On June 27, 2016, the Fair Employment and Housing Council considered a proposal to amend the Department of Fair Employment and Housing (DFEH) regulations with respect to the use of criminal history records in employment decisions. The proposed regulations would outline current law while also imposing additional restrictions that would further limit an employer’s use of such information.

Under current law, California employers are prohibited from utilizing certain criminal records and information in hiring, promotion, training, discipline, termination, and other employment decisions. In particular, when making an employment decision, employers may not consider: (1) an arrest or detention that did not result in conviction; (2) an individual’s referral to or participation in a pre-trial or post-trial diversion program; (3) a conviction that has been judicially dismissed or ordered sealed, expunged, or statutorily eradicated; or (4) a non-felony conviction for possession of marijuana that is more than two years old.

Employers are also prohibited under the Fair Employment and Housing Act (“FEHA”) from utilizing other forms of criminal convictions (not enumerated above) that may have an “adverse impact” on individuals on a basis protected by the FEHA, including on the basis of gender, race, or national origin. The proposed regulations would set forth new language providing that the adversely affected applicant or employee bears the burden of demonstrating that an employer’s policy or practice of considering criminal convictions has an “adverse impact” on employees on the basis of a protected category under the FEHA.  The term “adverse impact” would have the same meaning as “disparate impact,” as used by the Equal Employment Opportunity Commission (“EEOC”) in its April 2012 Guidance (Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions).

If the policy or practice of considering criminal convictions creates an adverse impact on individuals protected under the FEHA, the burden would then shift to the employer to establish that the policy is nonetheless justifiable because it is “job-related and consistent with business necessity.” To meet this burden, the employer must show that the challenged policy or practice bears a “demonstrable relationship to successful performance of the job and in the workplace and measure[s] the person’s fitness for the specific job [and does] not merely [] evaluate the person in the abstract.” In addition, the employer must show that the policy or practice is “appropriately tailored” to the particular job or jobs at issue, taking into account several factors, including: (i) the nature and gravity of the offense or conduct; (ii) the time that has elapsed since the offense or conduct and/or the completion of any sentence; and (iii) the nature of the job held or sought.

This means that bright-line policies that disqualify convicted felons are likely to be invalid. Indeed, the proposed regulations would hold that “any bright-line conviction disqualification policies or practices that do not incorporate an individual assessment” of the convictions and jobs in question, and that include “conviction related information that is seven or more years old,” is presumptively not job related or consistent with business necessity. In other words, the proposed regulations would presume that an employer violates the FEHA whenever it has a policy or practice that is shown to disparately impact a protected group.

In addition, even if the employer is able to show that the policy or practice is consistent with business necessity, the employee may still prevail if the employee can establish that there was a “less discriminatory alternative” that the employer should have used. This means that if there is a policy or practice that would be as effective as the current policy and would be less burdensome on applicants or employees in the protected class, such policy should be employed. For example, an employer might consider rejecting applicants or employees on the basis of only a certain type of conviction rather than all convictions. This restriction does not apply to policies or practices of barring certain individuals on the basis of other state or federal law, regulations, or licensing requirements.

The proposed regulations also require employers to notify an individual before taking an “adverse action,” such as declining to hire, discharging, declining to promote, etc. Although employers are already required to provide certain “pre-adverse action” notifications under the Fair Credit Reporting Act (FCRA) and similar state law, the proposed regulations would specifically require that the employer notify the individual of “the disqualifying conviction” and provide him or her with “a reasonable opportunity to present evidence that the information is factually inaccurate.” If the employee establishes that the record is inaccurate, the employer may then not consider the record in making its employment decision.

Although it is possible that the regulations may be amended, the proposed regulations provide employers with a cautionary reminder that use of criminal convictions and other history is limited in California.  Employers should review their current policies and practices to ensure compliance with current law, as well as anticipated changes. This is particularly true for multi-state employers that may utilize a standard hiring process for multiple states.