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California’s FEHA amendment bans employment discrimination for marijuana use

In September 2022, the California Fair Employment and Housing Act (FEHA) was amended to make it unlawful to discriminate against an applicant or employee who has engaged in the lawful use of marijuana outside of work. When the new law (known as “AB 1288”) takes effect on January 1, 2024, with limited exceptions, California employers will have to accommodate workers who engage in the off-duty use of marijuana, regardless of whether the use is for medical purposes.

AB 1288 is not a wholesale ban on employers restricting employees’ marijuana use or testing for it. Rather, the new law focuses on protecting against discrimination based on the use of cannabis outside of work hours and the workplace.

The new law does not ban drug testing – nor even completely ban testing for marijuana use. AB 1288 expressly allows an employer to rely on “scientifically valid pre-employment drug screening conducted through methods that do not screen for nonpsychoactive cannabis metabolites.” Such testing should only identify any current impairment or active THC levels. AB 1288 allows an employer to consider a positive result on such testing and to act on it.

AB 1288 further does not permit an employee “to possess, to be impaired by, or to use, cannabis on the job.” Nor does it affect “the rights and obligations of an employer to maintain a drug- and alcohol-free workplace,” as specified in Health and Safety Code section 11362.45, “or any other rights or obligations of an employer specified by federal law or regulation.” 

In addition, AB 1288 does not apply to an employee “in the building and construction trades,” a term that the legislation did not define. AB 1288 does not apply to positions requiring a federal government background check or security clearance. It also “does not preempt state or federal laws requiring applicants or employees to be tested for controlled substances, including laws and regulations requiring applicants or employees to be tested, or the manner in which they are tested, as a condition of employment, receiving federal funding or federal licensing-related benefits, or entering into a federal contract.”

Employers may still conduct drug testing after AB 1288 becomes effective. California law generally allows drug testing of applicants without suspicion but requires reasonable suspicion to test current employees. If AB 1288 applies, employers who conduct drug testing must use tests that detect current impairment or active THC levels rather than nonpsychoactive cannabis metabolites.

Employers should consider updating or creating a written drug testing policy that clearly states the employer (1) does not discriminate based on an individual’s off-the-clock cannabis use away from the workplace and (2) does not test for nonpsychoactive cannabis metabolites.

California’s seven-year rule and the date of parole

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When it comes to criminal records, the federal Fair Credit Reporting Act (FCRA) does not place any time limit on reporting criminal convictions. No matter how long ago the conviction occurred, it is reportable under the FCRA. Most states follow this rule, but several states, including California, do not.

California limits reporting criminal records involving the conviction of a crime from the “date of disposition, release, or parole” that predate the report by more than seven years. In cases where the subject was paroled after serving time in prison, it is essential to correctly determine the “date of parole” for purposes of applying the seven-year rule. Is the “date of parole” when the subject is released from prison and starts parole or the date that parole ends? A recent opinion by the California Court of Appeal resolved that question.

The California state court case is pending in the Orange County Superior Court dealing with the issue of whether a consumer reporting agency (CRA) is prohibited from disclosing a criminal conviction to a prospective employer if it has been more than seven years since the date of parole. In 2011, the plaintiff was convicted, released from prison, and placed on parole. In 2020, Amazon offered the plaintiff a job in Sacramento. The defendant, a CRA for Amazon, provided a background report to Amazon revealing the plaintiff’s criminal conviction. Amazon then withdrew its job offer. Because the plaintiff’s 2011 conviction predated the 2020 report by more than seven years, he filed a complaint alleging the CRA violated California’s seven-year rule.

The CRA challenged the plaintiff’s complaint by asserting that his parole ended in 2014, which predated the 2020 report by less than seven years, arguing that under California law, “the term ‘parole’ refers to the end of the parole period,” and it could not be liable to the plaintiff for violating the seven-year rule. However, the Superior Court disagreed with the CRA’s position and stated that under California law, the “date of parole” refers to the start date of parole, not the end date. The CRA appealed the court’s decision but to no avail. The Court of Appeal affirmed the Superior Court’s decision that the “date of parole” refers to the start date. The plaintiff can continue pursuing his complaint against the CRA.

How to consider sex offender registry records in California (Updated)

For California employers concerned about hiring sex offenders, there are a few important points to keep in mind.

An employer has a duty to keep the workplace free of sexual harassment and other forms of discrimination under state law. Under the California Fair Employment and Housing Act (FEHA), an employer can face significant liability if it knowingly employs a sex offender and fails to take actions to protect its other employees from unlawful behavior by that person.

To avoid this problem, employers would like to know if they are hiring a registered sex offender. But how can they find out?

Since 2005, the state has operated a Megan’s Law website with a database to obtain access to the state’s list of more than 100,000 registered sex offenders. Created to help state residents better protect their families by being able to search for an individual registrant or by geographic location, the site (https://www.meganslaw.ca.gov/Default.aspx) contains the sex offender’s name, aliases, age, gender, race, address, physical description and, in some cases, a photograph.

While the site would appear to be a boon for employers, state law expressly forbids use of the state’s sex offender registry information for employment purposes. California Penal Code section 209.46(l)(2)(E) prohibits the use of information disclosed on the website for purposes relating to health insurance, insurance, loans, credit, education, housing, and employment, among other uses.

Statutory exceptions provide for use “to protect a person at risk,” a term not defined by the Penal Code, as well as for employers required by law or authorized to request criminal history from the California Department of Justice. Examples of businesses that meet this standard may include child care centers, financial institutions, and governmental agencies.

An employer who runs afoul of the Penal Code’s prohibition can face actual and exemplary damages, attorneys’ fees, and a civil fine. Legislative history explains that the website attempts to protect the public while not inflicting additional punishment on registrants.

For employers trying to walk the fine line of protecting other employees and third parties, such as customers, from potential sex offender registrant employees while not violating the Penal Code, two alternate avenues exist to try to find out information about a sex offender: conviction records and employee/applicant self-disclosure.

Following applicable state and federal law, employers can conduct a criminal background check on applicants and employees and learn of a sex offense conviction. (However, convictions past the seven-year cut-off date in California may not appear on a background check report while the individual may still appear in the sex offender registry). An applicant or employee may also self-disclose a conviction.

Providing another wrinkle for California employers, the state’s Fair Chance Act took effect on January 1, 2018, mandating that employers with five or more employees must wait until after a conditional offer of employment has been made to ask any questions about criminal history. This includes inquiries about convictions, running a background check, or other efforts to find out about an applicant’s criminal past. 

If the employer decides not to hire the applicant, it must conduct an individualized assessment of the conviction at issue to evaluate whether it has a “direct and adverse relationship with the specific duties of the job that justify denying the applicant the position.” Other legal requirements, based on both state and federal law, must also be satisfied if an employer takes an adverse action on the basis of the background check (see our prior blog post (https://www.scherzer.com/reminder-to-california-employers-about-requirements-when-taking-adverse-action-based-on-a-criminal-record/) for more details).

What if an employer learns that an employee is a registered sex offender from another employee’s perusal of the Megan’s Law website? This situation could trigger liability under section 290.46 and employers should be careful to take action only after evaluating any potential risk the sex offender employee may pose to coworkers or customers, considering all the facts and circumstances.

Expungement of Criminal Convictions – California Style

Some states allow a defendant convicted of a crime to apply for a court order limiting public access to the conviction record or to restore rights and remove disabilities caused by the conviction. This type of order is commonly referred to as an expungement; however, the qualifications for obtaining an expungement and the effect of the expungement vary among the states that allow expungements.

California has an expungement procedure set forth in Penal Code 1203.4. If a defendant meets the qualification of Penal Code 1203.4, the court will allow the defendant to withdraw a plea of guilty or no contest, to reenter a plea of not guilty, and to have the case dismissed. The defendant is also relieved from many of the negative consequences of a criminal conviction.

When reviewing California criminal records showing a conviction, it is important to note if there is also a reference to a Penal Code 1203.4 dismissal because this can impact whether the record is reportable in a background check for a California employer. For example, California law does not allow the reporting of criminal records that result in a non-conviction in employment-purpose reports. Even though the record shows a conviction, the Penal Code 1203.4 dismissal effectively means the conviction never happened.

The reference to the code section will typically be found on the case docket, dated a year or so after the conviction date.

Complying with the California Consumer Privacy Act

The California Consumer Privacy Act of 2018 (CCPA) gives California residents more control over their personal information that businesses collect about them. The CCPA took effect on January 1, 2020, and final regulations for the statute were approved on August 14, 2020. Enforcement of the CCPA by the California Office of the Attorney General has begun and affected business not in compliance can be fined up to $2,500 per violation or $7,500 for each “intentional” violation.

Who has to Comply with the CCPA?

For-profit businesses doing business in California that collect and control California residents’ personal information must comply with the CCPA if they meet one of three requirements: (1) have annual gross revenues more than $25 million; (2) possess the personal information of 50,000 or more consumers; or (3) earn more than half of its annual revenue from selling consumers’ personal information. For further information about affected employers, see our previous article on the CCPA.

Compliance Strategies to Minimize Enforcement Risk

Businesses required to comply with the CCPA should consider several actions to avoid the risk of enforcement by the attorney general’s office:

  • Update existing privacy policy with information on how, why, and what personal information is collected and processed
  • Update existing privacy policy with information on how users can request access, change, or erase their personal data
  • Introduce a method to verify the identity of the person making requests to access or change their data
  • Introduce a “Do Not Sell My Personal Information” link on their home page to allow users to prohibit the sale of their personal data
  • Obtain consent from minors 13-16 years old before selling their personal data and obtain consent from parents for minors younger than 13

Responding to Consumer Requests and Protecting Personal Data

As more and more companies shift to remote work and digital systems, compliance with the CCPA has become more critical, and for some, burdensome. Companies with limited resources that are struggling to create remote work policies and procedures inside the office are now faced with the challenge of managing data beyond the office. It is important to note that under the CCPA, the California attorney general can also take enforcement action against a business for failing to respond to consumer requests to view or delete personal information, as well as for an unauthorized sale of a consumer’s personal information (or sharing of that data).

Avoiding these compliance pitfalls may require using artificial intelligence and implementing digital tools. Here’s how companies can adapt to CCPA requirements.

Look to analytics and automation technologies to meet consumer and auditor requests efficiently and affordably. Under the CCPA, consumers may request a copy of the data categories being gathered or for their data to be deleted. This is where digital solutions can come in handy. Virtual assistants can help employees ensure that requests are addressed by identifying which consumers have a higher compliance risk and placing them into an automated workflow. Furthermore, analytic tools can make it possible to identify all requests mentioning certain key words, such as “CCPA,” “personal information,” “remove,” or “disclose.” Such tools can ensure efficient and reliable compliance with consumer or auditor requests.

Ensure that third-party partners who collect consumer data are compliant with CCPA requirements. For companies that fail to store consumer data in one central location, they may find it harder to comply with CCPA regulations. Such companies often give third-party providers access to consumer data. In these scenarios, companies should make sure that the third-party providers themselves are compliant with the CCPA.

During these times especially, the CCPA has taken on a new urgency and this is probably just the beginning of the era of consumer data protection.

Employers and the CCPA

Unless a California employer has been hiding under a rock, chances are that the company is aware of the impending California Consumer Privacy Act (CCPA).

Signed into law in June 2018 as a quickly-enacted compromise to prevent an even stricter initiative from appearing on the ballot, the CCPA is the most far-reaching consumer privacy and data protection measure in the United States.

The new law applies to any for-profit company doing business in the state that (1) collects consumers’ personal information (PI) solely or jointly with others and (2) either (i) exceeds $25 million in annual gross revenues; (ii) annually transacts in the PI of 50,000 or more consumers, households or devices; or (iii) derives half or more of its annual revenues from PI sales.

“Personal information” includes an IP address, Internet activity, geolocation, education information and biometrics, among other data. A “consumer” is defined as “a natural person who is a California resident,” easily encompassing both employees and job applicants.

Covered entities are required to provide consumers with access to the data collected about them as well as the ability to opt out of the sale of their information to third parties and request that their PI be deleted. Businesses must disclose and deliver the information to consumers free of charge within 45 days of receiving a verifiable request.

Violations of the CCPA are actionable by the California Attorney General’s Office and a limited private right of action also exists for data breaches, with civil penalties of up to $7,500 per violation.

The expansive definitions and broad reach of the law have many employers concerned about the application of the CCPA to their business when the statute takes effect on January 1, 2020.

But – for those employers that do fall under the statute’s coverage – a last-minute amendment to the CCPA will provide a one-year reprieve.

In an effort to alleviate the burden on employers, state lawmakers enacted Assembly Bill 25 in September. The measure amended the CCPA to provide a one-year exemption for the personal information “collected from a natural person by a business in the course of the natural person acting as a job applicant to, an employee of, owner of, director of, officer of, medical staff member of, or contractor of that business.”

This tweak grants employers 12 months of breathing room as long as they are collecting the data of employees and job applicants solely for purposes relating to employment. Governor Gavin Newsom signed the bill into law on October 11, 2019.

Despite the reprieve, covered employers would be well-served to continue preparing themselves to comply with the law. The requirements of the CCPA will still apply with regard to PI about non-employees and/or non-exempt uses of employee and applicant data. And the statute will take full effect for employee and applicant data as of January 1, 2021, absent some future change to the law if lawmakers decide to extend the exemption or make it permanent.  

The challenges of employment applications for multi-state employers

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One of the hottest trends in employment in recent years has been the passage of “ban-the-box” and salary inquiry prohibitions in states and cities across the country.

Limitations on salary inquiry have popped up in recent years as part of the legislative fight against wage discrimination and the gender pay gap. Proponents of such prohibitions argue that salary history questions feed into the discrepancy between what male and female employees are paid by continuously repeating history.

Currently, California, Delaware, Massachusetts, Oregon and Puerto Rico have banned inquiries about prior salary, as have cities including New Orleans, New York and Philadelphia, with dozens of other states and local governments considering such measures.

The colloquial term “ban-the-box” refers to a box that applicants check to indicate they have a criminal record on standardized application forms. About 20 states and more than 150 local entities have already enacted legislation addressing inquiries into criminal history. The trend even went federal in 2015 with the Fair Chance Act introduced in Congress. Although the measure did not pass, it demonstrated the popularity of the movement.

The proposed federal legislation also shined a light on the situation facing multistate employers, with different laws in different states and in some situations, different laws in different cities or municipalities within the same state. One law may contain an outright ban on inquiries into salary or criminal history while another may place restrictions on the timing of the questions. Some laws define covered employers to include businesses with five or more employees; another may not apply its limitations to employers with less than 50 workers.

As an example, although the state already limited employers’ ability to ask job applicants about any juvenile court matters, the California legislature broadened its ban-the-box protections for employees with a new law in 2017. Employers in the state are restricted from making hiring decisions based on an applicant’s convictions records and forbidden from considering conviction history until a conditional offer of employment has been extended.

If an employer elects not to hire an applicant because of a prior conviction, the employer is required to conduct an individualized assessment to determine whether the history has a “direct and adverse relationship” with the job duties that justifies denial of the position. Written notice must be provided to an applicant that his/her conviction history has disqualified the applicant from employment, along with five days to respond and dispute the decision. A second notice must be provided with the final decision not to hire.

In contrast, Vermont’s ban-the-box measure takes a different approach, allowing employers to question applicants about their criminal records during the job interview, albeit providing an applicant with the opportunity to explain their record. And under New York City’s law, an employer commits a per se violation of the statute by using recruiting materials of any kind (including advertisements, solicitations or applications) that express, directly or indirectly, any limitation or specification regarding criminal history.

While the overarching principle remains consistent, the details of the laws vary from jurisdiction to jurisdiction. For multi-state employers, coping with such a patchwork of legal requirements poses a serious challenge.

As the number of state and local jurisdictions with laws addressing salary inquiries or criminal history continues to expand, multi-state employers should brace themselves for a giant compliance puzzle – and consider getting help from an expert.