By Soo Cho, Michele Haydel Gehrke, and Pamela Devata

Not only is complying with California’s labor laws challenging, operating a business in San Francisco can be particularly challenging due to a number of San Francisco city ordinances regulating employers.  Most recently, on February 17, 2014, Mayor Ed Lee signed the “Ban the Box” ordinance.  While the ordinance sounds as if it belongs in the same category as other  San Francisco environmental ordinances banning the use of plastic bags, this ordinance, formally known as the “Fair Chance Ordinance,” actually relates to what an employer can ask about relating to criminal history and when an employer can conduct a criminal background check in hiring. San Francisco is joining the ranks of many other states and municipalities who have recently passed similar restrictions “banning” the criminal history box (i.e., HI, MA, MN, RI, Newark, NJ, Seattle, WA, etc.).  See our publications relating to these trends here and here.

The Fair Chance Ordinance requires private employers in San Francisco who employ 20 or more employees (in any location) to limit the use of criminal background checks during the hiring process.  “Employers” is defined broadly to include not only private employers in San Francisco, but also employment agencies, contractors and subcontractors (with performance contracts in excess of $5,000 and for longer than 30 days), and housing providers.

Employers are barred from asking about criminal history or conducting a background check until the employer determines that the individual’s qualifications meet the requirements for the position.  Specifically, the law requires removal of the box or question on an employment application asking “Have you ever been convicted of a crime?”  The ordinance notes that an estimated one of four California adults has an arrest or conviction record and seeks to limit the “unnecessary and significant barriers to employment” created by such application questions. This is similar to the reasoning espoused in Equal Employment Opportunity’s Enforcement Guidance on the Use of Arrest and Criminal Records in the Hiring Process, which can be found here.

Employers in San Francisco may ask about a candidate’s conviction history after the first live interview, but must provide the candidate with a notice of rights (an applicable notice of rights will be published by the city within the next six months).  Employers are also prohibited from considering (1) any arrests that do not lead to convictions, (2) offenses other than felonies or misdemeanors, (3) convictions more than seven years old, (4) an applicant’s participation in or completion of a diversion or deferral of judgment program, and (5) sealed, inoperative or juvenile convictions.

Similar to the federal requirements under the Fair Credit Reporting Act, 15 U.S. C. Sec. 1681 et. seq. and state requirements under the California Investigative Consumer Reporting Agencies Act, Cal. Civ. Code Sec. 1786 et. seq,  the ordinance also provides that if an employer does run a background check and intends to take an adverse action against the candidate based on that information, the employer must:

  • Provide the candidate with a copy of the background check;
  • Notify the candidate of the adverse action; and
  • Identify the reason for the adverse action on the background check.

To disqualify the applicant, the conviction must bear a direct relationship to the position applied for (negatively affect the person’s ability to perform the job’s duties or responsibilities).  Employers also are required to consider whether the position offers the opportunity for the same or similar criminal offense to occur in the future.  Applicants must be given an opportunity to respond with evidence about whether their conviction is inaccurate, or offer evidence of rehabilitation or other mitigating factors.

Adding to the large number of break room notices, the ordinance also includes a requirement that employers post a notice in the workplace.  Importantly, employers must now revise employment advertisements/postings to include a notice that the employer will consider qualified applicants with criminal histories.  Employers must also retain all pertinent records, including applications, for three years.

Retaliation for exercising rights under the ordinance is prohibited.  The San Francisco Office of Labor Standards Enforcement (the city’s version of California’s DLSE) will not evaluate an employer’s decision, but will look into whether an employer made an individualized assessment into each employee, rather than maintaining a generalized policy not to hire individuals with criminal backgrounds.  An employer remains free to hire the most qualified and appropriate candidate, and to observe seniority systems or employee benefit plans.

For the first year, violations of the ordinance will result in warnings and a notice to correct.  After the first year, the penalty is $50 for a first violation and $100 for subsequent violations.   While the ordinance does not contain a private right of action, the OLSE may refer the matter to the city attorney for civil action if it determines an employer is not taking corrective measures.  Relief in a civil action can include reinstatement, back pay, payment of benefits or salary unlawfully withheld, additional liquidated damages, appropriate injunctive relief, attorney’s fees and costs.

This ordinance is the most recent of a number of San Francisco employment-related city ordinances.  As the ordinance has yet to go into effect, the actual application of the ordinance is still uncertain.  In the meanwhile, employers with operations in San Francisco should review their employment applications, job postings/advertisements, hiring, record retention and background check practices to ensure compliance with the new ordinance.  Once the required posting is published by the City, employers will also want to be sure to post the required notice along with their other employment-related notices.  Contact the authors or your favorite Seyfarth attorney for assistance in complying with this and other San Francisco ordinances.

Stay tuned for additional blog posts discussing other San Francisco employment ordinances including the Family Friendly Workplace Ordinance, the Paid Sick Leave Ordinance and the Health Care Security Ordinance.

Edited by Chelsea Spuck