California Bill Would Limit Use of Criminal History Information

​A bill introduced in the California Legislature, called the Fair Chance Act of 2023, would further restrict how employers can use information about the criminal histories of job seekers and employees. The legislation would expand upon the state's Fair Chance Act, which took effect in 2018.

"I wouldn't be surprised if something like this had a good chance of passing," said Rod Fliegel, an attorney with Littler in San Francisco.

The existing law prohibits California employers with five or more employees from asking about criminal convictions on job applications or considering the conviction history of an applicant before extending a conditional job offer to them. If an employer intends to deny an applicant a job because of a conviction history, the employer must make an individualized assessment of whether the applicant's conviction history has a direct and adverse relationship to the specific duties of the job.

The new bill goes further by requiring employers to send the applicant a written notice that lists the disqualifying convictions that form the basis for rescinding a job offer, as well as a copy of the conviction history report. This notice obligation would be "burdensome for employers that do a lot of hiring," Fliegel said. "It's not a small ask."

Spencer Waldron, an attorney with Fisher Phillips in Irvine, Calif., agreed that the bill could be bad for employers.

"There are valid concerns that employers have who want to do background checks in a proper manner to make sure someone is fit for a position, and if they're not able to do that, it's going to impact employers in a negative way," he said.

If the bill passes, employers would not be permitted to take adverse action against an employee or discriminate against an employee in the terms, conditions or privileges of employment based on their arrest or conviction history. In some cases, using an individual's arrest record in making employment decisions could violate the federal Civil Rights Act of 1964.

Existing California law requires employers to disclose in writing that they are asking for a criminal background report. Under the new bill, employers would also have to provide information about any laws or regulations that impose employment restrictions on the basis of a conviction, plus the specific duties of the position that may be impacted by a conviction and could result in an adverse employment action.

In addition, employers would be prohibited from requesting or requiring that applicants share their personal social media profiles to reveal information about their criminal history.

In job ads and applications, California employers generally cannot state certain limitations related to criminal history, such as by using the phrases "no felonies," "background check required" or "must have clean record."

However, the 2023 bill doesn't prevent employers from conducting a background check when federal or state law requires it for certain positions, such as teachers and school bus drivers. The bill only applies to criminal history, and employers remain free to do other types of background checks, such as verifying a person's identity, home address, education credentials and previous employers.

"There are some jobs where you have to run the background check, and there are jobs where employers are prohibited from hiring someone with certain crimes in their past," Fliegel explained.

Other provisions in the bill would:

• After violations, allow courts to require employers to conduct training for employees on the statute.
• Require employers to retain records relating to an individual's employment and promotion applications and give the records to the individual and the state Civil Rights Department in any administrative enforcement proceeding.
• Clarify that criminal history records obtained by employers are confidential and not subject to disclosure under the California Public Records Act, except as specified.

The bill "would impose civil penalties for violations based on the size of the employer and how many times they have violated the law," said Connie Chen, an attorney with Jackson Lewis in Los Angeles.

Tread Carefully and Train Regularly

When using background checks, weighing the legal risks and your hiring preferences is not a simple calculation.

"Often, employers believe that if an applicant or employee has any type of conviction, they can automatically take an adverse employment action," Chen said. "However, even under the current [California] Fair Chance Act, there is a lot more to consider and a process to undertake before making a decision such as revoking a job offer."

Fliegel recommended doing an audit of your background check program with help from an attorney. Companies should regularly train employees who administer a background check program on any legal compliance updates, especially if there are new hires in the department that handles background checks, he said.

More than 7 million California residents have conviction histories of some kind, including 2 million working-age Californians living with a felony record, according to the legislation.

Hiring people with a criminal record is often called second-chance hiring. A 2021 survey by SHRM Research found that 85 percent of HR leaders and 81 percent of business leaders said second-chance hires perform the same as or better than other employees. Additional data shows that second-chance hiring can reduce employee turnover while boosting employment rates.