Episode 243 - Navigating the Murky Waters of Employee Arrests

Welcome to The Workplace, a podcast by Cal Chamber. I'm Matthew Roberts, Associate General Counsel for Labor and Employment with the California Chamber of Commerce. Hello, listeners. As many of us have become aware, an employee's personal life will often impact their employment with their employer, whether that is the need for the employee to be caregiver or the employee has developed a substance abuse problem. Or in the case of today's episode, the employee had an encounter with law enforcement resulting in the employee's arrest. While we might be familiar with employment criminal background checks and the various laws that apply to these, arrests themselves have a very unique subset of rules that employers may not be aware of or may not have recognized, uh, in the past. So to help provide a pathway on responding to the arrests of our employees, We welcome back Cal Chambers General Counsel for Labor and Employment, Bianca Saad. Welcome back, Bianca.

Thank you, Matt. Pleasure to be here.

Okay, so let's start with the most common issue we see with arrests, which is activity of arrests appearing on a pre-employment criminal background check report. Now, as I mentioned, we know there are a lot of rules around how to conduct and respond to criminal background checks, but let's really hone in today on those reports that may show an arrest incident. What should employers do with a situation like this?

Great question. So California's Labor Code sets the ground rules for how employers may consider arrests when making employment decisions. Specifically, Labor Code Section 432.7 prohibits an employer from asking an applicant to disclose any information relating to an arrest or detention that didn't result in a conviction. That same Labor Code section also says that employers can't seek from any source or or utilize as a factor in hiring any record of arrest or detention that didn't result in a conviction. So, for these purposes, a conviction is defined as a plea, verdict, or finding of guilt, regardless of whether any sentence was imposed by the court. Now, of course, once that conviction occurs, then the whole incident will fall under our general ban-the-box criminal history rules. What this means in practice is that employers can't ask applicants the general question on applications or interviews, Have you ever been arrested or convicted of a crime for that matter? So, nor can they ask a third-party background check provider to go and find that information. Now, there is a narrow exception to this rule where the applicant was arrested and is out on bail or their own recognizance pending trial.

Okay, but I kind of want to back up a little bit because when you mention third-party providers doing background checks, it really raises a question for me, Bianca. What if you ask the third-party provider to do a background check, which I know is very common here in California, and tell the background check company, obviously do not provide this arrest information that we can't consider under the labor code, but that third-party provider does so anyway. So let me give you an example. You are looking to hire me, Bianca, and you do a background check on me. And the report you get back shows I was arrested last July, for example, for several suspected penal code violations. But then that report provides no additional information related to that arrest at all. How should an employer respond to that type of report?

Yeah, so in that situation, if all we have is an arrest and we don't have any other particular information about a conviction or pending trial or anything of that nature, it's unlikely the employer can utilize that information in hiring decisions. So while the employer can't unring the bell, so to speak, on the information received, The employer should ensure its decision-making isn't influenced by the information that really they shouldn't have had made available to them in the first place, right? So, next, the employer needs to consider what to do about this third-party provider. Something we talk often about with our members and in seminars is that when an employer hires a third party to assist with or handle an employment practice, in this case, it was background checks for hiring, the employer is still ultimately responsible for any violations arising from that practice. So the employer in this case needs to investigate how this arrest information got on the report and whether changes need to be made around how the employer conducts criminal background checks going forward.

Okay, so we've focused at the start here on applicants for employment and what you do with criminal background checks, but do any of these rules change once they become our employees and they get arrested?

Yeah, so Labor Code Section 432.7 applies to any condition of employment. Which can include whether an existing employee is terminated, as an example. But that doesn't mean an employer can't do anything about an employee if it learns that employee was arrested. So Labor Code Section 432.7 allows employers to ask about the arrest. For example, if an employer learns of an employee's arrest, the employer may consider investigating the circumstances of the arrest to determine a couple of things. First, what was the underlying conduct that led to the arrest? And second, you know, whether that underlying conduct has an impact on the employee's job duties. So, the employer would be utilizing this investigation to match up conduct that may have a negative impact on the employer's belief that the employee can do the job appropriately. So, for example, violent conduct for an employee that interacts with the public, or embezzlement or theft for employee that handles money or is a signatory on an account, or has access to sensitive personal information. In those situations, any discipline that would arise from the investigation would be conduct-based, not arrest-based. Now, obviously, due to the complexity of these investigations and the protections afforded by Labor Code Section 432.7, employers should approach this with extreme caution and with the assistance of qualified legal counsel.

Okay, so there's our policy out there, but let's put that to practice. Bianca, you ready?

Yes, let's do it.

All right. I have an employee that has been detained and they're not out on bail or their own recognizance pending trial, but is instead just in the county jail without any kind of conviction. Now, I've had a family member reach out to me that's been keeping me apprised of the situation and letting me know, hey, they're still in jail. Hey, we'd like you to keep their job opening. They're going to come back out. Do I really have to keep their job open under these circumstances?

Oh, such a great question. And as with most of these fact-based questions, it depends. And I know that's a very lawyerly answer, but it highlights the deliberation employers must undertake for every single case where an employee's job status is in question. So, there is no current requirement to protect an employee's job under these specific circumstances. If your attendance policy requires discipline and your practices would result in terminating an employee who, let's say, indefinitely missed work for a different non-job-protected reason, then employers should be consistent here. If an employer chooses this route, they must make it clear it is based on the attendance reason, right, and unrelated to the arrest. Now, separately, as we talked about previously, employers can make an effort to investigate the circumstances and conduct resulting in the arrest. Since the family member has made that employer aware of the arrest and potentially disciplined for that underlying conduct. Now, this may be difficult, however, in this situation because, you know, effective investigations require us providing due process to the employee, getting statements from the employee, which, again, could be difficult under the circumstances with the employee being detained. So, if the employer instead chooses to avoid all of this and just keep the job open, until the employee becomes available for work or is instead convicted, this could also create a precedent that is difficult for the employer to apply consistently. So in other words, if the employer decides to be lenient with the employee and not with another employee who ends up similarly detained down the road, you know, how is the employer able to explain that difference, right? That might be a difficult situation. Now, as your example demonstrates, these are all tricky situations, right? So the best course of action is always going to be to consult with legal counsel before doing anything.

Yeah, and I think your rundown on these issues and the kind of decision-making that should be confronting our employers was a really good example of why we do this in partnership with legal counsel and try to avoid doing this very sensitive issue on our own. Now, before I let you go, have there been any recent changes in this area of law, arrests or detention?

So, there has been one recent change, probably not what our listeners might expect. To expect, but we do have a new requirement effective March 30th, 2026. All employers must provide their new hires with the opportunity to designate an emergency contact for the employer to notify in the event that that employee is arrested or detained at the worksite, or if the employer otherwise is aware that the employee was arrested or detained while away from the worksite, but while performing their duties. In addition to the new hires, all employers must have provided their existing employees with this opportunity to designate an emergency contact for that purpose. So for those employers that may have missed the deadline, if this is brand new to you, just, it's important to know, go ahead and immediately add this to your new hire checklist and procedures when you are onboarding to ensure that our new hires are getting this and also make sure that all of our existing employees have had the opportunity to designate an emergency contact for this purpose.

Bianca, thank you so much for taking the time with me to help walk employers through handling issues related to an employee's arrest or detention.

Anytime, Matt. Thanks for having me.

And thank you, listeners, for joining this discussion on the workplace. Please share and subscribe to CalChambers Podcast by visiting calchamber.com.