Final Regulations on Federal Fair Chance to Compete Act
The Fair Chance Act, which defines when a hiring entity can request certain information from an applicant, was finalized by the Office of Personnel Management and became effective on 10/03/2023. Under this law, federal agencies and contractors cannot inquire about the criminal background of job-seekers before a conditional employment offer is extended. Certain roles, as determined by the Office of Personnel Management Director, may be exempt from the legislation, such as those that interact with children or handle finances.
While covered employers are still able to use criminal background and credit history to influence hiring decisions, this is now down further in the hiring process after the candidate has been assessed primarily based on experience, skillset, etc. and an offer is extended.
California Fair Chance Act Update
Starting from October 1, 2023, new updates to California’s Fair Chance Act will impact how employers can consider an applicant’s criminal history in employment decisions. The Fair Chance Act (FCA) enacted in 2018, prohibits employers with five or more employees from inquiring into an applicant’s criminal history until after making a conditional job offer. If the employer intends to deny employment based on an applicant’s conviction history, they must conduct an individualized assessment of the relationship between the conviction history and the job duties. If a preliminary decision to deny the offer is made, the applicant must be notified in writing and given a chance to respond. The FCA also prevents employers from using conviction history in a way that constitutes discrimination under the Fair Employment and Housing Act.
Modifications to the regulations include:
Expanding the definition of “employer” to include various entities involved in the hiring process.
Expanding the definition of “applicant” to include current employees seeking different positions and those undergoing criminal history review due to changes in ownership, management, or policy.
Prohibiting statements in job materials that exclude individuals with criminal history.
Offering exceptions for employers required by law to conduct background checks, but not where another entity is required to do so.
Prohibiting employers from considering voluntarily provided criminal history information.
Establishing specific procedures for rescinding conditional offers based on conviction history, including an initial individualized assessment and an opportunity for the applicant to respond.
Allowing consideration of rehabilitation or mitigating circumstances.
Applying FEHA procedures for FCA claims, including the right to file complaints with the Civil Rights Department.
Addressing the Work Opportunity Tax Credit (WOTC) and its impact on hiring individuals with past felony convictions.
For California employers, it’s crucial to:
\- Determine if your company falls within the expanded definition of “employer.”
\- Ensure that policies apply to the new categories of covered applicants.
\- Provide education and training to relevant employees.
\- Revise job advertisements to comply with the new regulations.
\- Follow FCA procedural requirements if denying employment based on conviction history.
\- Adhere to correct procedures for WOTC applications and records.
Additionally, keep an eye on Senate Bill 809, which proposes further changes to the FCA. As of now, the bill is on hold and not expected to move forward until 2024. Continue to monitor updates on these issues and consult legal experts for compliance guidance.