San Francisco’s Fair Chance Ordinance Takes Effect August 13, 2014: San Francisco Private Employers and City Contractors and Subcontractors Face Significant New Restrictions on Inquiries and Use of Criminal History

San Francisco’s Fair Chance Ordinance Takes Effect August 13, 2014: 
San Francisco Private Employers and City Contractors and Subcontractors
Face Significant New Restrictions on Inquiries and Use of Criminal History

By Gayle M. Athanacio, Virginia K. Young and Sharon O. Rossi.

Starting August 13, 2014, San Francisco employers, City Contractors and Subcontractors – as defined in the Ordinance – face significant limitations on obtaining and using criminal history information from job applicants and employees, including a new prohibition on criminal history “check the box” inquiries on employment applications.  Joining several states that have enacted “ban the box” laws in recent years (including California’s newly enacted “ban the box” requirements for public employers, Labor Code § 432.9), the Fair Chance Ordinance brings City contractors (including contracts relating to real property), subcontractors and all but the smallest private employers doing business in San Francisco closer in line with longstanding City public employment hiring practices.

Every San Francisco employer, even those whose employees work outside of San Francisco, should carefully review their employment applications and hiring practices in light of the new ordinance.  For many, compliance will require changes to written employment applications, interview practices, and procedures for using criminal history when making other employment decisions.

The article below discusses the requirements for private employers.  City Contractors and subcontractors may wish to review the following:  The Ordinance also applies to San Francisco housing providers, however, discussion of those requirements is beyond the scope of this article.

WHAT EMPLOYERS ARE COVERED?

The San Francisco Fair Chance Ordinance applies to private employers who are located in or doing business in San Francisco and who employ 20 or more persons.

• The 20 person threshold includes employees working outside San Francisco, the owner or owners of the business, and management and supervisorial employees.
• While employees working outside the City are counted to determine whether the employer has 20 or more employees, the Ordinance’s protections only apply to those individuals whose “physical location of employment or prospective employment” is wholly or substantially in San Francisco.

Example:  An employer doing business in San Francisco with 20 employees who work  outside of San Francisco seeks to hire a San Francisco based employee and a non-San Francisco based employee. The employer must comply with the Ordinance with regard to the hiring of the San Francisco employee. The Ordinance does not cover the non-San Francisco based employee.

WHAT DOES THE ORDINANCE REQUIRE?

Necessary Disclosures In Employment Solicitations and Advertisements

Under the Ordinance, any solicitation or advertisement that is “reasonably likely” to reach persons who are “reasonably likely” to seek employment in the City:

• Must expressly state that the employer will consider for employment qualified applicants with criminal histories in a manner consistent with the requirements of the Ordinance; and
• Cannot express, directly or indirectly, that any person with an Arrest or Conviction will not be considered for employment or may not apply for employment.

Pre-Inquiry Notice Required

Prior to any inquiry about criminal history, the employer must provide a copy of the City-issued notice to job applicants, informing them of their rights under the Ordinance. These notices must also be posted in the workplace or jobsite. The Notice can be printed from the Office of Labor Standards Enforcement (“OLSE”) website.

In addition, if the employer conducts background checks, it must comply with all state and federal requirements regarding background checks, including but not limited to those in the California Investigative Consumer Reporting Agencies Act (ICRAA), and the Federal Consumer Reporting Act (FCRA).

No “Check The Box” or Criminal History Questions On Employment Applications

Employers subject to the Fair Chance Ordinance can no longer include criminal history inquiries on their job applications. Limited “Conviction History” inquiries (which expressly include “Unresolved Arrests”) as defined in the Ordinance are permissible later in the hiring process, as described below.

Inquiries Into Criminal History Are Only Permitted After the First Interview or a Conditional Offer of Employment

Employers cannot inquire into criminal history – or run a background check that includes any criminal history report – until after either the first “live” interview or after making a conditional offer of employment.  A “live” interview can include an interview in-person, or through a telephone, videoconference, or “other technology” system.”

Limits on Permissible Questions

At the appropriate time, employers can inquire into criminal history; however, the Ordinance places limits on permissible questions in addition to those already imposed by applicable law, such as the California Labor Code’s prohibition on inquiries about convictions relating to possession of marijuana which are more than two years old. Cal. Labor Code § 432.8.

Employers may ask about Unresolved Arrests (one that is undergoing an active pending criminal investigation or trial that has not yet been resolved) or Convictions (felony or misdemeanor convictions for which person has been placed on probation, fined, imprisoned or paroled). However, even within this broad category, there are significant exclusions. No inquiry may be made into any of the following:

• Participation in or completion of a diversion or a deferral of judgment program;
• A conviction that has been judicially dismissed, expunged, voided, invalidated, or otherwise rendered inoperative;
• A conviction or any other determination or adjudication in the juvenile justice system, or information regarding a matter considered in or processed through the juvenile justice system; or
• A conviction that is more than seven years old, the date of conviction being the date of sentencing.

At no point can employers can ask about arrests not leading to a conviction, (except for Unresolved Arrests) or for information pertaining to an offense other than a felony or misdemeanor, such as an infraction.

Necessary Procedures When Making Employment Decisions

If the criminal history inquiry yields information which causes  the employer to either decide not to hire an applicant or to make an adverse employment action, the Ordinance requires the employer to comply with the following procedures:

• The employer must give the applicant or employee a copy of the background check report, if any, and notify the applicant or employee of the intended employment decision and the items forming the basis for the decision; and
• The applicant or employee must be given seven days to give the employer notice, orally or in writing, of evidence of the inaccuracy of the Conviction History or any evidence of rehabilitation or other mitigating factors. A non-exclusive list of rehabilitation evidence and mitigating factors are provided in the Ordnance; and
• If the applicant or employee submits evidence, the employer must delay any adverse action for a reasonable time and must reconsider the prospective decision in light of the information provided.
• Regardless of whether the employee or applicant submits information, in all cases the employer must conduct an individualized assessment, considering:
  • Only “directly-related convictions” (direct and specific negative bearing on that person’s ability to perform the duties or responsibilities of the job, including whether the employment position offers the opportunity for the same or a similar offense to occur and whether circumstances leading to the conduct will recur in the employment position);
  • The time that has elapsed since the Conviction or Unresolved Arrest; and
  • Any evidence of inaccuracy of the information, rehabilitation or other mitigating factors.

• The employer must notify the applicant or employee of the final decision.

WHAT ARE THE RECORD KEEPING REQUIREMENTS?

In addition to existing record keeping requirements imposed by other applicable laws, employers must keep records of employment, application forms, and other pertinent data for three years, and allow the OLSE reasonable access to such records to allow the OLSE to monitor compliance with the Ordinance. Employers may also be required to provide information to the OLSE, on an annual basis, verifying the Employer’s compliance with the Ordinance.

Failure to maintain or retain adequate records documenting compliance, or failure to allow the OLSE reasonable access to records, creates a presumption that the employer has violated the Ordinance. 

COLLECTIVE BARGAINING AGREEMENTS AND INTERACTION WITH STATE AND FEDERAL LAWS

The Ordinance applies to both existing collective bargaining agreements and to those that come into existence after the Ordinance’s effective date. However, the Ordinance does not limit provisions providing greater or other rights or protections.

Any part of the Ordinance that is in conflict with federal or state law or a requirement of a government agency implementing state or federal law will not be enforced. For example, employers may inquire about criminal convictions outside of the time periods set forth in the Ordinance where required by federal or state law or a government agency implementing federal or state law.

HOW IS THE ORDINANCE ENFORCED?

For private employers, both the City’s Office of Labor Standards Enforcement (OLSE) and the City Attorney have the authority to enforce the Fair Chance Ordinance.

Violations can include failures to follow proper procedures, including the failure to conduct an individualized assessment before taking an adverse action. The OLSE will not, however, second guess an employer’s properly documented decision.

The OLSE will issue warnings for first time violations and during the first year the Ordinance is in effect. Thereafter, penalties of up to $50 for a second violation and up to $100 for subsequent violations may be imposed by the OLSE. While the employer must pay to the City these penalties imposed by the OLSE for each employee or applicant as to whom the violation occurred, if multiple employees or applicants are impacted by the same violation at the same time (e.g. all applicants for a certain job openings are asked for their Conviction History on the initial application), the violation is treated as a single violation.

Where the employer does not promptly comply with the OLSE’s order to correct violations, the OLSE may refer the action to the City Attorney to consider initiating a civil action. Available relief includes: reinstatement; back pay; the payment of benefits or pay unlawfully withheld; liquidated damages in the amount of $50.00 to each employee, applicant or other person whose rights were violated for each day such violation continued or was permitted to continue; injunctive relief; and reasonable attorney’s fees and costs.

WHAT EMPLOYERS SHOULD DO NOW:

The first step every employer should undertake is to determine if it is potentially covered by the Fair Chance Ordinance. If your Company is subject to the Ordinance, then you should:

1. Ensure all advertisements and employment solicitations provide the required information.
2. Post the required notice to be readily accessible to job applicants and employees.
3. Remove all criminal history inquiries or “check the box” references in employment applications.
4. Ensure no inquiry into criminal background occurs until after the initial “live” interview (whether in person, on the phone, or through other technological means) or a conditional offer of employment is made.
5. Limit any inquiry to only permissible Convictions or Unresolved Arrests.
6. Provide proper notice of any intended adverse employment decision, and allow the prospective/current employee 7 days to respond to a notice of adverse employment decision.
7. In all instances, conduct an individualized assessment before making a final adverse employment decision and notify the applicant or employee of the final decision.
8. Maintain the appropriate records for 3 years.

If you have any questions as to whether or how San Francisco’s Fair Chance Ordinance affects your business, please contact the Rogers Joseph O’Donnell attorney with whom you regularly work, the authors of this legal update, or any member of the RJO employment practice group.

RJO’s Labor & Employment Law Practice Group is comprised of experienced labor and employment attorneys who regularly represent and advise employers, big and small, in wide variety of industries.

The content of this article is intended to provide a general guide to the subject matter, and is not a substitute for legal advice in specific circumstances.