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California legislators met on April 11, 2023 to discuss a proposed overhaul of employment-related criminal background checks. Simply put, if the Fair Chance Act of 2023 (SB 809) is passed into law, California will have the most restrictive criminal background check law in the country, and will significantly limit the way California employers can vet applicants for employment. Under existing state law, California employers may conduct a criminal background check for most positions only after making an initial offer of employment, and they may make adverse employment decisions based on criminal history only after conducting an individualized assessment that considers the nature of the offense and the duties of the job. While these existing restrictions are significant in their own right, the proposed new law will effectively eliminate criminal history consideration in most circumstances, allowing legislators to further reduce barriers to employment for people with criminal histories.

The Fair Chance Act will, among other things, “make it an unlawful employment practice to take adverse action against an employee or discriminate against an employee in the terms, conditions, or privileges of their employment based on their arrest or conviction history.” SB 809. In essence, the proposed law will all but ban employment-related criminal background checks, except for positions for which such checks are authorized or required by statute. And in the limited circumstances where criminal history checks are permitted, the Fair Chance Act will require employers to post a clear and conspicuous notice informing applicants and employees of their rights. The new law also will impose on employers additional document and data retention obligations for completed background checks.

State Restrictions Outside of California

California is not the only state considering stricter limits on criminal background checks. Nebraska introduced LB 367, which would prohibit employers from inquiring into an applicant’s criminal history until after a conditional offer of employment has been made. And Mississippi, South Carolina, and West Virginia have introduced bills that would limit public employers from using an applicant’s criminal history, a step towards further restrictions on background checks.

International Considerations

For companies that hire globally, California is just another piece of the ever-changing background check puzzle. Global employers must heed local criminal background check laws that often differ dramatically from country to country, and in many jurisdictions, generally prohibit such checks. Procedural details, such as the timing of permitted checks, also vary greatly. For example, while in the US, checks should occur post-offer in most cases, in some OUS-countries (e.g. Korea and Singapore), checks should be completed before the offer is conveyed. The bottom line is that companies must tailor their criminal background check policies and practices to local requirements, based on factors such as their industry, business needs, the positions being filled, risk tolerance, and global footprint.

Notwithstanding the global variances in what’s permissible, there are a few common guiding principles to keep in mind when conducting checks. Criminal background checks should be used consistently, either checking all similar positions or none of them. The company also must be able to explain why a certain position requires a background check, and if criminal history is ultimately a factor, how that history was used to make a decision. A blanket practice of adopting criminal history checks for every position within a company is a red flag in many jurisdictions that require criminal history checks to be reasonably related to the job. And when a company considers background checks in making hiring decisions, the company should avoid relying solely on criminal history information.

Next Steps

Check back on the Employer Report as we monitor the Fair Chance Act’s progress. The bill has the potential to dramatically change the hiring process for most California employers, and we stand ready to help you implement necessary changes if/when the time comes.