What the Modifications to California’s Fair Chance Act Mean for You

The new San Diego Fair Chance Ordinance, effective October 1, 2024, adds another layer to California’s Fair Chance Act by expanding protections for job applicants with criminal histories. 

Employers in San Diego County must now comply with specific local regulations, including notifying applicants of their right to file a complaint with the California Civil Rights Department (CRD) and the San Diego Office of Labor Standards and Enforcement (OLSE). These requirements aim to ensure further fair hiring practices by enhancing oversight and enforcement at the local level.

This is in addition to the July 2023 California Civil Rights Council’s updates to regulations enforced by the state’s Fair Chance Act. 

These regulations affect how California employers (and those who employ California residents) consider criminal history in employment decisions.

To date, the Fair Chance Act has primarily required California employers with five or more employees to (in short) wait until after a conditional offer of employment to inquire about or consider criminal history, conduct individualized job-related assessments before rejecting applicants due to criminal history, and follow a two-step notice process if action is taken based on the criminal history (similar in many ways to that of the Fair Credit Reporting Act). 

Below are the major changes to the Fair Chance Act that California employers should know (and care) about—the updates around which they should adapt their hiring and background check processes to stay compliant. 

Even if your organization doesn’t operate in California, it’s always good practice to keep a pulse on changing ban-the-box and fair employment laws in states like California and New York since they’re usually the earliest adopters of new workplace legislation and often represent what’s to (eventually) come for other states. 

Expanded Definitions for Employers and Applicants 

The updated FCA rules broaden the term “employer” beyond its definition of “a labor contractor and a client employer.” Now, “employer” also encompasses “any direct or joint employer, any organization that assesses an applicant’s criminal record for an employer, or represents an employer either directly or indirectly; any staffing agency; and any group that chooses, acquires, or receives workers from a roster or availability list.”

The FCA modifications also introduce two new types of “applicants,” which now include current employees who have applied for (or have expressed an explicit desire to be considered for) a different position within the company and current employees who are subject to criminal record review due to a change in ownership, management, internal policy, or procedures.  

Changes to the Way Employers Can Consider Criminal History Before Conditional Offer of Employment

Under new FCA regulations, employers are prohibited from including language in job advertisements, job postings, applications, or other hiring content and materials stating that candidates with criminal histories will not be considered for hire. 

Additionally, while FCA regulations continue to exempt employers who are required by law to conduct criminal background checks, they now explicitly stipulate that that exemption does not apply to an employer if state, federal, or local law requires another entity, such as an occupational licensing board, to conduct the background check. 

Finally, unless an exception applies, new rules outline that even if an applicant voluntarily shares information about their criminal history before receiving a conditional offer, the employer may not consider the information until it has decided whether to make a conditional offer.

Changes to the Way Employers Can Consider Criminal History After Conditional Offer of Employment

Under updated FCA law, if an employer intends to rescind a conditional offer, it must follow specific procedures before doing so, including: 

• Initial Individualized Assessment
  
  Regulations now require that employers conduct an “initial” individualized assessment before sending the notice of preliminary decision (a notice similar to the FCRA’s pre-adverse action notice). During this assessment, the employer must consider (a) the nature and gravity of the offense, (b) the time that has passed since the offense, and (3) the nature of the job held or sought.
  
  New rules also offer employers more tangible instructions for conducting this initial assessment, including several examples of evidence that may be relevant to each of the above three considerations. For example, when considering the nature and gravity of the offense or conduct, employers are now allowed to consider whether a disability, trauma, domestic or dating violence, sexual assault or stalking, human trafficking, duress, or other similar factors contributed to the offense or conduct.
  
  During the initial assessment, evidence around rehabilitation or mitigating circumstances voluntarily provided by the applicant must be considered.
• Opportunity for Applicant Response after Notice of Preliminary Decision and Reassessment
  FCA regulations now explicitly state that an employer may not refuse to accept additional evidence voluntarily provided by an applicant at any stage of the hiring process, require an applicant to submit additional evidence, disqualify an applicant for failing to provide any specific type of documents, or evidence, require an applicant to disclose the applicant’s status as an abuse survivor or require an applicant to produce medical records and/or disclose the existence of a disability or diagnosis. Evidence of rehabilitation or mitigating circumstances from the applicant or by a third party at the applicant’s request is optional.
  
  Additionally, FCA regulations continue to require employers to conduct a “reassessment” if an individual provides rehabilitation evidence or mitigating circumstances evidence in response to the preliminary decision notice, but now includes additional factors an employer may want to consider as part of this reassessment—like the applicant’s conduct during incarceration, the applicant’s employment history since conviction or sentence completion, community service and engagement since the conviction or stance completion, and more. 

Key Takeaways for California Employers 

Employers should first determine whether the expanded definition of “employer” pertains to their specific business to stay compliant with updated California laws under the Fair Chance Act and avoid fines. 

If yes, those employers should change their company policies regarding the consideration of criminal history to cover the two new categories of applicants under the expanded definition. They should update their process for denying an applicant employment based on criminal record history to match FCA procedural requirements (i.e., initial assessment before notice of preliminary decision). 

California employers should also audit job advertisements and postings for non-compliant references to criminal history and edit them accordingly. 

As always, they should provide learning and training on staying compliant with updated employment laws for all current and future employees involved in hiring (i.e., hiring managers and HR professionals).

This article is not intended to provide legal advice. Please check with your advisors before making any changes.