California Approves Amended Regulations on Employers' Consideration of Criminal History

The California Office of Administrative Law approved the Civil Rights Council’s proposed amendments to regulations regarding consideration of criminal history in employment. Effective October 1, 2023, employers must comply with individualized assessment and other preexisting California Fair Chance Act requirements for many current employees as well as applicants. The amended regulations both clarify and supplement these requirements.

This LawFlash does not cover all aspects of the amended regulations but highlights some of the notable changes.

AMENDED DEFINITIONS BROADEN SCOPE OF CALIFORNIA FAIR CHANCE ACT

While the amended regulations do not fundamentally change the nature of the California Fair Chance Act (the Act) or the required procedures for employers to consider applicants’ criminal history, the regulations apply these requirements to entities and employment contexts that were previously not covered by the law.

For example, the definition of “Applicant” now also includes (1) current employees who have applied or indicated a specific desire to be considered for a different position with their current employer and (2) current employees who are subjected to review and consideration of criminal history because of a change in ownership, management, policy, or practice.

The definition of “Employer” now also includes (1) a labor contractor and a client employer; (2) any staffing agency; (3) any entity that selects, obtains, or is provided workers from a pool or availability list; and (4) any entity that evaluates the applicant’s conviction history on behalf of an employer, or acts as an agent of an employer, directly or indirectly. As such, the amended definition includes background check vendors that evaluate an applicant’s conviction history on behalf of an employer.

GUIDANCE PROVIDED ON INITIAL INDIVIDUALIZED ASSESSMENT FACTORS

Under the Act, employers have been required to conduct an individualized assessment before making a preliminary decision to rescind an applicant’s conditional offer of employment because of a direct and adverse relationship between the applicant’s criminal history and the specific duties of the job, such that a decision to deny employment was job-related and consistent with business necessity. The amended regulations clarify that the individualized assessment must be “a reasoned, evidence-based determination.”

As before, employers must consider the following three factors when conducting an individualized assessment: (1) the nature and gravity of the offense or conduct; (2) the time that has passed since the offense or conduct and/or completion of the sentence; and (3) the nature of the job held or sought.

For each of these three factors, the amended regulations provide that “consideration of this factor may include but is not limited to” and then list the types of information that employers may consider under each factor.

For the “nature and gravity of the offense or conduct” factor, the amended regulations identify the following: (1) the specific personal conduct of the applicant that resulted in the conviction; (2) whether the harm was to property or people; (3) the degree of the harm (e.g., amount of loss in theft); (4) the permanence of the harm; (5) the context in which the offense occurred; (6) whether a disability, including but not limited to a past drug addiction or mental impairment, contributed to the offense or conduct, and if so, whether the likelihood of harm arising from similar conduct could be sufficiently mitigated or eliminated by a reasonable accommodation, or whether the disability has been mitigated or eliminated by treatment or otherwise; (7) whether trauma, domestic or dating violence, sexual assault, stalking, human trafficking, duress, or other similar factors contributed to the offense or conduct; and/or (8) the age of the applicant when the conduct occurred.

For “the time that has passed since the offense or conduct and/or completion of the sentence” the amended regulations identify the following: (1) the amount of time that has passed since the conduct underlying the conviction, which may significantly predate the conviction itself and (2) when the conviction led to incarceration, the amount of time that has passed since the applicant’s release from incarceration.

For “the nature of the job held or sought” factor, the amended regulations identify the following: (1) the specific duties of the job; (2) whether the context in which the conviction occurred is likely to arise in the workplace; and/or (3) whether the type or degree of harm that resulted from the conviction is likely to occur in the workplace.

In addition, the amended regulations require employers to consider—as part of the initial individualized assessment—any evidence of rehabilitation or mitigating circumstances that is “voluntarily provided by the applicant, or by another party at the applicant’s request, before or during the initial individualized assessment.”

GUIDANCE PROVIDED ON CONSIDERATION OF EVIDENCE OF REHABILITATION OR MITIGATING CIRCUMSTANCES

Employers previously were only required to consider evidence of rehabilitation or mitigating circumstances as part of the individualized reassessment (if an applicant provided such evidence after receiving a pre-adverse action notice). Now, there are instances as noted above where employers must consider such evidence as part of the initial individualized assessment.

In addition, the amended regulations provide further guidance regarding employers’ consideration of evidence of rehabilitation and mitigating circumstances. Evidence of rehabilitation or mitigating circumstances may include, but is not limited to the following:

• The length and consistency of employment history before and after the offense or conduct.
• The facts or circumstances surrounding the offense or conduct.
• The applicant’s current or former participation in self-improvement efforts, including but not limited to school, job training, counseling, community service, and/or a rehabilitation program, including in-custody programs.
• Whether trauma, domestic or dating violence, sexual assault, stalking, human trafficking, duress, or other similar factors contributed to the offense or conduct.
• The age of the applicant when the conduct occurred.
• Whether a disability, including but not limited to a past drug addiction or mental impairment, contributed to the offense or conduct, and, if so, whether the likelihood of harm arising from similar conduct could be sufficiently mitigated or eliminated by a reasonable accommodation, or whether the disability has been mitigated or eliminated by treatment or otherwise.
• The likelihood that similar conduct will recur.
• Whether the applicant is bonded under a federal, state, or local bonding program.
• The fact that the applicant is seeking employment.
• Successful completion, or compliance with the terms and conditions, of probation or parole.
• When the conviction led to incarceration, the applicant’s conduct during incarceration, including participation in work and educational or rehabilitative programming and other prosocial conduct.
• The applicant’s employment history since the conviction or completion of sentence.
• The applicant’s community service and engagement since the conviction or completion of sentence, including but not limited to volunteer work for a community organization, engagement with a religious group or organization, participation in a support or recovery group, and other types of civic participation.
• The applicant’s other rehabilitative efforts since the completion of the sentence or conviction or other mitigating factors.

While the amended regulations use permissive language (e.g., “may include”) rather than compulsory language (e.g., “must include”), employers with access to the above types of information may face increased scrutiny if they ignore or fail to consider such information during individualized assessments.

As a best practice, cautious employers may wish to consider such information when it is available and record that they have done so in written individualized assessment documents that can be used as evidence to defend against potential claims. For example, most employers will have information about the length and consistency of an applicant’s employment history prior to conducting an initial individualized assessment.

The amended regulations also provide examples of the kinds of documents that applicants may optionally and voluntarily choose to provide as evidence of rehabilitation and/or mitigating circumstances to employers. However, the regulations prohibit employers from requiring applicants to provide any specific type of evidence or disqualifying applicants for failing to provide any specific type of evidence. For example, employers may not require an applicant to provide a police report or court records to corroborate the truthfulness of preferred mitigating circumstances.

EMPLOYERS SEEKING THE WORK OPPORTUNITY TAX CREDIT

The amended regulations helpfully clarify that employers seeking the Work Opportunity Tax Credit (WOTC) may, prior to extending conditional offers of employment, require applicants to complete IRS form 8850 (Pre-Screening Notice and Certification Request for the Work Opportunity Credit) or its equivalent.

These requests will not constitute unlawful inquiries into applicants’ criminal history so long as the documents and information collected are used solely for the purpose of applying for the tax credit and are maintained in confidential files separate from the applicant’s general personnel file.

CONCLUSION

The amended regulations add increased depth and complexity to the existing requirements for employers when inquiring about and considering applicants’ criminal history. Accordingly, employers should review their existing policies and practices in this area, particularly those that pertain to the conducting of individualized assessments and reassessments of applicants’ criminal histories, to ensure they are in compliance with the amended regulations.