August 22, 2023

Modifications to California Regulations Governing Employer Consideration of an Applicant’s Criminal History Approved

The California Office of Administrative Law recently approved the Civil Rights Council’s amendments to regulations in the Fair Employment and Housing Act (“FEHA”) that govern employer inquiries into and consideration of a job applicant’s criminal history. The revised regulations take effect on Oct. 1, 2023.

For the most part, the revised regulations (located at California Code of Regulations Title 2, Section 11017.1) do not fundamentally change the rules regarding the use of criminal history, but instead seek to clarify employers’ obligations when using criminal history by adding more context and examples to the existing rules. However, a handful of additional requirements were included by the Civil Rights Council (“the Council”).  

This article provides a summary of modifications to C.C.R. § 11017.1 of which employers should be aware. 

Consideration of Criminal History Prior to a Conditional Offer of Employment

Under existing law, prior to making a conditional job offer, an employer is prohibited from inquiring about criminal history unless required to do so by law. 

The revised regulations clarify the following:

  • In addition to not being able to inquire about criminal history through job applications, background checks, or internet searches, employers cannot put statements in job advertisements, postings, applications or other materials that persons with criminal history will not be considered for hire, such as “No Felons” or “Must Have Clean Record.” 
  • Only if an employer or employer’s agent is required by law to conduct criminal background checks can any of the enumerated exceptions to the prohibition against inquiring about or using criminal history prior to making a conditional offer apply. It is not enough that a state, federal, or local law requires another entity (e.g., occupational licensing board) to conduct a criminal background check. 
  • Even if an applicant voluntarily discloses criminal history information prior to a conditional job offer, employers may not consider such information (or indeed any information prohibited by the regulations) until after it has decided whether to make a conditional job offer.  

Requirements if an Employer Intends to Deny an Applicant the Employment Conditionally Offered Because of the Applicant’s Criminal History

Initial Individualized Assessment

Under existing law, after extending a conditional job offer, if an employer intends to deny an applicant the job based on his or her criminal history, the employer must perform an individualized assessment of whether the applicant’s conviction history has a direct and adverse relationship with the specific duties of the job that justify denying employment. 

The revised regulations specify the following regarding an employer’s initial individualized assessment: 

  • This assessment must be “a reasoned, evidence-based determination.” 

In addition, existing regulations provided three main factors that employers are required to consider for the individualized assessment:

  • Nature and gravity of the offense;
  • Time that has passed since the offense or conduct; and
  • Nature of the job held or sought 

The revised regulations, identify specific examples of what employers may “consider[]” when analyzing each of the above three factors. 

Notice of Preliminary Decision and Opportunity for Applicant Response

Under existing law,  if, after the individualized assessment, the employer makes a preliminary decision to revoke the conditional offer, the employer must notify the applicant in writing of the preliminary decision, the disqualifying conviction(s) that is the basis for that decision, and his or her right to respond before the preliminary decision becomes final. Applicants may respond either with evidence challenging the accuracy of the conviction information or detailing rehabilitation efforts or mitigating circumstances.

The revised regulations add more examples of the types of evidence of rehabilitation or mitigating circumstances that applicants may submit in their response, and provide the following:

  • The decision to offer any such evidence must be optional and may only be provided by the applicant voluntarily. 
  • An employer may not require an applicant to disclose his or her status as a survivor of domestic or dating violence, sexual assault, stalking, or comparable statuses or the existence of a disability. 
  • An employer may not refuse to accept additional evidence voluntarily provided by an applicant at any stage of the hiring process.
  • To the extent an applicant voluntarily provides evidence of rehabilitation or mitigating circumstances before or during the initial individualized assessment (whereas such evidence would otherwise follow being notified of the right to respond to the preliminary decision to rescind the conditional employment offer), it must nevertheless be considered as part of the initial individualized assessment. 

Employers Seeking the Work Opportunity Tax Credit

The revised regulations provide the following clarifications for employers who wish to claim the Work Opportunity Tax Credit (“WOTC”) provided for under federal laws:

  • An employer may require applicants to complete an IRS form 8850 or equivalent (forms used to see if potential employees are members of a targeted group for purposes of qualifying for work opportunity credits) before a conditional offer of employment is made, as long as the information from the form is used solely to apply for the WOTC. 
  • An employer may require an applicant to complete U.S. Department of Labor Employment and Training Administration form 9061 (“Individual Characteristics Form (ICF) Work Opportunity Tax Credit”), or its equivalent, only after a conditional offer has been made. 
  • An employer must maintain “any forms, documents, or information used to complete the forms described in this section [on the WOTC] in confidential files separate from the applicant’s general personnel file and shall not use or disseminate these forms, documents, or information for any purpose other than applying for the WOTC.” 

New Definitions

The amended regulations add 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.” As commentators were quick to point out, this expanded definition could potentially implicate a background screener conducting a background check on behalf of an employer.   

The regulations also add an expansive definition of the term “applicant”, such that these prohibitions now apply to:

  • New applicants;
  • Existing employees who have applied for or indicated a specific desire to be considered for a different position;
  • Existing employees subject to a review and consideration of criminal history because of a change in ownership, management, policy, or practice;  
  • An individual who can prove that he or she has been deterred from applying for a job by an employer’s or other covered entity’s alleged discriminatory practice.   

The regulations also make clear that an employer cannot evade this section’s requirements by having the applicant start working before the post-conditional offer review of criminal history. 

Practical Implications

In conclusion, the Council’s revised regulations add to an already extensive list of procedures governing California employers’ use of criminal history as a basis for rejecting an applicant or taking other adverse actions against an applicant or employee. In light of these changes, employers that use criminal records/background checks to screen applicants should review their policies, procedures, and other documents related to their evaluation process. If in doubt,  reach our directly to your Payne & Fears attorney for assistance.