San Francisco Employers Face New Restrictions on Out-of-State Criminal History Screening

Seyfarth Synopsis: Employers operating in San Francisco need to comply with significant changes to the City’s Fair Chance Ordinance (FCO), which are already in effect. The Board of Supervisors amended the law to shield applicants and employees from adverse employment consequences tied to certain out-of-state arrests and convictions—and to tighten the procedural requirements employers must follow before taking adverse action based on criminal history. The amendments took effect August 10, 2026. Covered employers that have not yet updated their policies, procedures, and training should do so now, because any noncompliance since that date could give rise to liability.

Why the City Acted

The amendments grew out of concerns that, since the U.S. Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization, a growing number of states have enacted criminal penalties targeting conduct that remains entirely legal in California—including abortion care, gender-affirming medical treatment, drag performances, and conduct related to pregnancy loss. San Francisco’s Board of Supervisors determined that allowing employers to penalize workers for out-of-state records tied to this conduct effectively imports other states’ restrictive policies into San Francisco’s labor market. The amendments are designed to close that gap.

Who Is Covered

The FCO already applies broadly, and the amendments do not narrow that scope. Covered employers include virtually any individual, firm, corporation, partnership, labor organization, nonprofit, or business that employs five or more people—regardless of where those employees are located—as well as owners and supervisory managers.

Critically, “employment” under the ordinance is not limited to traditional W-2 relationships. It also captures temporary and seasonal work, part-time positions, contingent and contracted labor, staffing agency placements, and even unpaid vocational or educational training positions. Employers that rely heavily on contractors, staffing agencies, or internship programs should not assume those arrangements fall outside the ordinance’s reach.

Four New Categories of Protected Records

The core of the amendment is the creation of four new categories of out-of-state criminal history that employers are barred from asking about, considering, or relying on—provided the underlying conduct would have been lawful in California. These are records connected to:

• Reproductive healthcare: seeking, providing, or facilitating abortion services
• Gender-affirming care: including hormone therapy, surgical procedures, name/gender marker changes, and even use of gendered facilities or participation on sports teams consistent with one’s gender identity
• Drag performance: public artistic performances involving exaggerated gender presentation
• Pregnancy loss: conduct related to miscarriage (pre-20 weeks) or stillbirth (post-20 weeks), including related medical care

Both convictions and unresolved arrests in these categories are off-limits as a basis for adverse action. Employers should treat these categories the same way they already treat other legally protected criminal history—as information that simply cannot enter into a hiring or employment decision.

Adverse Action Process Has Become More Employee-Friendly

Beyond the new protected categories, the amendments added teeth to the existing pre-adverse action process:

• Acknowledgment requirement. If a worker disputes the accuracy of their criminal history or submits rehabilitation evidence within seven days of a pre-adverse action notice, the employer now must acknowledge receipt of that rehabilitation evidence within 14 days—a new affirmative obligation that didn’t exist before August 10.
• Mandatory withdrawal in certain cases. If the worker makes a reasonable factual showing that the proposed action rests solely on a conviction that isn’t “directly related” to the job, the employer must withdraw the proposed adverse action altogether. A conviction is “directly related” only where the underlying conduct has a direct and specific negative bearing on the person’s ability to perform the job.
• 30-day outer limit. Final adverse action notices must now be provided within 30 days of receiving the applicant’s response—or, if there’s no response, within 30 days of the original pre-adverse action notice.

Penalties Have Doubled

The City also substantially increased the financial stakes for noncompliance:

Violation	Previous Penalty	New Penalty
First	Up to $500	Up to $1,000
Second	Up to $1,000	Up to $2,000
Subsequent	Up to $2,000	Up to $4,000

Liquidated damages in private civil actions have also risen to up to $1,000 per violation. Because penalties apply per affected applicant or employee, a single flawed screening practice applied across a hiring pipeline can generate substantial cumulative exposure—a particular risk for employers with high-volume hiring programs. The higher penalties already apply, so an outdated screening practice can add to an employer's exposure with every applicant or employee it affects.

What Hasn’t Changed

Employers should not lose sight of the FCO’s existing baseline requirements, all of which remain fully in force:

• Criminal history inquiries still cannot begin until after a conditional offer of employment—a rule that applies to covered employers statewide, not just in San Francisco
• An individualized assessment is still required before any adverse action based on criminal history—also a statewide requirement
• Pre-adverse and final adverse action notices are still mandatory—likewise required of employers across California (and nationwide under the Fair Credit Reporting Act)
• Applicants and employees must still get a reasonable opportunity to respond before a final decision—a protection that exists under both federal, state and local law
• Longstanding prohibitions continue to apply to arrests not resulting in conviction, participation in or completion of a diversion or deferral of judgment program, expunged/dismissed/voided/invalidated convictions, juvenile records, infractions, and convictions for conduct that’s since been decriminalized—these prohibitions likewise apply to employers statewide

One important distinction: the seven-year lookback limitation on considering older convictions is a San Francisco-specific requirement and is not mirrored by a uniform statewide rule. The California Fair Chance Act itself does not impose a bright-line prohibition on considering convictions older than seven years, though the California Civil Rights Department (CRD) has taken the position—not based on the statute or any CRD regulation—that reliance on older convictions is unlawful. Employers operating only outside San Francisco should confirm separately whether any applicable local ordinance imposes a similar time limit, and should factor in the CRD’s guidance when calibrating their own risk tolerance around older convictions.

Recommended Next Steps

Employers hiring in San Francisco should promptly take the following steps, if they have not already:

1. Immediately audit background screening policies and vendor practices to ensure the four newly protected categories are excluded from consideration, and confirm any third-party background check providers are flagging these records appropriately. If records in these categories may have been considered in decisions made on or after August 10, employers should evaluate with counsel whether corrective steps are warranted.
2. Revise adverse action templates and workflows to build in the new 14-day acknowledgment requirement and the 30-day final notice deadline, and confirm these templates also satisfy the federal Fair Credit Reporting Act’s separate pre-adverse and adverse action notice requirements, which apply in parallel to the FCO’s. Employers should also review any adverse action processes that were pending on, or started after, August 10 to confirm they followed the new procedural requirements.
3. Extend compliance to the full workforce, including contingent workers, independent contractors, staffing agency placements, and unpaid trainees—not just traditional employees.
4. Reconcile San Francisco-specific requirements with existing California fair chance compliance programs. Many employers already comply with the state Fair Chance Act and other local ordinances, but San Francisco’s amendments layer on additional, jurisdiction-specific obligations that may not be covered by a generic statewide program—including the seven-year lookback rule and the four newly protected categories of out-of-state records. Employers with operations in Los Angeles or San Diego should also confirm compliance with those localities’ own local fair chance ordinances, which impose similar but not identical requirements.
5. Train recruiters, hiring managers, and HR staff on the amended rules as soon as possible if that training has not already happened, with particular attention to the new “directly related conviction” withdrawal obligation and the San Francisco-specific seven-year rule.
6. Track exposure at the per-employee level. Given that penalties and damages are assessed per affected individual, even a seemingly minor procedural gap can compound quickly across a hiring program.

Employers with questions about how these amendments affect their San Francisco hiring and screening practices should consult counsel promptly to review current policies and practices against the amended requirements, which are now in effect.