The Fair Employment and Housing Council published the final text for the “Consideration of Criminal History in Employment Decisions” regulation on March 27, 2017.  This regulation, effective July 1, 2017, impacts employers’ consideration of criminal history information for employment purposes, including those related to layoffs.  Employers are well-advised to take a fresh look at their policies and procedures related to criminal background checks and decisioning off of those checks.  Likewise, while the regulation is directed to employers’ considerations, consumer reporting agencies should take heed of this regulation as providing guidance on what should be included in a consumer report prepared for employment purposes under California law.

Under the final text, employers who are statutorily required to check applicant and employee criminal backgrounds likely have a rebuttable defense to a claim of adverse impact.  Applicants or employees may still prevail if they can show there was a “less discriminatory alternative” that serves the employers goals as well as the criminal history consideration policies.

There are several key requirements to note:

 1. Business Necessity

An employer is now required to have a business necessity for considering criminal history information in addition to the previous “job-related” requirement.  Previously, business necessity (i.e., necessary to the safe and efficient operation of the business and effectively fulfills the business purpose it is meant to serve) was an affirmative defense to employment discrimination under the Fair Employment and Housing Act, not a prerequisite to considering criminal history information for employment purposes.

2. Appropriately Tailored Policy

Specifically, an employer must consider factors such as the nature and gravity of the offense, the time that has passed since the offense and the nature of the job held or sought in order to appropriately tailor a criminal conviction consideration policy to be job-related and consistent with business necessity.  If an employer considers a conviction to be a disqualification without looking at the individual circumstances, then the employer must be prepared to show that there is an unacceptable level of risk posed by any person with that conviction and that the conviction itself has a “direct and specific negative bearing on the person’s ability to perform” his or her necessary employment duties.  Otherwise, the employer must conduct an individualized assessment.

3. Pre-Adverse Action Requirements

If the criminal conviction information is obtained by anyone other than the applicant or the employee (i.e., a consumer report or research conducted by the employer), an employer must provide the applicant or employee with a pre-adverse action notice, including notification of the specific disqualifying conviction.  This is a requirement beyond Section 604(b)(3) of the Fair Credit Reporting Action.  The employer is then required to wait a reasonable amount of time and provide a reasonable opportunity for the applicant or employee to prove that the information is factually inaccurate.  The employer must consider all additional information provided as applied to the individual and the job-relatedness and consistency with a business necessity of the policy as applied overall.

4. Specific Convictions Prohibited from Consideration

This regulation also prohibits the consideration of a wide range of criminal history components, including arrest and certain other juvenile court records and records related to non-felony convictions for possession of marijuana that are two or more years old.  Importantly, employers cannot consider these records even if there is no adverse impact (i.e., discrimination) to individuals on a basis enumerated under the Act (e.g., gender, race, religious creed, color, national origin).  Employers are also reminded of their obligation to comply with the California Investigative Consumer Reporting Agencies Act, the constitutionality of which is currently on appeal to the California Supreme Court in Conner v. First Student et al.

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