In February, the San Francisco Board of Supervisors passed the Fair Chance Ordinance, which limits when and to what extent employers can inquire into the criminal history of applicants and employees. The ordinance also applies in the fair housing arena. The aim of the ordinance is to delay when an employer can inquire about criminal history, but not to ban it entirely: employers cannot inquire into an individual’s criminal history until after the employer has determined that the individual meets the requirements for the position. The main highlights of the ordinance are as follows:

• Coverage:It applies to employers located or doing business in San Francisco with twenty or more employees and certain government contractors. The employer must count all employees (inside and outside of San Francisco) to determine whether it is covered by the ordinance. It protects individuals who work (or would work) within San Francisco.
• Job Advertisements and Applications: Employers cannot state in job advertisements or solicitations that are “reasonably likely to reach persons who are reasonably likely to seek employment in San Francisco” that individuals with arrests or convictions are not eligible for employment and they must state that they will consider qualified applicants with criminal histories (consistent with the allowances of the ordinance) for employment. Employers cannot seek criminal conviction information on job applications.
• Timing of Background Checks: Employers cannot inquire into, or run background checks involving, criminal history until after the first live interview (i.e., in person or via telephone, videoconferencing, or other technology) or a conditional offer of employment.
• Posting Notice: Employers must post a special notice (which the Office of Labor Standards Enforcement (“OLSE”) will provide) in the workplace informing applicants and employees of their rights under the ordinance. Employers must also provide this notice to applicants and employees before conducting any criminal history inquiries (including background checks).
• Recordkeeping: Employers must maintain records of their employment decisions (including job applications and other data) for at least three years and allow the OLSE to access such records.

The ordinance mirrors many of the established requirements under the federal Fair Credit Reporting Act and the California Consumer Credit Reporting Agencies Act and Investigative Consumer Reporting Agencies Act (e.g., the employer cannot consider convictions that are more than seven years old or arrests that do not result in conviction; it must notify the employee of any potential adverse action occasioned by discovery of a conviction in a background check, and the individual has a right to receive a copy of the background check and to provide information regarding an at-issue conviction, including evidence of rehabilitation or other mitigating factors; etc.).

In addition, it adopts much of the background check guidance issued by the Equal Employment Opportunity Commission in 2012 (e.g., the employer should conduct an individualized assessment, taking into account the relationship of the conviction to the position, the time that has elapsed since the conviction, and other mitigating factors). It also protects applicants and employees from retaliation for exercising their rights under the ordinance.

The ordinance becomes effective in August 2014. For first-time violations, or any violation within the first year of the ordinance being effective, the OLSE will only issue warnings. However, for second violations, the OLSE may impose a penalty of $50 for each aggrieved individual and $100 for subsequent violations.

Employers with employees in San Francisco, or that expect to recruit for positions in San Francisco, should revisit their job applications and background check procedures in light of the ordinance. Click here for the full ordinance and legislative digest.