California recently passed Senate Bill 731 (“SB 731”) into law which significantly expands the automatic sealing eligibility of most felonies that occurred on or after January 1, 2005, if certain circumstances are met. This will impact the type of records employers can lawfully rely upon for hiring decisions after conducting employment background checks.

Summary of Existing Law Regarding Employment Criminal Background Checks:

California employers with 5 or more employees are prohibited from doing any of the following:

(1) i ncluding on any application for employment any question that seeks the disclosure of an applicant’s conviction history;

(2) inquiring into or considering the conviction history of a job applicant until the applicant has received a conditional offer of employment; and

(3) considering, distributing, or disseminating certain types of criminal information (including “sealed” convictions) while conducting a conviction history background check in connection with an employment application.

Employers who intend to deny an applicant a position of employment must first make an individualized assessment as to whether the conviction history would have a direct and adverse relationship with the specific duties of the job. If the employer determines it would, the applicant must be notified of the decision and given five business days to respond. (For more information about these requirements, see our prior article here.)

Existing law requires the Department of Justice, on a monthly basis, to review the records in the statewide criminal justice databases and identify persons who are eligible for automatic conviction record relief. Under existing law, a person is eligible for automatic conviction record relief if, on or after January 1, 1973, they were sentenced to probation, and completed the terms of their probation without revocation, or if they were convicted of an infraction or a misdemeanor and other criteria are met.

Summary of the New Law:

Effective July 1, 2023, the new law under SB 731 expands this conviction record relief making it available for defendants convicted of most felonies on or after January 1, 2005, provided they have completed their incarceration, probation, mandatory supervision, parole or any other terms of their conviction, and a period of 4 years has elapsed during which the defendant was not convicted of a new felony offense. The new law does not apply to registered sex offenders or those convicted of violent or serious felonies, such as murder or attempted murder, manslaughter, kidnapping, rape, assault with a deadly weapon, robbery, and similar offenses.

The bill specifies that conviction record relief does not release the defendant from the terms and conditions of unexpired criminal protective orders.

What This Means For Employers:

While the new law doesn’t amend the Labor or Government codes, it dramatically restricts the types of criminal records employers can lawfully access and rely upon for hiring purposes. Employers will be unable to refuse to hire individuals for “less violent crimes,” such as domestic violence or fraud, because those criminal records would be sealed under the new law. This is true even if the employer could have refused to hire the applicant under the old law on the grounds that the conviction history would have a direct and adverse relationship with the specific duties of the job.

It is not entirely clear how a court would treat a situation where an employer relies on a record relating to a crime that should have been sealed, but somehow mistakenly made it onto a criminal background report (something that happens from time to time). As such, employers are wise to seek legal counsel before making any hiring decision based on an applicant’s criminal background history, especially in the near future as the Department of Justice and background-check companies adjust to the new legal requirements.

Critics of SB 731 have also noted how it could result in hiring discrimination by out of state employers against people with California addresses in their background, as SB 731 could prevent such employers from completing their standard—and in some cases mandatory—background checks for certain positions at banks, credit unions, insurance companies, and other similar financial and tech-related institutions.