Friday, July 21, 2017
The California Fair Employment and Housing Council (referred to as FEHC hereafter) recently adopted regulations that add restrictions to an employers’ consideration of criminal history for employees or applicants. The updates went into effect on July 1, 2017, and are largely consistent with the recent enforcement guidance set forth by the Equal Employment Opportunity Commission (referred to as EEOC hereafter). The new regulations are aimed at mitigating the adverse impact associated with the overly broad use of criminal background history in making employment decisions. In particular, the new regulations identify circumstances in which employers may face liability for considering criminal history in the decision to hire, promote, discipline, or terminate an employee. Employers are advised to adjust company policy and practices in accordance with this regulatory update.
Existing Limitations on Consideration of Criminal History
Existing California law prohibits employers from considering the following types of criminal history:
(1) An arrest or detention that did not result in conviction;
(2) Referral to or participation in a pretrial or post-trial diversion program;
(3) A conviction that has been judicially dismissed or ordered sealed, expunged or statutorily eradicated pursuant to law; and
(4) An arrest, detention, processing, diversion, supervision, adjudication, or court disposition that occurred while a person was subject to the process and jurisdiction of juvenile court law.
The new regulations extend the prohibitions to cover non-felony convictions for possession of marijuana that are two or more years old. 
Consideration of Criminal History May Adversely Impact Members of a Protected Class
Employers must be mindful that consideration of criminal history may adversely affect individuals who are members of a protected class. A protected class includes, but is not limited to, race, religion, disability, sex, age, and sexual orientation.
An applicant or employee bears the burden of proving that an employers’ policy of considering criminal history has an adverse impact on a protected class. An adverse impact, is “a substantially different rate of selection in hiring, promotion, or other employment decisions which works to the disadvantage of members of a race, sex or ethnic group.” An adverse impact may be established through the use of conviction statistics demonstrating a marked disparity in conviction rates of persons within a protected class. 
Once the applicant or employee demonstrates an adverse impact on a protected class, the burden shifts to the employer to demonstrate the consideration of criminal history is job-related and consistent with business necessity. The consideration of a criminal history cannot be used as a basis to evaluate the person in the abstract.  The employers’ policy for considering criminal history must be appropriately tailored. The following factors are relevant in determining whether a policy is legitimately business related:
- The nature and gravity of the offense or conduct;
- The time that has passed since the offense or conduct and/or completion of the sentence; and
- The nature of the job held or sought. 
Any bright-line conviction disqualification policy must have a specific and articulable relationship to the person’s ability to perform the functions of his or her position. Of note, bright-line conviction disqualification policies, including conviction-related information that is seven or more years old, are subject to a rebuttable presumption that the employers’ policy is not appropriately tailored or consistent with business necessity.  Alternatively, an employer may conduct an individualized assessment of the circumstances surrounding the applicant’s or employee’s disqualification by the conviction screening process.
New Notice Requirements and Opportunity to Present Information
The employers’ assessment of the individual applicants’ or employees’ conviction must involve notice of the disqualification and a chance for the applicant or employee to demonstrate the disqualification should not be applied to their particular circumstances. If an applicant or employee demonstrates the criminal history is factually inaccurate, said criminal history cannot be considered in the employers’ employment decisions.  Additionally, the employer should consider whether the additional information provided by the applicant or employee warrants an exception because the criminal history consideration is not job-related or consistent with business necessity. 
Although an employer may demonstrate that their policy of considering an individuals’ criminal history is job-related and consistent with business necessity, the applicants or employees may also challenge the employers’ policy by demonstrating that a less discriminatory policy or practice would serve the employer’s needs.  Accordingly, the FEHC recommends using “a more narrowly targeted list of convictions or another form of inquiry” that accurately evaluates job qualifications or risk without an undue burden on the employer.
Effect on California Employers
As a result of the new limitations on consideration of criminal history in employment decisions, employers may want to review their policies on the use of criminal history in employment decisions to ensure compliance with the new FEHC regulations. Employers should avoid bright-line conviction disqualification policies because such polices may adversely impact members of a protected class. As an alternative, an employer may want to conduct an individualized assessment of employees or applicants disqualified by the conviction screening process.
 These restrictions are codified in the California Code of Regulations, title 2, sections 11017 and 11017.1.
 California Code of Regulations, title 2, section 11017.1(d).
 California Code of Regulations, title 2, section 11017.1 (e)(3)