Imagine this: you are an employer in California, and you recently hired a new employee.  You ran your own background check, which did not turn up any criminal convictions.  However, the employee’s job duties include submitting online applications to a government agency, which requires the employee to complete a Live Scan background check with the Department of Justice.  The Live Scan reveals that the employee has a past criminal conviction that will prevent her from submitting the applications.  You terminate the employee, and she tells you the conviction was judicially dismissed.  What do you do?

This somewhat unique scenario is the basis of Lilia Garcia-Brower v. Premier Automotive Imports of CA, LLC.  What made the scenario even more interesting was the basis for the employee’s conviction.  In 2010, just four years before she applied to work at Premier Automotive Imports, the employee was convicted of grand theft for embezzling $2,600 from her prior employer, which, like her new employer, was a car dealership.  The employee paid restitution, completed 15 days of community service, and served three years of probation, then filed a successful motion to have her conviction dismissed pursuant to Penal Code section 1203.4.

The employer decided to terminate the employee for stealing from a prior employer, and the employer did not change its mind when the employee explained that the conviction had been judicially dismissed.  The background report that turned up the conviction was later corrected to show that the conviction had been judicially dismissed (which would allow the employee to perform the duties of the job), but by then the employee was already terminated.

The employee filed a complaint with the Labor Commissioner alleging she had been retaliated against for exercising her right, under Labor Code section 432.7, to not disclose a dismissed criminal conviction.  Over the next several years of legal proceedings, the case boiled down to one central question: did the employer know the conviction had been dismissed when it made the decision to terminate the employee?  In the latest ruling, the Court of Appeals found that the employee had presented enough evidence for this question to go to a jury.

This fact pattern raises an important question.  While consideration of criminal convictions that have been judicially dismissed could create legal liability, can an employer take into account the reasons behind an employee’s prior termination without violating section 432.7, when the employee was terminated for conduct that could be criminal, like stealing?  The answer should be yes.  Section 432.7 gives an employee the right not to disclose a prior conviction that has been judicially dismissed, but it does not shield an employee from disclosing whether he or she has been terminated from a prior job or the reasons for that termination.  The reasons for termination and the conviction should be viewed as two separate things – the employee was terminated for stealing, not because she was convicted of a crime.   Employees who have not committed crimes can be required to disclose the reasons for their prior terminations, and it would not make sense for employees to be exempt from such disclosures when their terminations are due to criminal conduct.

The fact pattern also illustrates how California’s lesser-known prior conviction laws can impact California businesses.  Employers would do well to familiarize themselves with prior conviction laws before making employment decisions based on those convictions.