Employment Law Defense Attorney | Fair Chance Act Guidance

Background Checks and the Fair Chance Act: How California Employers Stay Compliant and Avoid Claims

Running a background check on a job applicant sounds like a routine hiring step. In California, it's also one of the more heavily regulated ones. The state's Fair Chance Act reshapes when and how employers can ask about, receive, and act on an applicant's criminal history, and the sequence you follow matters just as much as the decision itself. Getting it wrong doesn't require bad intent. It usually just requires an outdated application form or a rushed hiring manager, and either one can turn into a Civil Rights Department complaint.

Working with an employment law defense attorney to build a compliant process from the start is far less costly than defending a claim after the fact.

What the Fair Chance Act Actually Requires

California's Fair Chance Act applies to employers with five or more employees, including part-time and temporary workers, at any location. The core requirement is timing: employers must delay any inquiry into, or consideration of, an applicant's criminal history until after a conditional offer of employment has been extended. That means no criminal history questions on the application itself, and no ordering a criminal background report before an offer is on the table.

Once a conditional offer is made and a background check reveals conviction history, the employer can't simply rescind the offer. California requires an individualized, job-related assessment weighing the nature of the offense, how much time has passed, and the specific duties of the position before any adverse action is taken.

If the employer decides to move forward with rescinding the offer based on that assessment, a two-step notice process applies: a preliminary notice giving the applicant a chance to respond, followed by a final notice if the employer proceeds. Skipping or rushing either notice is one of the most common ways employers create liability, even when the underlying hiring decision was reasonable.

Recent Regulatory Changes Employers Need to Know

The California Civil Rights Department (CRD) expanded its regulations governing criminal history in hiring, effective October 1, 2023, and enforcement activity has increased substantially since then. A single applicant complaint can trigger a review of an employer's entire hiring workflow, not just the individual decision that prompted it.

Two changes are particularly worth an employment law defense attorney's attention. First, updated rules clarify that even if an applicant voluntarily discloses criminal history before receiving a conditional offer, the employer still cannot consider that information until after deciding whether to extend the offer. Second, regulations now require an "initial" individualized assessment before sending the preliminary notice, adding a documentation step many employers weren't previously building into their process.

The Act's exemption for employers legally required to run background checks has also narrowed. That exemption no longer applies where a different entity, such as an occupational licensing board, is the one legally required to conduct the check, rather than the hiring employer itself.

Where Employers Actually Go Wrong

Most Fair Chance Act violations aren't the result of deliberate discrimination. They come from process gaps that accumulate quietly over time: a hiring manager who asks about criminal history during a phone screen out of habit, an application form that was never updated to remove conviction-history questions, or an HR team that treats a background check "hit" as automatic grounds for rescission without documenting the required individualized assessment.

Multi-location employers face an additional layer of risk. Applying one statewide policy without checking whether a specific worksite falls under a stricter local ordinance, such as certain county or city fair chance rules, can leave an otherwise compliant company exposed in particular locations.

Incomplete recordkeeping compounds all of this. If a rejected applicant files a complaint with the Civil Rights Department, the employer needs its notices, its individualized assessment documentation, and its response timeline readily available. Employers who can't produce that paper trail are in a materially weaker position, regardless of whether the underlying decision was fair.

Third-party vendors add another layer of exposure. California regulations now treat agents evaluating criminal history on an employer's behalf, including staffing agencies and background check vendors, as employers themselves for purposes of Fair Chance Act compliance. That means employers can't simply outsource this risk; they need to confirm their vendors are following the same sequencing and notice requirements the law requires of the employer directly.

Beyond the Fair Chance Act: The Seven-Year Lookback and Related Rules

California background checks are also generally limited to criminal records from the past seven years for most positions, with narrow exceptions for certain high-salary roles. Employers must additionally comply with the Investigative Consumer Reporting Agencies Act and the California Consumer Privacy Act when handling applicant data, including obtaining proper written consent before conducting a background check.

These overlapping requirements mean a single background check touches several distinct areas of California law at once. A process built to satisfy the Fair Chance Act alone can still leave gaps under consumer reporting or privacy law, which is part of why a comprehensive compliance review, rather than a piecemeal fix, tends to serve employers better in the long run.

Building a Compliant Hiring Process

A defensible background check process starts well before any applicant reaches the conditional offer stage. Employers should review and update job applications to remove any conviction-history questions, train hiring managers and interviewers on what they can and cannot ask during screening, and build the individualized assessment and two-notice process directly into the hiring workflow rather than treating it as an afterthought.

Multi-location employers should map every worksite against applicable local ordinances, not just state law, to confirm they're meeting the strictest applicable standard. And any employer working with staffing agencies or background check vendors should confirm those partners are following the same sequencing and documentation requirements, since liability doesn't stop at the vendor relationship.

Working With an Employment Law Defense Attorney

Fair Chance Act compliance isn't complicated once the process is built correctly, but the penalties for getting it wrong, including back pay, emotional distress damages, and legal fees, make it worth getting right the first time. Brereton, Mohamed, & Korte LLP works with employer defense clients throughout Santa Cruz to review hiring practices, draft compliant application materials, and defend against discrimination and wrongful termination claims when they do arise. Our team also conducts workplace investigations when a hiring or background check dispute escalates internally.

As your employment law defense attorney in California, we can help you close compliance gaps before they turn into litigation. Call 831-429-6391 or reach out online to schedule a consultation.

Read More: Background Checks and the Fair Chance Act: How California Employers Stay Compliant and Avoid Claims

Frequently Asked Questions

Q: Which employers does California's Fair Chance Act apply to?
The law applies to any employer with five or more employees, including part-time and temporary workers, at any location.

Q: Can an employer ask about criminal history on a job application in California?
No. The Fair Chance Act prohibits inquiries about criminal history during the application process. Employers must wait until after extending a conditional offer of employment.

Q: What happens if a background check reveals a conviction after a conditional offer?
The employer must conduct an individualized, job-related assessment before taking adverse action, and follow a two-step notice process, a preliminary notice and a final notice, before rescinding the offer.

Q: What if an applicant voluntarily mentions their criminal history before an offer is made?
Under updated regulations, the employer still cannot consider that information until it has decided whether to extend a conditional offer.

Q: How far back can a California employer look in a criminal background check?
Most positions are limited to a seven-year lookback period, with narrow exceptions for certain high-salary roles.

Q: Are staffing agencies and background check vendors subject to the Fair Chance Act?
Yes. California regulations treat agents evaluating criminal history on an employer's behalf as employers themselves for compliance purposes, meaning vendors must follow the same sequencing and notice requirements.

Q: What documentation should employers keep in case of a complaint?
Employers should retain preliminary and final notices, individualized assessment documentation, and a clear record of their response timeline, since these are what the Civil Rights Department will request if a complaint is filed.