New Laws Affecting Prospective Employers (2018)

Every January 1, a number of new employment laws take effect in California and this year is no exception. However, two new laws that took effect on January 1, 2018 will directly impact the application and hiring practices of California employers.
 
Salary History Inquiries [AB 168; Ch. 688; Eggman]
 
New Labor Code §432.3 now restricts a prospective employer’s ability to inquire about or rely on the salary history of an applicant for employment. Specifically:
 

• An employer may not rely on an applicant’s salary history as a factor in determining whether to offer employment to the applicant or what salary to offer.
• An employer may not seek salary history information, including compensation and benefits, about an applicant. This prohibition applies to both oral and written inquiries, including job applications, and regardless of whether made personally by the prospective employer or through an agent, such as a placement agency.
• An employer must provide the pay scale for a position to an applicant upon reasonable request. In other words, an employer must have an established written pay scale.
• This new law does not prohibit an applicant from voluntarily disclosing salary history information to a prospective employer, provided it is done without prompting.
• If an applicant chooses to voluntarily disclose salary history information to a prospective employer, the employer may consider or rely on it. However, consistent with the California Equal Pay Act (Labor Code §1197.5), which prohibits gender-based salary disparity, prior salary alone will not justify a disparity in compensation.

 
Ban-the-Box Law [AB 1008; Ch. 789; McCarty]
 
With limited exceptions, new Government Code §12952 amends the Fair Employment and Housing Act (FEHA) to make it unlawful for any public or private employer with five or more employees to do any of the following:
 
1.   Include any question on a job application seeking an applicant’s conviction history before the employer makes a conditional offer of employment;
2.   Inquire into or consider an applicant’s conviction history until after the prospective employer makes a conditional offer of employment;
3.   Consider, distribute, or disseminate information about any of the following while conducting the background check in connection with an application for employment:

• Arrest not followed by conviction, except as permitted by Labor Code §432.7(a)(1) [arrests where an applicant is free on bail or on his or her own recognizance pending trial] and (f) [limited exceptions for health care facilities];
• Referral to or participation in a pre-trial or post-trial diversion program; or
• Convictions that have been sealed, dismissed, expunged, or statutorily eradicated pursuant to law.

4.   Interfere with, restrain, or deny the exercise of, or the attempt to exercise, any right under this section.
 
If an employer intends to deny employment to an applicant solely or partially because of his or her conviction history, the employer must make an individualized assessment of whether the conviction history has a direct and adverse relationship with the specific duties of the job that justify refusing to hire the applicant. The assessment must consider:
 

• The nature and gravity of the offense or conduct.
• The time that has passed since the offense or conduct and completion of the sentence.
• The nature of the job held or sought.

 
If an employer makes a preliminary decision not to hire the applicant based on conviction history, it must notify the applicant in writing, which notice shall contain all of the following:
 

• The disqualifying conviction forming the basis for the preliminary decision to rescind the offer.
• A copy of the conviction history report, if any.
• An explanation of the applicant’s right to respond before that decision becomes final, and the deadline to respond. The explanation shall inform the applicant that the response may include evidence challenging the accuracy of the conviction history report, evidence of rehabilitation or mitigating circumstances, or both.

 
The applicant must have at least five business days to respond before the employer makes a final decision. If the applicant notifies the employer in writing during that time that he or she disputes the accuracy of the conviction history report and is taking specific steps to obtain evidence supporting same, then the applicant shall have five additional business days to respond. The employer must consider any information submitted by the applicant before making a final decision.
 
If an employer makes a final decision to deny employment solely or partially because of his or her conviction history, it must notify the applicant in writing of all the following:
 

• The final denial or disqualification;
• Any existing procedure for the applicant to challenge the decision or request reconsideration; and
• The right to file a complaint with the DFEH.

 
Among other exceptions, the prohibition does not apply to a position where an employer is required by any state, federal, or local law to conduct criminal background checks for employment purposes or to restrict employment based on criminal history. Credit unions are encouraged to consult with counsel to determine the extent to which this exemption might apply and how to ensure hiring procedures are compliant.