The Fair Chance Ordinance

A new San Francisco ordinance, enacted February 17, 2014 and operative August 16, 2014, will impact the application and hiring procedures for most employers who do business in the city. The ordinance — named the Fair Chance Ordinance — places new limits on a covered employer’s ability to obtain and use criminal history information for job applicants. The ordinance defines “employer” broadly — as any individual, firm, corporation, partnership, labor organization, group of persons, association, or other organization however organized, that is located or doing business in San Francisco and that employs 20 or more persons regardless of location, including business owners and management and supervisorial employees. “Employer” also includes job placement and referral agencies and other employment agencies. Most public entities, however, are excluded from the scope of the ordinance, but certain contractors, subcontractors, and housing providers are included.

Employers subject to the Fair Chance Ordinance are prohibited from requiring an applicant to disclose criminal history information on an employment application or otherwise before the applicant is interviewed. Instead, employers must wait until after the applicant’s first “live interview” or the candidate’s receipt of a conditional offer of employment before requesting or obtaining criminal history information about the potential employee. 

The Fair Chance Ordinance also prohibits covered employers from asking an applicant — at any time — about: (1) arrests not leading to conviction, (2) participation in a diversion program, (3) convictions that have been expunged, (4) juvenile offenses, (5) convictions that are more than 7 years old, and (6) offenses other than a felony or misdemeanor (such as an infraction). While this second set of restrictions largely mirrors existing California law, the ordinance creates a new source of potential liability for noncompliant employers.

Before inquiring into an applicant’s conviction history (i.e., after the first live interview or conditional offer), the employer also must provide an applicant with a notice of the applicant’s rights under the Fair Chance Ordinance and the restrictions the ordinance places on the use of criminal history information, regardless of whether the inquiry is made directly to the applicant or to a third-party consumer reporting agency. The specifics of the required notice are set out in Section 4905(b) of the ordinance.

If an employer intends to make an employment decision based on an applicant’s criminal conviction history, the Fair Chance Ordinance requires the employer to conduct an individualized assessment of the applicant and consider: (1) only convictions that have a direct bearing on the applicant’s ability to perform in the position, (2) the time that has elapsed since the conviction, and (3) any evidence of inaccuracy or rehabilitation. 

If an employer intends to reject an applicant after conducting the required individualized assessment, the employer must provide the applicant with a notice of its intended decision, the specific criminal history that the employer used in making its decision, and a copy of any criminal background check obtained on the applicant. The notice must be provided regardless of whether the criminal history is obtained through the applicant or through a consumer reporting agency. The employer must then wait at least seven days from the date of the notice before taking final adverse action. If the applicant disputes the criminal history during the seven-day period, the employer must take a “reasonable time” to reconsider its decision before taking final action and must notify the applicant of the final action taken. 

The Fair Chance Ordinance also prohibits employers from disseminating solicitations or job advertisements that are reasonably likely to reach persons who may apply for employment in San Francisco and that state that the employer will not consider qualified applicants with a criminal history or that such candidates will not be hired. And the ordinance goes further, affirmatively requiring employers who distribute solicitations or advertisements that are reasonably likely to reach San Francisco applicants to state in such solicitations or ads that the employer will “consider for employment qualified applicants with criminal histories” in a manner consistent with the requirements of the ordinance.

Employers must also display a poster (in English, Spanish, and Chinese) regarding the Fair Chance Ordinance in each San Francisco location where applicants or employees visit and must send the poster to each labor union that represents employees in the employer’s workplace. The specific requirements of the poster can be found in Section 4905(b) of the ordinance.

The ordinance also requires employers to keep records of employment and application forms for three years.

Penalties for violations

For a first violation or for any violation found during the first year of the ordinance, the Office of Labor Standards Enforcement (OLSE) will issue warnings and notices to correct. For a second violation, the OLSE may impose a penalty of US$50 per applicant, and for each violation thereafter, the penalty may increase to US$100 per applicant. Additionally, the city may bring a civil action for a violation of the ordinance, and if the city prevails, it will be entitled to legal or equitable relief, including liquidated damages and attorneys’ fees.

National trends

San Francisco is just the latest jurisdiction to enact legislation prohibiting or limiting criminal history inquiries in the employment context (often referred to as “ban the box” legislation). Over 50 jurisdictions now restrict the use of criminal background checks in the hiring process (either for all employers or just public employers), including Massachusetts, Minnesota, Rhode Island, Hawaii, Seattle, Buffalo, Philadelphia, and Newark. And the “ban the box” campaign is gaining steam; similar legislation is currently pending at the state and local level around the United States.

The new restrictions apply to more than criminal background information. Several states and cities have recently enacted limitations on the use of credit, social media, and other sources of information in the employment context.

What employers should do now

Employers subject to the Fair Chance Ordinance should immediately take steps to ensure that they will be compliant with the ordinance’s requirements when it becomes operative. Employers should first ensure that their employment application forms and applicant intake systems do not request criminal history information from San Francisco applicants. Employers also should ensure that the application and intake processes for such employees delay inquiries into criminal history until allowed and avoid altogether the types of criminal history information prohibited by the ordinance.

Employers also need to revise their hiring policies and procedures to allow for the individualized assessment of applicants with criminal histories, including the notice and seven-day waiting period requirements of the ordinance. Employers also should begin drafting form notices in compliance with the ordinance, although the ordinance directs the OLSE to promulgate the required form notices and posters.

Finally, employers should take steps to ensure that all solicitations, advertisements, and job postings contain the required “fair chance” statements. Internet-based postings in particular should be scrutinized since they will be “reasonably likely” to reach San Francisco job applicants.