New Regulation in California Regarding Use of Criminal Background Checks for Employment Decisions

On July 1, 2017, the California Fair Employment and Housing Council (FEHC) will implement a regulation limiting the use of an applicant or employee’s criminal history in employment decisions, including hiring, firing and promotion. Under the regulation, employers are still prohibited from requesting information about certain convictions, as addressed in Labor Code sections 432.7 to 432.9. However, the regulation is silent as to whether misdemeanors identified in a pre-employment criminal background check may be considered by employers. Additionally, when an employment decision is based, even in part, on information obtained from a source other than the applicant or employee, such as a criminal background check, the regulation will require the employer to inform the applicant or employee.

Under the regulation, if an individual, who is a member of a protected class such as race, national origin or gender, believes an employer’s reliance on a prior criminal conviction adversely impacted hiring, firing or promotion, the individual may file a discrimination claim under the Fair Employment and Housing Act (FEHA). “Adverse impact” is determined though findings of a disproportionate effect of criminal background information on a certain protected class. Additionally, an individual may file a FEHA claim if the employer failed to provide notice that the employment decision, in whole or in part, was based on a criminal background check. Notably, several jurisdictions have adopted a Ban-the-Box law, which requires that employers notify an individual of an adverse employment decision based on a criminal background screening even if the information was disclosed by the individual.

An individual may establish a presumption of “adverse impact” through local, state or national conviction statistics supporting a nexus between the employment decision and members of the protected class. For example, an applicant may show that statistically the employer’s criminal background screening disqualifies most of those in that applicant’s protected class. If the individual proffers evidence of a nexus, an employer may still overcome the presumption of “adverse impact” through evidence showing other reasons, including demographics of the applicant pool, for the results. Additionally, the employer may show the particular position requires exclusion of applicants with criminal convictions. Nevertheless, an individual may still prevail if he or she proves there are less-discriminatory policies or practices, including limits on the types of convictions used to exclude an applicant, which effectively serve the employer’s goals.

In anticipation of the new regulation, employers may want to consider the following:

1. Limit the scope of criminal background checks to certain job positions, and identify offenses that may demonstrate unfitness for that job position.

2. Avoid a blanket policy that denies applicants of a position because of a criminal conviction unless the position, such as a health care or child care provider, requires a clear criminal background.

3. If a criminal background check is warranted, implement a narrow policy that demonstrates it is (i) job-related, (ii) a business necessity and (iii) allows for individual assessment of each candidate.

4. Train managers, hiring officials and decision-makers on implementation of the procedures.