Following a trend of so-called “ban the box” legislation, on February 17, 2014, San Francisco Mayor Edwin Lee (D) signed the Fair Chance Ordinance (the Act) into law. The Act places substantial restrictions on the rights of employers and contractors to use criminal background information in employment decisions.

It is estimated that, in California, one in four adults has an arrest or conviction record. According to the City’s Board of Supervisors, “[m]any thousands of people in our local community are directly impacted by barriers to reintegration based on these records.” It is estimated that as many as 90% of employers conduct background checks. The Board found that lack of employment is a significant cause of recidivism.

The Act prohibits an employer that either is located, or doing business in, the City and has 20 or more employees regardless of location from inquiring about, requiring disclosure of, or if such information is received, basing an adverse employment action on:

  1. An arrest not leading to a conviction (except in limited circumstances);
  2. Participation in or completion of a diversion or a deferral of judgment program;
  3. A conviction that has been judicially dismissed, expunged, voided, invalidated, or otherwise rendered inoperative;
  4. A conviction or any other determination or adjudication in the juvenile justice system, or information regarding a matter considered in or processed through the juvenile justice system;
  5. A conviction that is more than seven years old from the date of sentencing; or
  6. Information pertaining to an offense other than a felony or a misdemeanor, such as an infraction.

The Act further states that an employer may not inquire on an employment application about the facts or details of any conviction history, any unresolved arrest, or any of the matters listed above. Similarly, the employer may not require the disclosure of the same information.

The Act also states that an employer shall not require applicants or employees to disclose and shall not inquire into their conviction history or an unresolved arrest until either the first live interview with the person (via telephone, videoconferencing, use of other technology, or in person) or, at the employer’s discretion after a conditional offer of employment.

Prior to making any criminal history inquiry, the employer must provide the applicant or employee with a notice prescribed by the Act. And, prior to obtaining a background check report, the employer must comply with all applicable federal and state law requirements.

In making an employment decision based on an applicant’s or employee’s conviction history, the employer must conduct an “individualized assessment,” considering only directly-related convictions, the time that has elapsed since the conviction or unresolved arrest, and any evidence of inaccuracy or rehabilitation or other mitigating factors.

Consistent with the federal Fair Credit Reporting Act (FCRA) and other state laws, before taking an adverse action based on a person’s conviction history, the employer must give the person a copy of the background check report, if any, and notify the person of the prospective adverse action. The applicant or employee then has seven days to provide the employer with evidence of inaccuracy, rehabilitation, and/or other mitigating factors, after which the employer has a reasonable period of time to reconsider the prospective adverse action.

The Act makes it clear that “it does not intend, and shall not be construed, to require an employer to give preference to anyone or to hire an unqualified person with an arrest or conviction record.” Moreover, the Act does not limit an employer’s ability “to choose the most qualified and appropriate candidate from applicants for employment.”

The Act imposes similar requirements on certain housing providers and city contractors. It goes into effect on a prospective basis only 180 days from February 17.