iStock_000076923915_LargeSeyfarth Synopsis:  The Fair Employment and Housing Council is vetting proposed regulations to prevent employers from discriminating against applicants or employees with criminal histories. Our colleague Kate Svinarich attended a recent public hearing and filed this report. And stay tuned for a later dispatch, featuring proposed regulations on Transgender Identity and Expression, which the FEHC considered at the same meeting.  

The California FEHC appears to want to make it easier for applicants and employees with criminal histories to sue for violations of the Fair Employment and Housing Act. On April 7, 2016, the FEHC met in Oakland to hear significant public comment from advocacy groups and the formerly incarcerated about Proposed Regulations Concerning the Use of Criminal History in Employment Decisions.

The proposed regs largely incorporate federal case law and EEOC guidance holding that the use of criminal history in employment decisions (including hiring) can constitute “disparate impact” discrimination against protected groups. Promulgating the proposed regs would be consistent with the Department of Fair Employment and Housing’s increased enforcement efforts to deter discrimination based on criminal records checks (see our previous blog on the subject of “Handling Applicant Criminal Records to Avoid Disability Discrimination Claims”).

The stated objective of the proposed regs is to describe how use of criminal history in employment decisions may violate the FEHA if it has an adverse impact on applicants or employees based on a FEHA-protected category (race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, and military or veteran status).

Two important clarifications. The proposed criminal history regs make two important clarifications to existing California law:    

          Adverse impact. The proposed regs say that, under the FEHA, “adverse impact” is synonymous with “disparate impact” as defined by the federal EEOC: even though a policy or practice is neutral on its face, it can still have discriminatory impact if it adversely affects the employment opportunities of a protected class. Historically, categorical use of rules regarding criminal history (e.g., we will not hire anyone who has ever been convicted of any crime) may result in adverse impact based on, for example, race, color, or national origin.

          Business necessity. The proposed changes also clarify that business necessity, as well as job-relatedness, is necessary to justify a policy or practice that has an adverse impact on a protected class. Although this is no change from existing law, the proposed regulations spell out that employers, to avoid liability, must consider each applicant or employee with a criminal history individually, as well as the nature and gravity of the offense, the time that has passed since the offense, when the individual completed their sentence, and the nature of the job held or sought.

Additional Obstacles to Avoiding Liability. The proposed regs would place a few more potential stumbling blocks in the path of employers than already exist by virtue of the current federal and state guidelines:

          Plaintiffs could establish a prima facie case of discrimination relying on statewide evidence correlating protected characteristics, criminal history, and failure to hire. A representative for the California Employment Lawyers Association (a group of plaintiffs’ lawyers) advocated for—and the FEHC was inclined to include in the regs—provisions that would allow a plaintiff to meet the initial burden of proving discrimination based on statewide statistics, rather than on local, regional, or industry-specific statistics. Given the stark statistics correlating protected characteristics, criminal history, and employment, the plaintiff’s burden would likely be easily met.

          Employers may be required to inform an applicant of the reason for an adverse decision by written correspondence and provide an opportunity to respond. As advocated by the National Employment Law Project, the FEHC was inclined to strengthen portions of the proposed regulations requiring employers to make individual evaluations of candidates with criminal histories by notifying individuals of the conviction that disqualified them from a position of employment, and by providing them with a reasonable opportunity for that person to respond with evidence of a factually incorrect record, with evidence of significant rehabilitation, or with evidence of other indicators that recidivism is unlikely. If the employee were to establish that the record was factually incorrect, then that record could not be used in the employment decision.

          Employers with a “bright line” policy that disqualifies candidates with a criminal history or certain type of conviction would be presumed to have violated the FEHA. The proposed regulations also would likely hamper an employer’s ability to rely on any “bright line” rule about the qualifications of candidates and employees with criminal histories. Such a “bright line” rule presumptively would not be considered “job related” or “consistent with business necessity,” and would therefore be considered unlawful. To avoid liability, the employer would then need to prove that its policy can properly distinguish candidates who “do and do not pose an unacceptable level of risk” and that the convictions “have a direct and specific negative bearing” on the applicant’s ability to perform the position’s job duties.

These new regulations are not yet in effect. It seems likely that the FEHC will adopt its final regulations regarding criminal history at its next meeting, on June 27, 2016. In light of these new proposals and the DFEH’s more proactive enforcement efforts, employers should reevaluate any practice that uses criminal history as a disqualification from employment.