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

California's Fair Chance Act changes how you can screen job applicants, and getting the sequence wrong is one of the fastest ways to end up defending a discrimination claim. The law bars most employers with five or more workers from asking about conviction history before extending a job offer, and it requires a documented individualized assessment before you can rescind that offer based on a criminal record. If your hiring team asks about a record too early, skips the written notice steps, or treats a conviction as an automatic disqualifier, you're exposed to a Civil Rights Department complaint or a lawsuit. Here's what the Fair Chance Act actually requires and how to build a background check process that holds up.

What Is the Fair Chance Act?

The Fair Chance Act, also called Ban the Box, is California's law restricting when employers can ask about or act on a candidate's criminal history. It applies to public and private employers with five or more employees, which covers nearly every business in Santa Cruz County. Under Government Code Section 12952, you cannot include conviction questions on an application, ask about a record in an interview, or search court records or social media for criminal history until after you've made a conditional offer of employment. A conditional offer has to be genuine, meaning the only thing standing between the candidate and the job is the outcome of the background check.

There are narrow exceptions. Some positions, like certain roles working with children or in law enforcement, are required by other state or federal law to screen for criminal history earlier, and the Fair Chance Act doesn't override those rules. Outside of those carve-outs, the presumption runs strongly in favor of the applicant, and employers should treat the conditional offer requirement as a hard rule rather than a guideline.

Ban-the-Box Rules: What You Can't Ask and When

Before a conditional offer, your job postings, applications, and interview questions need to stay silent on conviction history entirely. That includes indirect questions, like probing employment gaps when you're really fishing for incarceration history. You also can't state in a job ad that people with records won't be considered, unless a specific law disqualifies someone from that role.

Once you've extended a genuine conditional offer, you're free to run a criminal background check, but a few categories stay off-limits permanently: arrests that didn't lead to conviction, sealed or dismissed records, diversion program participation, and most juvenile offenses. Information a candidate volunteers before the conditional offer can't be used against them either, even if they bring it up unprompted.

The Individualized Assessment Process

If the background check turns up a conviction that concerns you, you can't reject the candidate outright. 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's duties. If you decide to move toward a denial, the law requires a structured sequence:

•        Send a preliminary denial notice identifying the specific 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 about the report's accuracy. Disputes get an additional fifteen business days.

•        Review whatever the applicant sends before finalizing anything.

•        If you still decide to withdraw the offer, send a final notice explaining the decision and the applicant's right to file a complaint.

Skipping any one of these steps, even when your underlying decision was reasonable, is often enough on its own to support a claim.

Common Mistakes That Lead to Claims

Most Fair Chance Act violations we see aren't the result of employers deliberately discriminating against applicants with records. 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 the assessment. Multi-location employers run into trouble when they apply one policy statewide without checking whether a worksite falls under a stricter county or city ordinance. Incomplete recordkeeping is another frequent issue: if a rejected applicant files with the Civil Rights Department, you'll need your notices, your assessment documentation, and your response timeline on hand.

Third-party staffing agencies and background check vendors add another layer of risk. 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 your vendor's report format doesn't match what the individualized assessment requires, or if a staffing partner runs its own screening ahead of your conditional offer, your business can still be named in the resulting complaint.

Why California Employers Need Local Guidance

Santa Cruz businesses face this law the same way employers across the state do, but the practical risk shows up in the details: how your application forms are worded, how your background check vendor structures its reports, and how your managers are trained to handle conviction disclosures that surface during interviews. Whether you're in Santa Cruz, or Los Angeles, or any other part of California, these compliance details apply just the same, and an employment law defense attorney can audit your hiring materials before a complaint ever gets filed, which is far less costly than defending one after the fact. If your business operates in Los Angeles, San Francisco, or Oakland, you 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 your 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 employer 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.

Frequently Asked Questions

Q: Does the Fair Chance Act apply to my small business?

A: The law applies to any employer with five or more employees, including part-time and temporary workers, at any location. If you have fewer than five, state law doesn't cover you, though some county and city ordinances set lower thresholds.

Q: Can I ask about criminal history during a phone screen?

A: No. You can't ask about or investigate conviction history at any point before a conditional job offer, including phone screens, in-person interviews, or informal conversations.

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

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

Q: How far back can a background check look?

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

Q: What happens if I skip the individualized assessment?

A: Skipping the assessment, 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.

Q: Do local ordinances add extra requirements beyond the state law?

A: 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.

Q: When should I call an employer defense attorney about a background check policy?

A: Before you roll out a new hiring process is ideal, but if an applicant has already disputed a rejection or filed a complaint, contact an employment law defense attorney immediately to protect your response timeline and documentation.