Author: Brian J. Hoops, Associate Attorney, Enterprise Counsel Group

Until last year, California employers with five or more employees could pre-screen applicants using criminal background checks or by asking questions on a job application. A new law, however, called the Fair Chance Act (Govt. Code 12952) prohibits employers from asking applicants about criminal history before the employer makes a job offer. Employers are now limited to conducting criminal background checks only after making a job offer to an applicant.

The Fair Chance Act also prohibits an employer from even considering information, such as an arrest without a conviction, sealed records, or participation in a diversion program, when determining whether to hire an applicant.  The Fair Chance Act, and laws like it, are colloquially referred to as “ban the box” laws because they force employers to remove the criminal history inquiry section from employment applications. 

  • If an employer wishes to rescind an offer because of an applicant’s criminal history, the employer must first satisfy several requirements:
  • Justify the reasons for rescinding the offer
  • Provide written notification of the rescission
  • Provide the applicant five days to respond to the rescission
  • Consider any response from the applicant
  • Inform the applicant of the final decision of rescission and the applicant’s right to take any grievance to the specific California Division that enforces the law

This new law may have unintended consequences. For instance, researchers have found that similar laws negatively impacted at-risk populations’ ability to obtain employment. This is because employers are left to guess whether an applicant has any criminal history. 

The Fair Chance Act also raises concerns because it implicates employers’ constitutional right to speak, as protected by the First Amendment. In essence, this law works only because it bans employers from asking questions to applicants. 

In the commercial context, when a law interferes with free speech rights the government must justify its restrictions. While no California court has addressed the constitutionality of the Fair Chance Act, a federal court in Pennsylvania considered a similar Philadelphia law that banned employers from asking applicants about previous wages. In that case, Philadelphia implemented the law to remedy the gender wage gap. But the federal court held that the law violated employers’ free speech rights because no evidence showed that asking a question causes gender pay discrimination. The court found that since there was not a close connection between the law’s purpose and its method of achieving that purpose, it failed constitutional muster. 

Given the lack of California caselaw addressing the Fair Chance Act, it is an open question of whether it is compatible with free speech rights guaranteed by the First Amendment. 

If you have questions about your rights and duties as an employer, let us know. ECG can help guide you to the right answer.