After more than a year of administrative activity pertaining to California’s Fair Chance Act (FCA), the California Civil Rights Council issued final modifications to the FCA’s regulations (the “Revised Regulations”). The Revised Regulations are effective as of October 1, 2023.

The FCA is a “ban the box” law that restricts California employers with five or more employees from asking about an applicant’s criminal history until after the employer has made a conditional offer of employment. The FCA allows employers to conduct a criminal background check after making a conditional job offer. Importantly, if an employer wants to withdraw the offer because of information disclosed by the check, the employer must first conduct an individualized assessment of the applicant’s criminal history.

The Revised Regulations make several important updates to employers’ ability to consider and rely upon an applicant’s criminal history when taking adverse action. Therefore, it is vital that California employers understand the full scope of their new compliance obligations under the FCA. Below, we highlight three of the most significant changes resulting from the Revised Regulations.

I.  Expanded Coverage

The Revised Regulations expand the definition of both “employer” and “applicant” so that more entities and individuals fall within the scope of the FCA.

Previously, FCA regulations defined covered “employers” to mean (i) labor contractors (i.e., anyone who supplies a client employer with workers or maintains a pool or availability list of workers to perform labor within the client employer’s usual course of business) and (ii) client employers (i.e., those who engage such workers). The Revised Regulations expand the definition of “employer” to include (1) joint employers, (2) entities that evaluate an applicant’s criminal history on an employer’s behalf or as the employer’s agent, (3) staffing agencies, and (4) entities that procure workers from pools or availability lists.

Previously, the FCA regulations defined “applicant” to include only those individuals who had been conditionally offered employment. The Revised Regulations amend the definition to add (1) existing employees who have applied for, or indicated a specific desire to be considered for, a different position with their current employer, and (2) existing employees who are subject to a review and consideration of criminal history because of a change in ownership, management, policy, or practice.  

II.  Clarification of Employer Prohibitions

With limited exceptions, the Revised Regulations continue to prohibit employers from inquiring about or considering an applicant’s criminal history prior to extending a conditional job offer (the “Pre-Offer Prohibition"). To help employers understand how to comply with this obligation, the Revised Regulations add detail as to when and how the Pre-Offer Prohibition applies, including:

• clarifying that the Pre-Offer Prohibition includes gleaning criminal history information through internet searches (regardless of whether such searches are directed at discovering criminal history), not only through employment applications and background checks;
• confirming that the Pre-Offer Prohibition also applies to criminal history that an applicant voluntarily discloses prior to receiving a conditional job offer;
• making explicit that employers are prohibited from including statements in job advertisements, postings, applications, or other materials that persons with criminal histories will not be considered for hire, such as “No Felons” or “Must Have Clean Record”; and
• making clear that employers that impermissibly inquire into an applicant’s criminal history prior to making a conditional offer of employment may not, after extending a conditional job offer, then use an applicant’s failure to disclose criminal history prior to the conditional offer as a factor in subsequent employment decisions, including denial of the position conditionally offered.

The Revised Regulations also include additional information clarifying as to when the Pre-Offer Prohibition does not apply. With respect to situations in which the employer is a state or local agency, the previous regulations provided that the Pre-Offer Prohibition did not apply if the employer was required by law to conduct criminal background checks. The Revised Regulations clarify that for this exemption to apply, the legal requirement must extend directly to the employer or the employer’s agent. If another entity, such as an occupational licensing board, is the party actually required to conduct the relevant criminal background check, then the exemption does not apply, and the employer must comply with the Pre-Offer Prohibition.

III.  Clarified Process for Withdrawing a Conditional Offer of Employment

Most of the changes resulting from the Revised Regulations relate to the process an employer must follow to withdraw a job offer because of the applicant’s conviction history.

Under the FCA, if an employer intends to deny employment based solely or in part on the applicant’s conviction history, the employer must first conduct an individualized assessment of whether the applicant’s conviction history has a direct and adverse relationship with the specific duties of the job sufficient to justify denying the applicant the position. Importantly, the Revised Regulations specify that an applicant’s possession of a benefit, privilege, or right required for the performance of a job by a governmental licensing or regulatory agency or board is probative of the applicant’s conviction history not being directly and adversely related to the specific duties of that job. In other words, for example, if a licensing board has granted the applicant a license despite the applicant’s conviction history, it will be more difficult for an employer to establish that the conviction alone disqualifies the individual from the job.  

Moreover, the Revised Regulations make explicit that employers must conduct a reasoned, evidence-based, individualized assessment (the “Initial Individualized Assessment”) before sending the applicant notice of its preliminary decision (also called a “pre-adverse action notice”) and, thereafter, must conduct a reassessment after reviewing any additional information that the applicant submits in response to the pre-adverse action notice (the “Reassessment”).

The Initial Individualized Assessment

The FCA provides that employers must consider the following factors in conducting the Initial 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 position held or sought. The Revised Regulations add a list of considerations an employer may take into account in evaluating each of the three factors, as summarized below.

1.  The Nature and Gravity of the Offense or Conduct

The Revised Regulations invite employers to consider:

• the specific personal conduct of the applicant that resulted in the conviction;
• whether the harm was to property or people;
• the degree of the harm (e.g., amount of loss in theft);
• the permanence of the harm;
• the context in which the offense occurred;
• whether 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;
• whether trauma, domestic or dating violence, sexual assault, stalking, human trafficking, duress, or other similar factors contributed to the offense or conduct; and/or
• the age of the applicant when the conduct occurred.

Employers should, however, bear in mind that there are prohibitions against asking applicants about medical conditions or disabilities. Such information should only be considered if relevant to the proposed job and volunteered by an applicant.

2.  The Time That Has Passed Since the Offense or Conduct and/or Completion of the Sentence

The Revised Regulations invite employers to consider:

• the amount of time that has passed since the conduct underlying the conviction (which may significantly predate the conviction itself) and/or
• when the conviction led to incarceration, the amount of time that has passed since the applicant’s release from incarceration.

3.  The Nature of the Position Held or Sought

The Revised Regulations invite employers to consider:

• the specific duties of the job,
• whether the context in which the conviction occurred is likely to arise in the workplace, and/or
• whether the type or degree of harm that resulted from the conviction is likely to occur in the workplace.

Notice of the Preliminary Decision and Opportunity to Respond

If, after completing the Initial Individualized Assessment, the employer makes a preliminary decision that the applicant’s conviction history disqualifies them from the offered job, the FCA requires the employer to provide the applicant with the pre-adverse action notice, which includes an explanation informing the applicant that they have at least five business days to submit evidence challenging the accuracy of the conviction history report and/or evidence of rehabilitation or mitigating circumstances (collectively, “Relevant Evidence”) should they wish to do so.

The Revised Regulations clarify that the five business days begin to run from the date of the applicant’s receipt of the pre-adverse action notice and that if the notice is sent by mail or other method without tracking, the notice is deemed received five calendar days after the mailing is deposited for delivery for California addresses (10 or 20 days for mailing outside of the state or country, respectively).

The Revised Regulations also provide additional examples of the types of information an applicant might submit to an employer, which would constitute Relevant Evidence, specifically:

• the applicant’s 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 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; and/or
• successful completion, or compliance with the terms and conditions, of probation or parole.

In connection with an applicant’s response to an employer’s pre-adverse action notice, the Revised Regulations prohibit employers from:

• refusing to accept additional evidence voluntarily provided by an applicant, or by another party at the applicant’s request, at any stage of the hiring process (including prior to making a preliminary decision to rescind the applicant’s job offer);
• requiring an applicant to submit any Relevant Evidence;
• requiring an applicant to provide a specific type of documentary evidence (e.g., a police report as evidence of domestic or dating violence), or disqualifying an applicant from the employment conditionally offered for failing to provide any specific type of documents or other evidence;
• requiring an applicant to disclose their status as a survivor of domestic or dating violence, sexual assault, stalking, or comparable statuses; and/or
• requiring an applicant to produce medical records and/or disclose the existence of a disability or diagnosis.

The Reassessment

Under the Revised Regulations, during the Reassessment, employers remain obligated to consider any information that an applicant (or third party) submits to the employer after it has made a preliminary decision (including Relevant Evidence). The Revised Regulations also add four factors employers may evaluate during the Reassessment if an employee submits information regarding rehabilitation or mitigating circumstances, specifically:

• 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 the 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; and/or
• the applicant’s other rehabilitative efforts since the completion of sentence or conviction or mitigating factors not captured in the above subfactors.

After assessing all the required factors, if an employer makes a final decision not to hire the applicant, the employer remains obligated to notify the applicant in writing of this decision by sending a final adverse action notice.

What California Employers Should Do Now

• Review and revise recruiting and background screening policies and procedures to align with all required steps of the adverse action process, including, but not limited to, the following:
  • conducting an Initial Individualized Assessment before sending out a pre-adverse action notice;
  • providing at least five business days from receipt of the pre-adverse action notice (or add five calendar days for a response if mailing in-state) for the applicant to respond to the notice;
  • performing a Reassessment, including a review of any new information submitted; and
  • making sure the pre-adverse action and final adverse action notices have all of the required elements.
• Train human resources professionals and hiring managers on the revised process for the withdrawal of a conditional offer of employment.
• If using any third-party services to conduct criminal background checks, confirm that such entities understand the Revised Regulations and are similarly prepared to comply with them.

Michelle Hamamah, a former Associate in the firm’s Los Angeles office, contributed significantly to the preparation of this Insight.

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