New San Francisco Law Restricts Employers’ Use of Criminal Background Checks

San Francisco’s recently enacted Fair Chance Ordinance (a.k.a., the “Ban-the-Box Ordinance”) limits the use of criminal history information in pre-employment screening by San Francisco employers, contractors, and affordable housing providers.  Under the ordinance, which becomes operative on August 13, 2014, employers are prohibited from requiring applicants for San Francisco-based jobs to disclose any conviction history and from conducting a criminal background check until after the first live interview or after a conditional offer of employment. 

Who is subject to the new restrictions?
The ordinance protects applicants who are applying for jobs in San Francisco.  It applies to hiring decisions for San Francisco-based positions with private sector employers, and/or for work on city contracts and subcontracts, including those outside the city.  The ordinance covers employers located or doing business in San Francisco who employ 20 or more workers (regardless of location) and contractors hiring employees who would be performing work in furtherance of a contract within San Francisco on city contracts worth more than $5,000 in a fiscal year.

What is required and prohibited?
Employers must state in all covered job solicitations and employment advertisements that they will consider for employment qualified applicants with criminal histories.  Other than pending arrests still under investigation, employers may never ask applicants or employees about arrests not leading to a conviction; participation in or completion of a diversion or a deferral of judgment program; dismissed or expunged convictions; juvenile convictions or adjudications; convictions more than seven years old; or offenses other than a felony or misdemeanor.  Following the first live interview or a conditional offer of employment, employers may ask about conviction history and conduct a criminal background check, excluding the prohibited material just mentioned, but applications cannot request this information. 

In addition, employers are required to post a notice from San Francisco’s Office of Labor Standards Enforcement (OLSE) that details applicant and employee rights under the ordinance.  A copy of that OLSE notice must be given to an applicant or employee prior to conducting a criminal background check.

Once a past conviction has been disclosed, employers must conduct an individualized assessment, considering whether the position offers the opportunity for the same or a similar offense to occur, how old the conviction is, and any mitigating factors.  Before taking an adverse action against an applicant or employee based on criminal history, the employer must provide the person with their criminal history report, notice of the prospective adverse action, and the specific basis for the action.  The applicant/employee then has the right to offer evidence concerning the inaccuracy of their conviction, of rehabilitation, and other mitigating factors.  If the employer decides to proceed with the adverse action, it must provide final notice of the action.  The ordinance does not require employers to give preference to applicants with a criminal history, and employers retain discretion to choose the most qualified and appropriate candidates.  Retaliation for exercising any rights under the ordinance is prohibited.  Employers must keep records relating to the ordinance, including application forms, for three years. 

What are the penalties for violations?
First violations and violations during the initial year the ordinance is in effect will result in warnings and notices to correct.  Second violations will result in a $50 administrative penalty for each employee or applicant, increasing to $100 per employee or applicant for subsequent violations.  In addition, San Francisco may bring a civil action against an employer, and relief could include reinstatement, back pay, payment of benefits or salary unlawfully withheld, additional liquidated damages of $50 per employee whose rights were violated, injunctive relief, and attorneys’ fees and costs.

Is this a trend?
As explained in the ordinance, many cities, counties and states have passed laws regulating employers’ use of criminal background checks.  Employers should consult with counsel before asking questions of applicants or employees regarding their criminal history.