Employers with operations in California should be vigilant about compliance with the protections against criminal record discrimination in the California Fair Employment and Housing Act (FEHA). The FEHA prohibits employers from inquiring into and using specific criminal record information. The FEHA also mandates procedures for evaluating such information and providing notice to applicants. The Department of Fair Employment and Housing (DFEH) is ramping up its efforts to enforce these protections, including exercising its authority to issue investigative subpoenas, written interrogatories, and requests for production of documents.

The Fair Chance Act

The FEHA, as amended in 2018, makes it unlawful for covered California employers with at least five employees to:

• Include on any application for employment any question that seeks the disclosure of an applicant's conviction history;
• Inquire into or consider the conviction history of an applicant before the applicant receives a conditional offer of employment; and
• Consider, distribute, or disseminate information about any of the following while conducting a criminal history background check in connection with any application for employment: (1) an arrest that did not result in a conviction, subject to the exceptions in Labor Code § 432.7(a)(1) and (f); (2) referral to or participation in a pretrial or post-trial diversion program; and (3) convictions that have been sealed, dismissed, expunged or statutorily eradicated pursuant to law.

The regulations implementing the FEHA now state that an "applicant" includes individuals who begin work before, but are still subject to, the employer's review of their criminal history. This amendment is especially relevant in light of the pandemic. Court closures have resulted in considerable backlogs and staffing shortages. As a result, some employers have allowed applicants to begin work before receiving criminal background check reports.

Once an offer has been made and the criminal history obtained, the FEHA further provides that the employer cannot deny an applicant a position solely or in part because of conviction history until the employer performs an individualized assessment. This assessment must justify denying the applicant the position by linking relevant conviction history with specific job duties of the position sought. In particular, the assessment must consider:

• The nature and gravity of the offense and conduct;
• The time that has passed since the offense or conduct and completion of the sentence; and
• The nature of the job held or sought.

Once the employer makes a preliminary decision that the applicant's conviction history is disqualifying, the employer must notify the applicant of this preliminary decision in writing. The employer is not required to justify or explain to the applicant its reasoning for making the preliminary decision, however. But, the employer must:

• Provide the written notice of the disqualifying conviction or convictions that are the basis for the preliminary decision to rescind the offer;
• Include a copy of the conviction history report, if any; and
• Provide an explanation that the applicant has the right to respond to the notice within at least five business days, and that the response may include submission of evidence challenging the accuracy of the conviction record, or evidence of rehabilitation or mitigating circumstances or both.¹

The employer cannot make any final determination based on conviction history during this five-business-day period. If the applicant timely notifies the employer in writing that they are disputing the conviction history and are taking steps to obtain evidence to support this, the employer must provide five additional business days to respond to the notice. The employer must also consider any additional evidence or documents the applicant provides in response to the notice before making a final decision.

If the employer ultimately decides to deny an applicant based on the conviction history, the employer must notify the applicant of this in writing, and include notification of any existing procedure the employer has to challenge the decision, as well as notification of the applicant's right to file a complaint with the DFEH.

Increased Enforcement

The DFEH did not rigorously enforce the FEHA's protections against criminal record discrimination in 2018 and 2019. Last year, enforcement efforts started to increase, and this trend is continuing in 2021, including instances where the DFEH is exercising its authority to issue investigative subpoenas, written interrogatories, and requests for production of documents. Recent examples of broad informational requests from the DFEH include: forms used to ask applicants about any criminal records; forms used to obtain authorization for criminal background checks; policies relating to the use of criminal history in hiring decisions; and documents related to decisions not to hire any applicant since January 1, 2018, for reasons relating to their criminal history. The DFEH has resolved some charges by requiring employers to conduct specific training on the Fair Chance Act. It remains to be seen whether the DFEH will begin to file lawsuits, but that seems likely.

Takeaways

Employers should conduct a privileged review of their criminal record screening policies to ensure compliance with the FEHA, including documents presented to applicants, internal documents used to assess criminal record information, and notices provided to applicants. Conducting training and audits is prudent.

Employers should consider whether they are subject to the fair chance ordinances in the City of Los Angeles and City of San Francisco.² These related laws are not preempted by the FEHA and impose even more onerous obligations on covered employers.

Employers should conduct a privileged review of their policies and procedures for complying with the fair credit reporting laws, because such lawsuits, including nationwide class actions, are a mainstay of the plaintiff's bar in California and other states. The requirements of the federal Fair Credit Reporting Act (FCRA) and California statutes are similar but not identical. These laws are hyper-technical, and according to some courts, demand literal compliance. Again, training and audits are recommended.

Last year, the Fifth Circuit invalided the EEOC's Enforcement Guidance on using arrest and conviction records for employment purposes. The EEOC nonetheless continues to pursue some Title VII claims. Employers should continue to monitor developments in this related area of the law. Some settlements have required both programmatic changes and payouts.

Posted: March 9, 2021

¹ If notice is transmitted through a format that does not provide a confirmation of receipt, such as a written notice mailed by an employer without tracking-delivery enabled, the notice shall be deemed received five calendar days after the mailing is deposited for delivery for California addresses, 10 calendar days after the mailing for addresses outside of California, and 20 calendar days after mailing for addresses outside of the U.S.

² See also Rod Fliegel and Jennifer Mora, "Ban-the-Box" and Beyond: Employers That Do Business In or Contract with the City of San Francisco Should Review Sweeping Restrictions Regarding Inquiries Into, and the Use of, Criminal Records, Littler Insight (Feb. 14, 2014).