to:

• “the length and consistency of employment history before and after the offense or conduct;
• the facts or circumstances surrounding the offense or conduct;
• the applicant’s current or former participation in self-improvement efforts, including but not limited to school, job training, counseling, community service, and/or a rehabilitation program, including in-custody programs;
• whether trauma, domestic or dating violence, sexual assault, stalking, human trafficking, duress, or other similar factors contributed to the offense or conduct;
• the age of the applicant when the conduct 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;
• the likelihood that similar conduct will recur;
• whether the applicant is bonded under a federal, state, or local bonding program;
• the fact that the applicant is seeking employment; and/or
• successful completion, or compliance with the terms and conditions, of probation or parole.
• 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;
• the applicant’s employment history since the conviction or completion of sentence;
• 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
• the applicant’s other rehabilitative efforts since the completion of sentence or conviction or mitigating factors not captured in the above subfactors.”

Although some of these “evidence of rehabilitation or mitigating circumstances” factors are identical or similar to the initial assessment factors listed above, the new regulations repeat some initial assessment factors and add others, so we have listed all above, including any repeats.

Other California Background Check Requirements

In addition to the Civil Rights Council’s new regulations, other recent developments in California highlight the state’s attempts to discourage employers from conducting background checks. Earlier this year, the state legislature introduced (but has not yet passed) Senate Bill (SB) 809, which would restrict criminal history checks to positions for which federal, state, or local law require them. Further, on July 1, 2023, SB 731, which increases the speed by which certain criminal history records are expunged, became effective. (California law prohibits employers from considering expunged records.) In 2022, due to a court decision and California Governor Gavin Newsom’s subsequent veto of a bill correcting the issue, driver’s license numbers and dates of birth in court records became largely inaccessible to the public, including consumer reporting agencies (CRAs). As a result, CRAs have been struggling to verify the identities of criminal defendants in state court searches, seriously limiting CRAs’ ability to report criminal records and delaying background check results significantly for employers.

Information regarding background check requirements under federal, state, D.C., and major locality laws is available in the firm’s Client Portal (here if you already have Client Portal access; here and here for additional information). Client Portal complimentary Basic-level access is available to all Ogletree Deakins clients. Client Portal subscribers have deeper access to additional materials, which are updated as laws change. Client Portal materials on the new California requirements for Premium-level subscribers will include a California step-by-step process/cheat sheet, California pre-adverse action letters, and California law summaries. For more information on the Client Portal or a Client Portal subscription, reach out to clientportal@ogletreedeakins.com.

There are many additional nuances to California’s new background check regulations and its effects on how employers can conduct background checks. For an in-depth review of these and other considerations, join us for our upcoming webinar, “New California Criminal Background Check Requirements,” featuring James R. Silvers (shareholder, Greenville), Gustavo A. Suárez (of counsel, Greenville), and Leslie E. Wallis (shareholder, Los Angeles) on Thursday, September 7, 2023, at 4 p.m. Eastern. Register here.