June 30, 2017
Compliance Matters

New California Regulations Severely Restrict How Employers May Use Criminal History Information
New regulations slated to go into effect on July 1, 2017 will severely limit the rights of a California employer to use or solicit information about the criminal history of a job applicant or employee. These regulations are an outgrowth of a larger policy conversation about alleged discriminatory incarceration practices. They are designed to grapple with the reality that certain segments of the population have a disproportionately higher chance of being incarcerated than others and that keeping all convicts from obtaining employment means that large segments of the population will be permanently unemployable. Whether or not you subscribe to this notion, it's important to understand how these new regulations impact your day to day business practices. We explain below.


The law used to be fairly simple. Employers were free to ask about and use most criminal conviction records when screening job applicants and making personnel decisions. Arrest records (and certain convictions) on the other hand were treated differently. Based upon the notion that certain segments of the population stand a statistically greater chance of being arrested than others, the California Labor Code (sections 432.7 and 432.8), has long prohibited employers from using or even inquiring into any of the following criminal records:

  1. a record of an arrest or detention that did not result in a conviction;
  2. a record of a referral to or participation in a pretrial or post-trial diversion program;
  3. a record of a conviction that has been judicially dismissed or ordered sealed, expunged, statutorily eradicated, or otherwise eliminated by law;
  4. a record of an arrest, detention, processing, diversion, supervision, adjudication or court disposition that occurred while a person was subject to the process and jurisdiction of juvenile court law or anything relating to an applicant's juvenile offense history that has been sealed by the juvenile court; and
  5. a record of a non-felony conviction for possession of marijuana that is two or more years old.
The New Regulations   

The new regulations set to go into effect on July 1 build on this notion and go even further by outlawing the use of any other criminal history information when making hiring or employment decisions if doing so would have an "adverse impact" on an individual due to his or her membership in a protected class. An "adverse impact" essentially means that  an employee or job applicant can prove (typically through the use of statistics) that a particular policy or practice (such as barring all convicted criminals from employment) works to the disadvantage of members of the applicant's "protected" class.

The regulations permit applicants and employees to demonstrate an adverse impact through the use of conviction statistics or any other evidence that show a pattern of negative impact on class members. For example, State or national level statistics show substantial disparities in the rate of conviction and incarceration of various races and ethnicities when compared to Caucasians. These statistics could be used to show the requisite adverse impact.
If a job applicant or employee is able to demonstrate that an employer policy has an "adverse impact" on members of his or her protected class, the employer must be able to demonstrate that the policy is both job-related and consistent with business necessity. That is, the employer must show that its screening policy is related to the applicant or employee's successful performance on the job and is a true measure a person's fitness for the position in question. To meet this burden, the employer must demonstrate that the policy or practice is appropriately tailored to the specific job, taking into account at least the following factors:

  1. the nature and gravity of the offense or conduct;
  2. the time that has passed since the offense or conduct and/or completion of the sentence; and
  3. the nature of the job held or sought.
(Note: conviction disqualification policies or practices that include conviction-related information that is 7+ years old are subject to a rebuttable presumption that they are not sufficiently tailored to meet the "job-related" and "consistent with business necessity" exception.)

However, even if an employer is able to illustrate that its policy or practice is job-related and consistent with business necessity, an applicant or employee who is adversely impacted can nevertheless prevail if the employee or applicant can demonstrate that a less discriminatory alternative exists that serves the employer's goals as effectively as the challenged policy or practice (such as a more narrowly targeted list of convictions or another form of inquiry that evaluates job qualification or risk while not significantly increasing the cost or burden on the employer.)

Finally, if the policy has an adverse impact, then before an employer can take action based upon the criminal information, the employer must do two things:(1) notify the individual of the disqualifying conviction; and (2) provide the individual a reasonable opportunity to present evidence that the information is factually inaccurate. If factual inaccuracy is established, then that portion of the criminal record cannot be considered in the employment decision. 

What This Means For Employers

Employers in California who consider criminal records in screening applicants or making employment decisions must be mindful of the obstacles imposed on them by this new regulation. At a minimum, employees should review their policies and practices to make sure they are in compliance. To that end, all questions regarding criminal history on job applications should be carefully tailored to exclude the inquiries identified above.  Also, Employers must use extreme caution when utilizing a policy of automatic rejection of any applicant with a criminal history because the regulations require a more nuanced tailored approach. Finally, supervisors and managers involved in making hiring and other employment decisions should be trained to understand how these new regulations impact those processes and the rights that are now afforded to applicants and employees under these new Regulations.

If you have any questions about the matters discussed in this issue of Compliance Matters, please call your firm contact at (818) 508-3700 or visit us online at www.brgslaw.com .

Richard S. Rosenberg
Katherine A. Hren
Shant A. Kotchounian
Ballard Rosenberg Golper & Savitt, LLP 

15760 Ventura Blvd.
Eighteenth Floor
Encino, CA 91436
(818) 508-3700

6135 Park Drive South
Suite 510
Charlotte, NC 28210
Matthew Wakefield:
(704) 846-2143 


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