Employers with employees in California should review policies and practices regarding consideration of criminal history in employment decisions as well as protections on the basis of gender identity, gender expression, and transgender status.

Regulations on Consideration of Criminal History

On July 1, new regulations affecting employers’ use of criminal background information take effect in California. All employers with employees in California should carefully review their policies and practices regarding consideration of criminal history in employment decisions to ensure compliance with the new regulations.

The regulations, issued by the Fair Employment and Housing Council, prohibit employers from asking about or considering certain kinds of criminal history entirely and set up a burden-shifting framework for adverse impact claims brought by employees based on an employer’s policy of considering criminal convictions.

Criminal History Items Prohibited from Consideration

Under the new regulations, employers are prohibited from considering certain types of criminal history or seeking this history from “the employee, applicant or a third party.” While most of these items are already prohibited for consideration in some capacity under existing law, the language of these regulations would prohibit employers from getting this information through third-party services. Prohibited items include the following:

  • An arrest or detention that did not result in conviction
  • Referral to or participation in a pretrial or post-trial diversion program
  • A conviction that was judicially dismissed or ordered sealed, expunged, or statutorily eradicated pursuant to law
  • An arrest, detention, processing, diversion, supervision, adjudication, or court disposition that occurred while the person was subject to the jurisdiction of juvenile court
  • A nonfelony conviction for possession of marijuana if the conviction is more than two years old

Adverse Impact Burden-Shifting Framework

Under the regulations, consideration of criminal history, other than those items already prohibited, is not permitted when it would have an adverse impact on a protected class and the employer cannot prove that such consideration is job related or consistent with business necessity. The regulations set up a burden-shifting framework for bringing such “adverse action” claims:

  • First, applicants/employees have the burden of showing that an adverse impact exists through the use of statistics or otherwise. Under the regulations, state or national statistics showing a substantial disparity in conviction rates for a protected class are presumptively sufficient.
  • Then, if the applicant/employee meets this burden, the burden shifts to the employer to show that its criminal history policy is justifiable as job related or consistent with business necessity. To meet this burden, the employer must show that the policy does not “merely evaluate the person in the abstract,” but bears on a relationship to successful performance of the specific position. In this regard, the policy has to at least take into account the following factors:
    • The nature and gravity of the offense or conduct
    • The time that has passed since the offense, conduct, and/or completion of the sentence
    • The nature of the job held or sought
  • If the employer successfully demonstrates job relatedness, the applicant/employee can still prevail if he or she can show there is a less discriminatory option to meet the employer’s goals that is as effective and not significantly more costly or burdensome.

Reminder as to Action Items for Employers

Employers should ensure that their policies regarding consideration of criminal history in employment decisions as well as all related job postings, application forms, and/or other recruiting materials are compliant and updated in accordance with the new regulations. If part of the hiring process includes using investigative consumer reports from an agency, the employer should request that prohibited items be excluded from such reports. In addition, employers may need to review and revise pre–adverse action notice and adverse action notice forms to comply with the notice requirements of the regulations. HR personnel and others involved in the hiring process should also understand any changes in policy.

Note: Additional Pending Legislation in California and Local Ban-the-Box Ordinances

In addition to the regulations already slated to take effect on July 1, there is legislation currently under consideration in California that would impose additional requirements if passed. The bill, AB 1008, would essentially make these regulations statutory and would add more criminal history items to the list of items an employer is prohibited from considering. In addition, many of the requirements for disclosure and notice of adverse action under the pending legislation are more specific and onerous, so employers should expect to revisit their compliance with the finalized language if it does pass. AB 1008 passed the assembly on June 1, and as of June 20 it has been re-referred to the California Senate Labor and Industrial Relations Committee.

In addition, there has been a proliferation of “ban the box” ordinances in local jurisdictions, such as San Francisco and Los Angeles, so employers with employees in jurisdictions with local ordinances must also comply with those ordinances.

New Transgender Regulations Also Effective July 1

In addition to reiterating the California Fair Employment and Housing Act’s existing protections on the basis of gender identity, gender expression, and transgender status, these regulations expand the definition of “gender identity,” which may include perceptions of gender identity, sex stereotyping, and those gender identities described as “a combination of male and female, neither male nor female,” and others. The regulations also provide protections against discrimination against individuals who are “transitioning,” and require employers to honor employees’ requests to be identified by a preferred gender, name, or pronoun. Definitional information regarding transitioning and other terms is included in the regulations.

Notably, employers may not request information regarding gender or sex-related information from applicants and employees, which may prove challenging in addressing fair pay act issues. The regulations, however, make it clear that employers who have affirmative action reporting or recordkeeping requirements, such as EEO-1 reports, may request applicants to self-identify on a voluntary basis.

Employers should also be aware that the new regulations place obligations on employers to ensure equal access to restrooms and other similar facilities regardless of gender identity, gender expression, or transgender status. These regulations bolster existing requirements that went into effect on March 1, 2017 related to gender-neutral signage for single-user toilet facilities.

Employers should review their policies to ensure that they are consistent with the definitions and regulatory requirements related to the Department of Fair Employment and Housing’s transgender regulations.