In California, fair chance or Ban-the-Box laws restrict an employer from asking about an applicant’s criminal background history in the early stages of the hiring process. And while there is no federal Ban-the-Box law that applies to private sector employers, California’s Fair Chance Act prohibits private sector employers with five or more employees from inquiring into or considering an applicant’s conviction history until after a conditional offer of employment has been made. Specifically, prior to making a condition offer of employment, employers are prohibited from considering, distributing, or disseminating information relating to:

• Arrests that do not result in a conviction
• Participation in a diversion program
• Convictions that have been sealed, dismissed, expunged, or statutorily eradicated; or
• Any conviction for which the convicted person has received a full pardon or has been issued a certificate of rehabilitation.

Criminal records are considered consumer reports. Employers who have made a conditional offer of employment and have provided all requisite notices concerning the use of consumer reports, may make inquiries concerning the applicant’s criminal background history.

Employers may not revoke a conditional job offer based on an applicant’s criminal history without initiating the required notice process. California Ban-the-Box laws do not apply to an applicant for a position:

• With a state or local agency that requires it by law.
• With a criminal justice agency.
• As a farm labor contractor.
• Where the employer is required by federal, state, or local law or regulation to:
  • conduct criminal background checks; or
  • restrict employment based on criminal history.

Check in with us next week for additional Ban-the-Box best practices and tips for revoking a conditional offer of employment.

California’s Fair Chance Act (FCA) limits an employer’s use of an applicant’s or employee’s criminal conviction history in the following ways:

• Including questions about an individual’s conviction history before a conditional offer of employment has been made.
• Inquiring, considering, or discriminating information about an applicant’s or employee’s criminal conviction history before a conditional offer of employment has been made.
• Considering information about arrests not followed by a conviction, underlying pending charges or convictions dismissed, sealed, eradicated, or expunged; or an individual’s participation in a diversion program.

Employers in California with five or more employees are prohibited from conducting any criminal background history check until after a conditional offer of employment has been made. Once made, the employer must conduct an individualized assessment before making any decisions regarding revocation of the conditional offer.

Revoking a Conditional Offer of Employment
California employers subject to the FCA may not revoke a conditional offer of employment based on information discovered within an individual’s criminal conviction history without conducting an individualized assessment.

The assessment must consider the following factors:

• The nature and gravity of the conviction.
• How much time has passed since the offense or conduct and completion of the sentence.[i]
• The nature of the job held or sought.

An employer may, but is not required to, put the results of its assessment in writing. Employers should seek legal counsel before creating a written record of the results of its assessment.

If the employer’s decision is to withdraw the conditional offer of employment based solely on a conviction(s) discovered in the criminal background history, it must provide the applicant or employee advance written notice and an opportunity to respond.

A preliminary notice of intent to withdraw the conditional offer of employment must include all of the following:

• Notice of the disqualifying conviction(s)
• A copy of the conviction history report (if any)
• Notice of the right to respond (in writing) within 5 business days including:
  • Notice of opportunity to provide evidence:
    • Challenging accuracy of the conviction history report
    • Rehabilitation and/or mitigating circumstances

Employers are prohibited from making any final decisions during the initial 5-day time period. A notice of intent to challenge, received in writing, grants the applicant/employee an additional five business days with which to respond. Rebuttal evidence once submitted must be considered before the employer makes a final decision.

A final decision to disqualify an applicant based solely or in part on the applicant’s conviction history must be communicated in writing to the applicant and must include all of the following:

• Notice of the denial or disqualification decision.
• Existing procedure(s), if any, for challenging the decision or to request reconsideration.
• Notice of the right to file a complaint with the Department of Fair Employment and Housing

The employer’s final decision may, but is not required to, justify, or explain its reasoning behind making the final decision to deny or disqualify.

Some exceptions do apply. FCA provisions do not apply to an applicant for a position:

• With a state or local agency that requires it by law.
• With a criminal justice agency.
• As a farm labor contractor.
• Where the employer is required by federal, state, or local law or regulation to:
  • Conduct criminal background checks; or
  • Restrict employment based on criminal history.

Tips, Insights and Best Practices:Employers should consider the following regarding Ban-the-Box compliance:

• Training for all personnel involved in the hiring process.
• Conducting the individualized assessment does not prevent an employer from having validly established pre-job qualifications.
• Consider allowing additional time beyond the requisite 5 or 10-day response periods for the applicant or employee to provide rebutting evidence. However, policies and procedures for giving applicants more time to provide evidence should be the same for all applicants or employees.
• Consider performing a self-audit to evaluate in advance what types of convictions would prohibit an employee from performing a specific job (e.g., a conviction for financial fraud or embezzlement would prohibit an applicant or employee from performing job duties involving the handing of cash or company bank accounts.) Considering this issue in advance can lessen an individual’s chances of proving allegations of discriminatory conduct. In other words, making these decisions in advance prevents making case-by-case determinations for obvious types of convictions; evidencing prior consideration as opposed to consideration based on an individual’s alleged protected classification.

Many California and Arizona municipalities have enacted their own Fair Chance ordinances. These local laws may add additional burdens to employers in these locals. Employers should consult local laws or legal counsel to determine if local laws apply.

With few exceptions, almost all states, including California and Arizona, adhere to the default rule of at-will employment. The at-will nature of employment; the ability to terminate the employment relationship with or without notice for any reason, so long as it’s not a wrongful reason, is an important legal protection, and can help in challenging allegations of wrongful termination.

Typically, unless an employee can prove a contrary agreement or some other legal limitation on the employer’s right to terminate, an employer may terminate an employee at any time, with or without notice, and for any lawful reason, or no reason. Nonetheless, it is important employers take steps to make sure they do nothing that could be viewed as impacting the default at-will nature of the employee/employer relationship. For example, employee handbooks that don’t have at-will provisions or adequate disclaimer language could form the basis of an argument that the employer did not intend to form an at-will relationship; even probationary periods and progressive disciplinary policies, if not drafted properly, can be seen as suggesting something other than at-will employment.

The existence of express agreements limiting the right of the employer to terminate absent good cause—whether oral or written—can also impact the at-will nature of employment. Agreements with employees for specified terms (e.g., “three months’ notice will be provided prior to termination”) or employer statements suggesting job security, permanent employment, or that the employee will be able to keep their position so long as they continue performing their job, have all been deemed actions that could transform an at-will relationship into a termination “for-cause” relationship.

Tips for Protecting the At-Will Relationship

To avoid taking actions that could impact the at-will employer/employee relationship keep in mind these important tips:

• Include at-will employment provisions in the employee handbook, job applications, offer letters, and standalone policies.
• Review employee handbook language, offer letters, and any employment agreements to make sure existing language cannot be misunderstood as representing or suggesting permanent employment
• Train employees involved in recruiting, interviewing, and hiring on the difference between at-will and for-cause employment
• If your employee handbook includes a progressive discipline policy or probationary periods, speak with legal counsel about the necessity of keeping such policies and/or make sure they both expressly state they are not intended to change the at-will nature of employment.

NOTE: Even a contract for employment can include an at-will employment provision.

The Equal Employment Opportunity Commission (EEOC) just announced that it is once again extending its EEO-1 Data Collection filing deadline. The new deadline for uploading EEO-1 reports for 2019 and 2020 has been extended from August 23, 2021 to October 25, 2021. 

Employers subject to EEO-1 reporting requirements should take note that the EEOC’s extension notice makes clear there will be no further extensions. 

A recent decision by the California Court of Appeal (2^nd App. Dist.) relied on the Federal Arbitration Act (FAA) to settle a question of ambiguity created by a typographical error in a third-party translation of an employer’s arbitration agreement.

In the case Western Bagel Co. Inc. v. Superior Court of Los Angeles County and Jose Calderon,[i] former employee Jose Calderon (Calderon) alleged in a punitive class action that his employer had failed to provide meal and rest periods in accordance with California law. Calderon is a Spanish-speaker with only a basic English vocabulary. While employed by Western Bagel, Calderon was provided with two versions of the company’s arbitration agreement: an original in English and a copy in Spanish. One clause in the Spanish version of the agreement provided for “non-binding” arbitration while all other clauses referred to “binding” arbitration.

Western Bagel argued that the difference in language was due to a typographical error made by the third-party translation service that created the Spanish version of the document. Calderon argued the error muddied the waters and made the intent of the parties unclear as to whether arbitration was to be binding or non-binding. The lower court resolved the issue by applying the contra proferentem doctrine; used when the intent of the parties cannot be discerned, the doctrine is applied to resolve the ambiguity against the drafter of the document.

In reversing the lower Court’s decision, the Appellate Court determined that in matters involving arbitration the FAA preempts the use of contra proferentem. The FAA default is “that any ambiguities about the scope of an arbitration agreement must be resolved in favor of arbitration, a fundamental attribute of which is a binding arbitral proceeding.”  

The Calderon case illustrates two important points of contract construction:

• In contract matters not involving arbitration, where the intent of the parties is unclear, ambiguities will be resolved against the party who drafted the document.  
• In contract matters involving arbitration, where the intent of the parties is unclear, the FAA default rule will be applied to resolve ambiguities in favor of arbitration.

This case also emphasizes how important it is that translated documents mirror the terms used in the original document. Employers utilizing translation services should carefully review translated documents and consider including a disclaimer that makes clear any ambiguities in translation are to be resolved in favor of the original document.