San Francisco Expands Fair Chance Ordinance Restrictions

On July 10, 2026, San Francisco amended its Fair Chance Ordinance (FCO) to expand restrictions on the criminal records employers may use in employment decisions. Covered employers may not rely on certain out-of-state convictions or unresolved arrests related to abortion-related healthcare, drag performances, gender-affirming care, or spontaneous abortion-related conduct when the underlying conduct is lawful in California.

The amendments also establish new adverse action procedures and increase penalties for noncompliance, including higher administrative penalties and expanded litigation exposure.

This update applies to employers with five or more employees located in or doing business in San Francisco and covers positions involving at least eight hours of work per week in San Francisco. The amendments took effect on August 10, 2026.

What Employers Should Do

Legal Requirements

• Do not rely on covered out-of-state convictions or unresolved arrests involving abortion-related healthcare, drag performances, gender-affirming care, or spontaneous abortion-related conduct that is lawful under California law.
• When an applicant or employee submits information challenging a proposed adverse action, acknowledge receipt within 14 days, delay the action for a reasonable period, and reconsider the information provided.
• Withdraw a proposed adverse action if the applicant or employee makes a reasonable factual showing that the action is based solely on a conviction that is not related to the position.

Practical Considerations

• Review and update criminal background screening policies, notices, workflows, and adjudication procedures to reflect the ordinance’s expanded restrictions and new adverse action requirements.
• Establish compliance processes and train internal stakeholders and background screening vendors on the ordinance’s new deadlines, notice requirements, and decision-making standards.
• Consider whether a Professional Employer Organization (PEO) or Administrative Services Organization (ASO) could assist with policy updates, process management, training, and coordination with background screening vendors.

Overview

Expanded Categories of Protected Criminal Records: The amendments prohibit employers from relying on criminal records that fall within four newly protected categories:

• Abortion-related healthcare convictions.
• Drag-related convictions.
• Gender-affirming care convictions.
• Spontaneous abortion-related convictions.

The ordinance defines each category and prohibits employers from treating these records as related convictions for purposes of employment decision-making.

Treatment of Records: The newly protected categories of convictions and unresolved arrests cannot be considered “directly related convictions.” As a result, employers cannot justify adverse employment actions by arguing that these records are job-related.

New Adverse Action Procedures: When an applicant or employee responds to a proposed adverse action by providing evidence that a conviction is inaccurate, rehabilitation exists, or the conviction is not related to the position, the employer must:

1. Confirm receipt of the response within 14 days.
2. Delay the proposed adverse action for a reasonable period.
3. Reconsider the information submitted.

Additionally, if an applicant or employee provides information reasonably showing that the proposed action is based solely on a conviction that is not related to the position, the employer must withdraw the proposed adverse action.

Final Adverse Action Notice Deadline: If the employer proceeds with an adverse action, a final decision must be issued within 30 days after receiving the individual’s response. If no response is received, the final decision must be issued within 30 days after the employer’s initial notice.

Increased Penalties and Litigation Exposure: The amendments increase the maximum administrative penalties that may be assessed by the Office of Labor Standards Enforcement (OLSE):

• First violation: increased from $500 to $1,000 per affected applicant or employee.
• Second violation: increased from $1,000 to $2,000 per affected applicant or employee.
• Subsequent violations: increased from $2,000 to $4,000 per affected applicant or employee.

The ordinance also increases liquidated damages available in private lawsuits from $500 per day to $1,000 per day for each affected individual. Attorneys’ fees and other available remedies remain available.

Why This Matters

The amended Fair Chance Ordinance expands the criminal records that San Francisco employers cannot consider in employment decisions and imposes new procedural requirements before adverse action may be taken. Employers that use criminal background checks may need to update screening practices, forms, and workflows to comply with the ordinance’s expanded restrictions.

The amendments also increase the cost of noncompliance. Employers may face higher administrative penalties, enforcement actions by the Office of Labor Standards Enforcement (OLSE), and greater exposure to private litigation, including liquidated damages, attorneys’ fees, and other remedies.

Key Risks for Employers

• Administrative penalties of up to $1,000 for a first violation, $2,000 for a second violation, and $4,000 for subsequent violations, assessed per affected applicant or employee.

• Private litigation exposure, including liquidated damages of up to $1,000 per day per affected individual, plus attorneys’ fees and other available remedies.

• Enforcement actions by the Office of Labor Standards Enforcement (OLSE) for relying, in whole or in part, on prohibited out-of-state convictions or unresolved arrests involving abortion-related healthcare, drag performances, gender-affirming care, or spontaneous abortion-related conduct.

• OLSE findings of violation for failing to conduct the required individualized assessment before taking adverse action based on criminal history information.

• Liability arising from failures to comply with the ordinance’s new procedural requirements, including the 14-day acknowledgment obligation, reconsideration requirements, withdrawal obligations, and 30-day final notice deadlines.

Source References

• San Francisco – Fair Chance Ordinance

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