California 'Bans the Box,' Prohibits Salary History Queries

​California employers will need to modify their job applications and update their training for those involved in the hiring process after California Gov. Jerry Brown signed two new laws, both effective Jan. 1.

[SHRM members-only toolkit: Managing the Hiring Process in California]

Statewide Ban-the-Box Law Signed

California became the 10th state to require private-sector employers to "ban the box" on employment applications asking about applicants' criminal conviction histories when Brown signed A.B. 1008 on Oct. 14.

The law prohibits most public and private employers with five or more employees from asking applicants about criminal conviction histories until after a conditional offer of employment has been made. Positions required by law to undergo employment screening are exempted.

"It is not a surprise that California enacted this law given how many other states and cities have similar laws, including since several cities in California such as San Francisco and Los Angeles have recently enacted their own versions," said Michael Kalt, an attorney with Wilson Turner Kosmo in San Diego and the government affairs director for the California State Council of SHRM.

Kalt added that while well-intentioned, the new law's requirements may delay hiring decisions and increase HR's administrative burden. "The law may create unintended consequences such as employers avoiding conviction history checks, which may increase the likelihood of hiring someone who presents a danger, or encourage some employers to simply avoid making initial offers to people they improperly suspect may have a conviction history," he said. 

Assemblyman Kevin McCarty, D-Sacramento, who sponsored the legislation, said that the intent of the law is to give applicants with a criminal record the opportunity to be judged on their qualifications and not their criminal histories. "After a conditional offer has been made there is nothing preventing an employer from conducting a background check," he said.

Roughly 7 million Californians, have an arrest or conviction record that can undermine their efforts to obtain employment, according to McCarty's office.

Nationwide, 29 states and over 150 cities and counties have adopted ban-the-box laws, and in 2013, California passed a similar law that applied to state agencies, cities and counties. Ten states and 15 major cities have adopted ban-the-box hiring laws that cover both public- and private-sector employers.

"For many California employers, this will necessitate revising initial employment applications to remove boxes or questions that ask applicants to disclose criminal convictions," said Benjamin Ebbink, an attorney with Fisher Phillips in Sacramento. "If the employer has a supplemental application or form that is only provided to applicants after a conditional offer of employment has been made, that document may continue to ask about conviction history."

If an employer wants to deny an applicant a position based on reviewing conviction history, it must make an individualized assessment and provide the applicant with an opportunity to respond before making a final decision, Ebbink said.

The individualized assessment must consider the nature and gravity of the criminal offense, the time that has passed since the offense and the completion of the sentence, and the nature of the job sought, added Jennifer Mora, senior counsel in the labor and employment department of Seyfarth Shaw's Los Angeles office. "The employer may but [is not required to] document the individualized assessment."

Mora explained that if the individualized assessment leads to a decision that the applicant's conviction history is disqualifying, then the employer must provide a written notice which goes beyond what the federal Fair Credit Reporting Act requires, including:

• The conviction at issue.
  
• A copy of the conviction history report.
  
• The applicant's right to respond to the notice before the employer's decision becomes final.
  
• A deadline for that response.
  
• An explanation that the response may include evidence challenging the accuracy of the conviction history and evidence of rehabilitation or mitigating circumstances.
  

The employer must consider any information the applicant submits disputing the accuracy of the conviction history before making a final decision, Mora said.

She noted that if an employer then makes a final decision to deny employment based on conviction history, a second written notification must be provided to the applicant, which must include:

• The final denial.
  
• Notice of any existing procedure to challenge the decision or request reconsideration, and the right to file a complaint with the California Department of Fair Employment and Housing.
  

Kalt added that the new law does not preempt conflicting municipal ordinances such as those in Los Angeles and San Francisco, adding to potential confusion, and that the law does not provide any protections against negligent hiring lawsuits. 

"Employers may find themselves in the uncomfortable position of choosing between not hiring an applicant with a conviction history and risking a lawsuit for employment discrimination or hiring the individual and risking a negligent hiring or retention lawsuit if there is a resulting incident or problem," Ebbink said.

There is also concern about how the law would relate to or overlap with the new California Fair Employment and Housing Council regulations on criminal history and adverse impact, and whether employers will be confused about their obligations between the two.

Kalt provided the following tips for HR professionals doing business in California:

• Update applications to remove inquiries related to conviction history.
  
• Train hiring managers and supervisors, as well as any third-party recruiters, to avoid inquiring about an applicant's conviction history until after a conditional offer of employment has been extended.
  
• Train hiring managers and any third-party investigators on the types of information that may be obtained during a background search for conviction history information.
  
• Train those involved in the hiring decision about the factors that must be considered when determining whether prior convictions disqualify an applicant.
  
• Develop protocols and notices for the process where the employer notifies applicants of potentially disqualifying convictions and provides an opportunity to respond.
  
• Review local ordinances for additional requirements or limitations regarding conviction history information.
  

Questions About Past Salaries Are Soon Off-Limits

A.B. 168 restricts employers' use of salary history information, which includes compensation and benefits. Signed by Gov. Brown on Oct. 13, the law bars employers from requesting the pay history of job applicants. Employers may consider salary history information that an applicant voluntarily offers, however. Employers are also required to give applicants the pay scale for a position upon request.

California joins a growing number of states and cities preventing employers from asking about applicants' past salaries. San Francisco recently passed an ordinance that will go into effect on July 1, 2018.

Supporters of the law say that basing salaries on prior compensation allows wage discrimination to follow people from job to job. "However, employers have generally argued that they utilize salary history information for legitimate, nondiscriminatory reasons, such as matching their job offers to current market rates," Ebbink said. "Employers have argued that prohibiting them from reviewing salary history information will result in wasted time for both parties where the employee's expectations or requirements for compensation far exceed what the employer is able to offer for the position."

According to federal data from 2015, the median wages for women in California are 84.8 percent of those for men.

Prior to Jan. 1, HR should carefully review the company's employment applications and hiring processes to ensure that they do not inquire into, or rely upon, salary history information, Ebbink said.

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