California continues its lead in restricting use of criminal records with the Fair Employment and Housing Council (FEHC) recently finalizing new regulations that further limit a California employer’s ability to use criminal history when making employment decisions. The regulations, borrowing heavily from the EEOC’s 2012 Guidance, will be effective July 1, 2017.

The highlight of the new regulations is the prohibition of an employer from considering a job applicant’s or employee’s criminal history in making an employment decision if doing so would result in an adverse impact on individuals within a protected class, such as gender, race, and national origin. In order to succeed on a claim under these regulations, a job applicant must first prove that an employer’s background screening policy actually has an adverse impact on a protected class. Adverse impact can be proven by using conviction statistics or “other evidence” that establishes that a protected group is affected by the screening policy in a disproportionate manner, compared to other groups.

If an adverse impact is shown, the employer must demonstrate that the policy is (1) job-related and (2) consistent with business necessity. To satisfy this standard, employment policies must consider (a) the nature and gravity of the offense, (b) the amount of time that has elapsed since the offense, and (c) the nature of the job held or sought. Under the FEHC regulations, employers are specifically required to maintain policies and procedures that allow for an “individualized assessment” when considering the criminal history of an applicant. In other words, a blanket policy, prohibiting hiring of all individuals with criminal histories, would violate the regulations. Employers must be prepared to justify their policies and adverse decisions related to the criminal history of an applicant. Convictions that lead to an adverse hiring decision should have a “direct and specific negative bearing on the person’s ability to perform the duties of the position.”

Significantly, employers should note that even when the employer implements job-related screening processes, an applicant or employee can still prevail on an adverse impact claim if he or she is able to show that there is a less discriminatory policy or practice that serves the goals of the employer, without significantly increasing the cost or burden on the employer.

The regulations also contain employee notice requirements. Before an employer may take any adverse action against an applicant based on criminal history, the employer must give the applicant notice of the disqualifying conviction and provide a reasonable opportunity to present information that the conviction information is factually inaccurate. If the information is inaccurate, employers must exclude that information in their hiring decision. Such notice is only required when the criminal information is obtained by a source other than the candidate. The FEHC regulations note that some employers are prohibited under federal law, state law, or other regulations from hiring individuals with certain criminal records and are required to screen an individual’s criminal history before offering employment in those positions. In these situations, the applicable laws will constitute a rebuttable defense to an adverse impact claim.

What are next steps for California employers?

• Review your criminal record-based screening policies and procedures, and assess whether they are necessary to your business.

• Craft a narrowly tailored policy that demonstrates how the policy is job-related, consistent with business necessity, and allows for an individualized assessment of employees and applicants.

• Eliminate any blanket prohibition that uniformly excludes applicants with criminal convictions.

• Written policies are a necessary start. However, beyond having a policy allowing for an individualized assessment of criminal background information, make sure that you are actually engaging in such individualized analyses.

Finally, all employers, whether in California or elsewhere should pay close attention to federal law governing employee background checks as well as the patchwork of various state and local “ban-the-box” measures.