A new California Fair Employment and Housing Council regulation on considering criminal history in employment decisions became effective July 1, 2017. The regulation draws heavily from the EEOC Enforcement Guidance on Consideration of Arrest and Conviction Records in Employment Decisions
but, in typical California fashion, is also different. The Enforcement Guidance was based on national statistics showing that African-Americans and Hispanics were more likely to have a criminal history. Based on these statistics, the EEOC concluded that an employment policy excluding individuals with a criminal history could cause a disparate impact based on race, in violation of Title VII.
The new regulation requires that, if an employer has a policy of considering criminal history resulting in an adverse impact on a group protected by the Fair Employment and Housing Act, the employer must show that its policy is job-related and meets business necessity, using one of two approaches. Key points of the new regulation are summarized below.
Incorporation of Pre-Existing Limits on Considering Criminal History
The regulation incorporates pre-existing limitations on employers considering the following types of criminal history:
Arrests/detentions not resulting in convictions
Referrals to/participation in diversion programs
Dismissed, sealed, expunged or eradicated convictions
Non-felony marijuana possession convictions older than 2 years
The regulation also incorporates the governmental entity “ban the box” law, local ordinances, and restrictions in the federal Fair Credit Reporting Act and California Investigative Consumer Reporting Agencies Act.
Applicant/Employee Burden of Proof
The applicant or employee must establish that an employer’s policy or practice of considering criminal convictions causes an adverse impact based on a FEHA-protected classification. State or national statistics showing substantial disparities in conviction rates based on, for example, race “presumptively” meet this burden. The employer can rebut this by showing that the outcome would be different based on the specific circumstances, such as specific geographical area in question, types of convictions considered, the job, etc.
If a candidate establishes an adverse impact, the employer must then show its policy is job-related and consistent with business necessity (see below).
However, even if the employer can successfully prove these defenses, the candidate still has an opportunity to, in effect second guess the employer, by showing that there is a less discriminatory policy that would meet the employer's goals as effectively. An example of this would be a narrower list of convictions resulting in disqualification.
Employer Options for Showing Job-Related and Consistent with Business Necessity
The employer must demonstrate that its policy bears a relationship to successful job performance and measures a candidate's fitness for a specific position considering, at a minimum:
An employer can do this by using either a "bright line" conviction disqualification (automatically rejecting all candidates with certain types of convictions) or an individualized assessment. An employer using the bright line approach must show:
Its policy can properly distinguish between individuals that do/do not pose an unacceptable risk, and
The convictions disqualifying a candidate have a direct and specific negative bearing on his/her ability to perform the duties of the position. (Convictions older than seven years generally will not meet this standard unless the employer is legally required to consider older convictions.)
An employer using an individualized assessment must take the following steps with any candidate excluded by the initial screening:
Give the candidate a chance to show that the exclusion should not be applied, and
Consider any additional information provided
Notification if Candidate Not Source of Information
If conviction information is obtained from any source other than the candidate, before taking an adverse action, the employer must notify the candidate and give him or her the opportunity to show the information is inaccurate. Note that this is not intended to give the candidate an opportunity to argue that the information is not relevant.
Comments and Tips
The FEHC has once again created a Hobson's choice for employers: Risk being sued for negligent hiring or risk being sued for employment discrimination.
Review existing policies, procedures and forms to determine if they need to be revised to comply with the new regulation.
Decide if your organization is going to take a “bright line” or “individualized assessment” approach.
A bright line approach is probably more efficient once implemented because it does not require notification and follow up with every candidate excluded by an initial screen. However, this approach will require an analysis to determine which convictions should and should not result in an automatic disqualification. A bright line approach likely cannot be one size fits all for different types of employees. The EEOC Enforcement Guidance makes it clear that excluding convictions for positions that allow access to children or other vulnerable individuals, or involve working with money or private information, may not be defensible for positions such as manual labor.
An individualized assessment approach is likely to be more time-consuming. It may also be difficult to control consistency, potentially resulting in disparate treatment claims. However, with appropriate measures to ensure consistency, it is more likely to defeat a disparate impact claim.
Since most employers learn of criminal convictions through background checks, the new regulation may result in additional notice obligations. Background checks are covered by credit reporting laws which require employers to provide notice of an adverse action (for example a decision not to hire) when it is based on information in an investigative consumer report. Those laws generally require that the notice include the contact information for the agency compiling the report. Now, if an employer learns of a criminal conviction through a background check and decides on that basis not to hire the candidate, the employer will need to ensure the candidate is given the notices required by credit reporting laws and notice of the opportunity to prove to the employer that the information is incorrect.
Surprisingly, the new regulation does not include a "ban the box" provision (prohibiting employers from asking about criminal convictions in an application or otherwise during the initial application process). However, many municipalities have ban the box ordinances (including San Francisco and Los Angeles). These local ordinances usually include other restrictions so employers with employees in different parts of California will need to ensure their policy complies with multiple overlapping laws.