CA Background Check Compliance and Regulation Grows More Complex

Background Check Compliance and Regulation Update: New Fair Chance Reform Bill

In recent years, California has undertaken many efforts to reduce barriers to societal reintegration for those with criminal records. The result has been a complex environment for background check compliance, and regulation continues to be subject to strict enforcement. With a bill advancing in the state legislature, businesses may soon need to update their policies again.

The original version of the bill drew attention nationwide and made for some splashy headlines. As first drafted, the proposed background check legislation would have virtually ended the pre-employment screening practice for most California companies. Legislators wanted to ban background checks except for positions already requiring them by law. This would have removed a valuable tool from the hands of employers almost overnight and made background check compliance an even more legally perilous process.

The outcry was swift from state business owners and commercial advocacy groups. Though the bill remains in legislative committees, the latest version drops the blanket ban in favor of modifying the state's existing ban the box and fair chance legislation. Another provision that required employers to show a clear "nexus" or connection between a conviction and the vacant job was also scrapped for now.

In its place, the new version of the background check regulation enhances and strengthens the requirement that employers conduct individualized assessments of all candidates. Businesses that take adverse action, according to the FCRA, would need to produce a written document summarizing the individual evaluation of each candidate. Currently, the law only requires such an assessment rather than any formal report.

The newly required report must state the employer’s justification for denying the job. This could create a challenging path for businesses—the risk of inadvertently saying something that could be perceived as discriminatory spikes dramatically. It's not hard to imagine a surge in EEOC enforcement actions or lawsuits over such claims.

Lawmakers also want to make it clear that companies cannot advertise jobs in a way that discourages those with convictions from applying. Stating that you do not wish those with a record to apply will now be a violation of the law. Fines for violating the law could then be shared with the individual who reported the breach.

The bill moves to another legislative committee, which will be debated and possibly amended further. The final form the law will take remains to be seen. However, lawmakers seem committed to moving the proposal to the floor for a vote before the end of the session. Therefore, California-based companies should consider closely watching its progress.

Will the provision to restore a background check ban make a return? It seems unlikely at this point, but it could still happen. For now, companies needn’t worry about finding loopholes or exceptions to such a strict version of the regulation. However, the landscape of background check compliance and regulation in California is sure to change in some way this year—so keep an eye out for future updates.