California employers face growing scrutiny under the Fair Chance Act (FCA). In recent years, the California Civil Rights Department (CRD) has intensified its investigations into alleged FCA violations, and employers unfamiliar with the rules face significant compliance risk. This article offers a guide to compliant background check practices and to staying ahead of CRD enforcement.
The stakes are rising for California employers, who are seeing an increase in charges filed with the CRD alleging violations of the FCA. This trend follows the CRD's expanded regulations governing the use of criminal history in employment decisions, which took effect Oct. 1, 2023, and reflects the agency's heightened focus on FCA compliance in response to complaints filed by applicants and employees.
The discussion below provides an overview of the FCA legal framework, the compliance areas the CRD typically examines when FCA charges are filed, and steps employers can take to prepare for and defend against these inquiries.
The Fair Chance Act and the 2023 regulatory clarifications
The FCA generally requires California employers to:
• Delay inquiry into or consideration of criminal history until after a conditional offer of employment--this includes ordering a criminal history background report;
• Conduct an individualized, job-related assessment before rejecting an applicant based on criminal history; and
• Follow a two-step notice process--a preliminary determination notice and a final determination notice--when taking action based on criminal history, regardless of how the information is obtained.
Regulatory amendments approved in 2023 clarified and expanded several key compliance obligations, including:
• Expanding the definition of "applicant" to include certain current employees whose criminal history is reviewed due to changes in ownership, management, policies or practices.
• Reaffirming that employers may not include language in job advertisements or postings suggesting that individuals with criminal histories will not be considered.
• Prohibiting employers from considering voluntarily disclosed criminal history prior to a conditional offer.
• Clarifying that exemptions for legally mandated background checks apply only when the employer itself is required by law to conduct the check.
• Requiring an initial individualized assessment before issuing a preliminary decision notice.
• Expanding the categories of mitigating and rehabilitative evidence employers must consider, including trauma, disability-related circumstances and evidence of rehabilitation.
What the CRD examines when a charge is filed
When an applicant or employee files a charge alleging an FCA violation, the CRD's investigation commonly extends beyond the narrow factual allegation to examine whether the employer complied with related FCA requirements across the board. In those investigations, the CRD typically focuses on the following areas:
Timing of criminal-history inquiries. The CRD routinely evaluates whether the employer made any inquiry--directly or indirectly--into criminal history before extending a conditional offer, including through questions on employment applications, interview conversations, informal recruiter or hiring-manager inquiries, and reliance on information volunteered too early in the process.
Individualized assessments. The FCA does not require an employer to document its assessment, but the CRD frequently requests documentation demonstrating that the employer conducted the required initial individualized assessment before issuing a preliminary decision notice; considered each of the three statutory factors (the nature and gravity of the offense or conduct; the time that has passed since the offense, conduct or completion of sentence; and the nature of the job sought or held); and connected the assessment to the actual duties and risks of the position.
Notice and response procedures. The CRD commonly examines whether the preliminary and final determination notices included all required materials, including the conviction-history report and a statement that the individual has the right to file a complaint with the CRD; whether the applicant or employee was afforded the full response period required by regulation; and whether the employer refrained from making a final decision before the response period expired.
Consideration of mitigating or rehabilitative evidence. When an applicant submits mitigating or rehabilitative evidence, investigators often assess whether the employer accepted and evaluated all information submitted; conducted and documented a meaningful reassessment; and considered trauma-related, disability-related or other mitigating factors where applicable.
Consideration of convictions older than seven years. Although California law permits employers to consider convictions older than seven years--outside the City and County of San Francisco and unincorporated areas of Los Angeles County--the CRD frequently asks whether the employer relied on older convictions. These inquiries reflect the CRD's publicly stated position, including guidance posted on its website, disfavoring reliance on older criminal records. Employers should be prepared to articulate and document why consideration of an older conviction was job-related and consistent with business necessity, and should expect the CRD to require a heightened showing of job-relatedness.
Preparing for a charge
Employers facing an FCA charge--or seeking to reduce future exposure--should consider the following measures.
Audit criminal-history decision-making processes. Review job postings, applications, interview materials, recruiter scripts, conditional offer letters, and preliminary and final determination templates to ensure compliance with FCA requirements.
Strengthen documentation of individualized assessments. Use job-specific assessment tools that address the three required factors and prompt decision-makers to consider rehabilitation and mitigation evidence.
Ensure compliance with notice and timing requirements. Confirm that notices include required attachments and language, that response deadlines are properly calculated and that reassessments are documented.
Train recruiters, HR and hiring managers. Training should focus on prohibited inquiries, the handling of volunteered information and the required assessment and notice procedures.
Conclusion
An FCA charge can trigger searching inquiries into how an employer evaluates criminal history and implements required assessment and notice procedures. Rather than wait for a charge to be filed, employers should ensure their practices are well-documented, consistently applied and aligned with the current regulatory framework--before the CRD takes a closer look.