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

California's Fair Chance Act reshapes when and how you're allowed to screen job applicants, and getting the order of operations wrong is one of the quickest ways to end up on the receiving end of a discrimination claim. The law prohibits most employers with five or more workers from asking about conviction history before a job offer goes out, and it requires a documented, individualized assessment before you can pull that offer back based on a criminal record. Ask about a record too soon, skip the required written notices, or treat a conviction as an automatic disqualifier, and you've opened the door to a Civil Rights Department complaint or a lawsuit. Here's what the law actually requires and how to build a background check process that can withstand scrutiny.

What Is the Fair Chance Act?

Also known as Ban the Box, the Fair Chance Act is California's law limiting when employers can ask about or act on an applicant's criminal history. It covers public and private employers with five or more employees - which means nearly every business in Santa Cruz County falls under it. Under Government Code Section 12952, conviction questions can't appear on applications, come up in interviews, or be the subject of court record or social media searches until after a conditional offer of employment has been made. That offer has to be real: the background check result should be the only thing standing between the candidate and the job.

There are limited exceptions. A handful of positions - some roles involving children, or in law enforcement - are governed by other state or federal laws that require earlier screening, and the Fair Chance Act doesn't override those. Outside those carve-outs, the law heavily favors the applicant, and employers should treat the conditional-offer requirement as firm, not flexible.

What You Can't Ask, and When

Before a conditional offer is extended, job postings, applications, and interview questions all need to steer clear of conviction history - including indirect questions, like probing an unexplained employment gap as a workaround for asking about incarceration. Job ads also can't state that people with records need not apply, unless a specific law disqualifies candidates from that role.

Once a genuine conditional offer is on the table, you can run a background check, but some categories remain permanently off-limits: arrests that never led to conviction, sealed or dismissed records, diversion program participation, and most juvenile offenses. Anything a candidate volunteers before the conditional offer - even unprompted - also can't be held against them.

The Individualized Assessment Process

If a background check surfaces a conviction that concerns you, an outright rejection isn't an option. California law requires an individualized assessment weighing the nature of the offense, how much time has passed, and whether the conviction actually relates to the job. If that assessment points toward denial, a specific sequence applies:

• Send a preliminary denial notice naming the conviction and including a copy of the background check report
• Give the applicant at least ten business days to respond with context, evidence of rehabilitation, or a dispute of the report's accuracy - disputes get an extra fifteen business days
• Review whatever the applicant submits before making anything final
• If you still move to withdraw the offer, send a final notice explaining the decision and the applicant's right to file a complaint

Missing any one of these steps - even when the underlying decision was reasonable - is often enough by itself to support a claim.

Common Mistakes That Lead to Claims

Most Fair Chance Act violations aren't the result of deliberate discrimination. They come from process gaps: a hiring manager who asks about a record during a phone screen out of habit, an application form that was never updated to remove conviction questions, or an HR team that treats a background check "hit" as automatic grounds for rescission without documenting an assessment. Multi-location employers run into trouble when they apply one statewide policy without checking whether a worksite falls under a stricter local ordinance. Weak recordkeeping compounds the risk - if a rejected applicant files a complaint, you'll need your notices, assessment documentation, and response timeline on hand.

Third-party staffing agencies and background check vendors add another layer of exposure. California regulations now treat agents evaluating criminal history on an employer's behalf as employers themselves, so outsourcing the screening step doesn't outsource the liability. If a vendor's report format doesn't line up with what the individualized assessment requires, or a staffing partner runs its own screening ahead of your conditional offer, your business can still end up named in the complaint.

Why California Employers Need Local Guidance

Santa Cruz businesses face the same statewide law as employers everywhere else in California, but the practical risk lives in the details: how application forms are worded, how a background check vendor structures its reports, and how managers are trained to handle conviction disclosures that come up during interviews. Whether your business is in Santa Cruz, Los Angeles, or elsewhere in the state, these compliance requirements apply the same way, and an employment law defense attorney can audit hiring materials before a complaint is ever filed - far less costly than defending one after the fact. Employers operating in Los Angeles, San Francisco, or Oakland may also be layering local fair chance ordinances on top of the state law, each with its own notice periods and recordkeeping rules.

Protect Your Business Before a Claim Is Filed

Fair Chance Act compliance isn't complicated once the process is built correctly, but the penalties for getting it wrong - back pay, emotional distress damages, and legal fees - make it worth doing 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 arise. Our team also handles workplace investigations when a hiring or background check dispute escalates internally. As your employment law defense attorney in California, we can help close compliance gaps before they become 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

Does the Fair Chance Act apply to my small business?

The law applies to any employer with five or more employees, including part-time and temporary workers, at any location. Businesses with fewer than five aren't covered by state law, though some county and city ordinances set lower thresholds.

Can I ask about criminal history during a phone screen?

No. Conviction history can't be asked about or investigated at any point before a conditional job offer - including phone screens, in-person interviews, or informal conversations.

What counts as a "conditional offer" under California law?

A conditional offer must be genuine, meaning the background check is the only remaining condition before the candidate starts. Offers still contingent on other unresolved factors, like reference checks or salary negotiation, can complicate this requirement.

How far back can a background check look?

Under California's Investigative Consumer Reporting Agencies Act, most conviction history reporting is limited to seven years, with exceptions for certain high-salary positions.

What happens if I skip the individualized assessment?

Skipping it, or failing to document it, is one of the most common grounds for a Fair Chance Act claim, even when the underlying hiring decision was reasonable. The Civil Rights Department can order back pay and damages for violations.

Do local ordinances add extra requirements beyond the state law?

Yes. Los Angeles County, the City of Los Angeles, San Francisco, and Oakland all have their own fair chance ordinances with stricter notice periods, documentation rules, or penalties. Employers with locations or remote workers in those jurisdictions need to check both layers.

When should I call an employment law defense attorney about a background check policy?

Ideally before rolling out a new hiring process - but if an applicant has already disputed a rejection or filed a complaint, contact an employment law defense attorney right away to protect your response timeline and documentation.