Effective July 1, 2017, the regulations under the Fair Employment and Housing Act will identify new circumstances in which employers may face liability for considering criminal history in making employment decisions such as hiring, promotion, training, discipline, layoff, and termination. The amended regulations largely adopt the guidance set forth by the U.S. Equal Employment Opportunity Commission (EEOC) in its April 2012 "Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964," and will be codified at California Code of Regulations, title 2, sections 11017-11017.1.

Prohibition on Considering Certain Criminal History

The regulations expand the list of criminal records that employers are prohibited from considering (or seeking information about) to include any non-felony conviction for possession of marijuana that is older than two years. Current law prohibits consideration of a smaller subset of infractions and misdemeanor convictions related to marijuana. 

Adverse Impact Discrimination

Although the regulations do not prohibit an employer from considering all criminal information, they allow a candidate (an applicant or current employee) to bring a discrimination claim if the employer's use of criminal records results in an "adverse impact" (referred to by the EEOC as "disparate impact") on candidates in protected classes, such as race, national origin, and gender. A candidate has the initial burden of proving that an employer's consideration of criminal history has an adverse impact on a protected class. State– or national–level statistics showing substantial disparities in the conviction records of one or more protected categories are presumptively sufficient to establish an adverse impact. 

If adverse impact is demonstrated, the burden then shifts to the employer to prove that its policy allowing consideration of criminal history is "job-related and consistent with business necessity," and appropriately tailored, taking into account at least the three factors set forth in Green v. Missouri Pacific Railroad Company (8th Cir. 1975) 549 F.2d 1158 – (i) nature and gravity of the offense or conduct; (ii) the amount of time since the offense or conduct and/or completion of the sentence; and (iii) the nature of the job held or sought. There is a rebuttable presumption that a policy is not sufficiently tailored if it (i) does not consider individualized circumstances, and/or (ii) includes convictions that are more than seven years old (except when the policy is justified by other federal or state laws or regulations). Even if an employer demonstrates that its policy is job-related and consistent with business necessity, candidates may still prevail if they can demonstrate that there is a less discriminatory policy or practice that serves the employer's goals as effectively (e.g., a more narrowly targeted list of convictions or another form of inquiry).

Notice Requirements

Before an employer may take an adverse employment action against a candidate based on conviction history, the employer is required to give the candidate notice of the disqualifying conviction and provide him or her with a reasonable opportunity to present evidence that the conviction information is factually inaccurate. 

Employer Best Practices

In light of these regulations, employers should review their employment applications and develop narrowly tailored written policies and procedures for screening candidates for criminal conduct that take into account the job requirements and circumstances under which jobs are performed. Additionally, employers operating in the 28 states and more than 150 cities and counties that have adopted a ban-the-box or fair chance policies – including Los Angeles and San Francisco – should ensure compliance with the additional requirements of those legal requirements.