California Fair Chance Act: Updates Employers Need to Know About Criminal History Rules

Employers in California must follow stricter rules on criminal history checks under the updated Fair Chance Act from October 2023. New regulations expand definitions, require tailored evaluations, and mandate written notices before rejecting candidates due to conviction records.

By Douglas Wade, Attorney

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Table of Contents

1. Introduction

2. What’s changing?

3. Fair Chance Act Implications for Employers

Introduction

Employers in California will have to follow new guidelines under the Fair Chance Act (FCA) regarding the use of a person’s criminal past when making hiring choices as of October 1, 2023. Section 11017.1(Title 2) of the California Code of Regulations is affected by these regulations, which also include new procedures that businesses must adhere to when taking criminal histories into account as they make hiring or other employment decisions.

The rules supplement California’s already extensive set of rules that employers must abide by when considering criminal histories when making hiring decisions.

What’s changing?

Extended Definition of “Employer” as per the new Fair Chance Act: The definition of “employer” is broadened by the regulations, which go beyond the current definition: “any joint or direct employer, any organization that assesses an applicant’s criminal history on behalf of a company or functions as a company’s agent, either indirectly or directly, any staffing vendor, and any organization that chooses, acquires, or receives workers from an inventory or availability list, as well as a labor vendors and a client employer.”
Extended Definition of Applicant: Current staff members who have submitted applications for or expressed an intention to be weighed for an alternate position with their present employer, as well as those who are subjected to a scrutiny and evaluation of their criminal history due to a change in control, management, policy, or practice, are now included in the altered regulations’ definition of an applicant.
Individualized Evaluation: In accordance with the new Fair Chance Act, before hiring someone with a criminal past, companies must perform an individual evaluation of each applicant. Such assessment is made with consideration of the nature of the work, the period since indictment, and the severity and character of a crime.
Standard of “Direct Relevance”: Employers are mandated to consider only criminal histories that are judged as directly relevant to a role/position. It means that employers are not allowed to reject an applicant solely because of their criminal past unless the conviction has a particular and apparent adverse bearing on the employment requirements.
Business Necessity and Job-Relatedness: Employers have to demonstrate that their screening needs are both applicable to their work and crucial to the functioning of their enterprises. The policies that are very general or vague and also biased towards subjects with criminal records will be considered discriminatory.
Disclosures & Notifications: In case the criminal record of an applicant was a consideration in failing to select them, the employer must provide them with written notice. Thereafter, the candidate will get an opportunity to respond and provide additional information regarding their records.
Fair Chance Procedure: There is now a “fair chance procedure.” When an employer decides to disqualify an applicant due to their criminal history, an elaborate procedure must be followed. During this process, the applicant can respond, dispute errors, or submit evidence of rehabilitation.

Fair Chance Act Implications for Employers

Employers have to review and revise their own hiring procedures and policies, in case they want to ensure compliance with the new standards set by the Fair Employment & Housing Act. This includes the introduction of the customized evaluation and equal opportunity procedure, the modification of the application forms, and the training of managers and human resource staff members in the novelties. Violating these Fair Chance Act regulations/laws may lead to discrimination lawsuits with costly legal consequences.

Things to remember

Companies are not allowed to inquire or even consider the criminal history of a job candidate before making a conditional job offer. This is despite a background check being required by different organizations, e.g., occupational licensing agencies.
There are several exceptions, including occupations in police enforcement, some farm labor vendors, and jobs where taking criminal background into account is required by law.
These guidelines under the Fair Chance Act are applicable to prospective hires, current workers looking for different positions, and workers having their criminal histories reviewed because of ownership, management, policy, or practice changes.
An employer cannot take into account criminal background information that an applicant willingly provides prior to a conditional offer until after the offer choice.
Before making a conditional offer, employers may request that candidates fill out IRS Form 8850 (or comparable forms); however, the data should only be utilized for Work Opportunity Tax Credit reasons.
Arrests minus a conviction and some criminal offenses, such as non-felony convictions for marijuana over the age of two, are never taken into account.
An employer must perform a customized evaluation, taking into account the type of offense, the amount of time since the offense, the nature of the particular work, and the relationship between the conviction record and the position, if they plan to reject an applicant on the basis of their conviction history.
Employers are required to take into account any evidence of rehab or alleviating factors that an applicant may submit.
Written notification of the employer’s initial decision to reject the applicant must be given, along with information regarding the convictions taken into account, the supporting documentation, and the applicant’s right to reply.
Candidates must answer within a minimum of five business days, and they must be given an extra five days if they ask for more time.
In addition to providing information on how to contest the decision or lodge an appeal with the California Civil Rights Department, the employer is required to notify the applicant of the decision that was made.

To be fully informed/ready for the Fair Chance Act changes that took effect on 1^st October 2023, employers must make note of these changes.

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California Fair Chance Act: Updates Employers Need to Know About Criminal History Rules

Introduction

What’s changing?

Fair Chance Act Implications for Employers

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