California Changes Employment Regulations Regarding Criminal History

Modifications Made to the Regulations

On June 24, 2023, some modifications to California’s Fair Chance Act (FCA) were approved. These go into effect on October 1, 2023. The Fair Chance Act is designed to improve job opportunities for former criminal offenders, thereby reducing their recidivism and lessening their dependence on public funding and services. The FCA regulates when employers may order criminal background checks and what they may do with any information they discover.

The modifications expand the definition of who is covered under the act and address job advertising and screening for the Work Opportunity Credit. They also clarify what an employer must do when they elect to rescind a job offer because of criminal history.

1. Expanded Definition of Employer

Under the new rules, more entities are defined as employers under the Fair Chance Act. The definition now includes labor contractors, union hiring halls and client employers. It also includes any entity that evaluates the applicant’s criminal history on behalf of an employer. It includes staffing agencies and groups that obtain workers from a pool or availability list.

2. Expanded Definition of Covered Employees

The new regulations add two types of employees that will now be covered under the act:

• Those who are seeking a different job with their current employer.
• Those who are being reviewed because of a change in ownership or change in management policy.

3. Advertising

Employers will now be explicitly prohibited from publishing advertising or postings stating that people with criminal history will not be considered.

4. Work Opportunity Credit (WOTC)

Employers may request that applicants fill out IRS Form 8850, to determine the possibility of applying for WOTC, even before making a conditional offer. However, they may not inquire how an applicant qualified for WOTC, and they may not use information for any purpose other than to apply for the credit.

5. More Clarity about Rescinding an Offer

Currently, employers with five or more employees may not ask a candidate about criminal history or order a criminal background check until they have made a conditional job offer. If they discover a criminal past, they may not rescind unless the history is directly related to the job in question or would present a hazard in the workplace. If they decide to rescind, they must notify the candidate in writing of what they discovered, inform them of their rights under the FCA and allow the applicant an opportunity to rebut or to provide mitigating information.

Under the new modifications, there are some clarifying additions to the FCA:

• Even if an applicant volunteers information about criminal history, the employer may not consider it in deciding whether to make a conditional offer.
• A decision to rescind an offer must be evidence-based and must consider the nature and gravity of the offense as well as how much time has passed. The decision must also consider the nature of the job and whether the offense is specifically related to the job.
• The applicant has the option of providing evidence of rehabilitation or mitigating circumstances but is not required to do so. This information may be provided only by the applicant or at the applicant’s request. The employer is not allowed to require or demand it.
• If the employer makes a preliminary decision to rescind a job offer based on criminal history, they must notify the applicant in writing. The notice must include a copy of the criminal history report, a notice of the applicant’s right to respond, an explanation of the type of evidence the applicant may submit and a notice of the applicant’s deadline to respond.
• There are specific actions that an employer may not take. They may not refuse to accept the applicant’s evidence or require the applicant to submit any specific type of evidence. They may not disqualify the applicant for refusing to provide evidence. They may not require the applicant to produce medical records, to disclose a disability or to disclose that they are a survivor of domestic abuse, sexual assault, stalking or similar acts.
• There are actions the employer may consider in a decision to rescind. They may look at conduct during incarceration, employment history since conviction or completion of sentence, volunteerism, engagement with a religious group, participation in a recovery group and civic participation.

Bottom Line

The latest California regulatory changes expand the scope of who falls under the FCA and provide more clarity around what an employer may do in considering criminal history during the hiring process.

While the latest changes to California’s Fair Chance Act may not impose large new burdens on companies that hire in California, they underscore the importance of keeping abreast with the most current regulations to ensure that employers remain compliant. There are almost always pending bills in the California legislature that may more narrowly define what an employer can and cannot do in the hiring process.

CRAs face an ongoing challenge in retrieving thorough background information for their clients while keeping their searches compliant. Eagle Eye Screening Solutions provides the wholesale service that CRAs count on for compliant, accurate search results that integrate into their screening processes.