California’s Fair Chance Law Could Apply Directly to Employee Background Check Providers

California famously leads the way in many United States regulations. Its regulatory environment is strict and detailed, and companies operating within the state’s massive economy must navigate these rules carefully. For example, the state has one of the most extensive Fair Chance laws governing the employee background check process. Briefly, it seemed as though the state legislature would consider banning background checks altogether.

In October 2023, new clarifications and expansions to the state’s fair chance laws will come into force. Most notably, the law’s definition of what constitutes an employer will change after six years in effect. This language difference could considerably impact how companies conduct background checks for employees and choose their screening partners.

What’s changed in the new clarifications?

In the original version of the law, the text specifically defined what an employer was and provided a list of the relevant entities. This version placed the compliance burden directly on these organizations to clarify enforcement practices. In the new revision, effective 2023, the definition of an employer has grown more expansive.

In future, the California fair chance law will also apply to any entity that accesses criminal history information to help employers evaluate candidates. In other words, background check companies will also have additional compliance concerns in California. If a background check company begins compiling a report for a California business before extending a conditional offer, that company would now also be liable for violating the law.

Previously, a screening company might have prepared a report for an employer during the hiring process and supplied it at the appropriate stage. However, it would be illegal for the company to conduct the background check if the employer hadn’t provided the conditional offer.

Employers should seek assurances of compliance

There are only a few months before the changes go into effect. This shift necessitates better communication about background checks for employment. Screening companies must confirm with employers when it is acceptable to begin searching for background information. 

Because employers may also be liable if their screening partner violates the law, California companies must begin a conversation about this topic as soon as possible. Ideally, your background check provider should demonstrate a clear policy and a new workflow consistent with the shifting definitions in the fair chance law.

Working with a compliance-ready screening provider

At backgroundchecks.com, staying on top of shifting compliance requirements nationwide remains a vital part of our work. The employee background check remains a necessary tool for hiring—and we’re prepared to continue operating in full compliance with the changes in the law come October 1. Even as hiring challenges mount, our team continues working closely with employers to provide the support they require at the appropriate hiring stages. 

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