On July 24, the California Office of Administrative Law approved the Civil Rights Council’s (the Council) proposed amendment to California’s Employment Regulations Relating to Criminal History, which are set to become effective on October 1, 2023. Among other changes, the amendment modifies the existing regulations regarding employers’ investigation of a job applicant’s criminal history. Notably, the amendment expands the definition of “employer” under those regulations in such a way that could potentially implicate a background screener conducting a background check on behalf of an employer.
The regulations regarding employers’ criminal history inquiries originally took effect in July 2017, and mandated a process that employers must follow when considering criminal information as part of an employment decision. In a nutshell, the regulations prohibit employers from “inquiring into, considering, distributing, or disseminating” information related to a job applicant’s criminal history until after the employer has made a conditional offer of employment; prohibit inquiring into or considering certain types of criminal records at any stage of the employment decision; require employers to conduct an “individualized assessment” before rescinding a conditional offer of employment based upon the applicant’s conviction history; and require a specific notice to be provided to a job applicant before adverse action is taken.
The new amendment to the regulations largely clarifies and adds details to the existing obligations. However, tucked away within the amendment is a revision regarding to whom the regulations apply. Previously, the regulations applied to “employers” and a specifically defined list of “other covered entities,” including labor contractors and union hiring halls. The new amendment, however, adds a definition for the term “employer” that includes “any entity that evaluates the application’s conviction history on behalf of an employer, or acts as an agent of an employer, directly or indirectly.” That broad definition ostensibly could include a background screener that is allegedly “evaluating” the applicant’s criminal history on behalf of an employer in the course of conducting a background screening.
Such a broad reach of the regulations’ definition of “employer” appears to be more than theoretical. During the notice and comment period, one commentator urged the Council to adopt a broader definition of employer, specifically so the regulations would apply to “a third party like a background check company . . . where it exerts control over access to the job market or employment opportunities, and its discriminatory conduct interferes with an applicant’s access to the same, and where it acts as an agent of the direct employer.” In its Final Statement of Reasons for the amendment, the Council stated it “agrees for the most part with this comment,” and adopted a slightly varied version of the definition proposed by the comment.
The impact of the regulations on background screeners could be significant. For instance, since the regulations prohibit “employers” from inquiring into criminal history prior to making a conditional offer of employment, background screeners preparing a consumer report for an employer may need to ensure the employer has made a conditional offer of employment before evaluating criminal history as part of the screening. The regulations’ prohibition on “inquiring” about certain types of records or records beyond a certain age could also now extend to background screeners’ collection of public record information, even if the prohibited information does not end up in a consumer report. The amended regulations provide no clarity on how the obligations would apply to a background screener.
Given the new definition of “employer” and the Council’s seeming acknowledgement of the amendment’s scope, background screeners should carefully evaluate their compliance strategy in consultation with experienced counsel.
