San Francisco Expands Fair Chance Ordinance to Out-Of-State Criminal Records

Companies that review criminal background checks for their San Francisco applicants and workers face new compliance obligations and increased penalties under recent amendments to the city's Fair Chance Ordinance (FCO). Amendments to the FCO, effective August 10, 2026, prohibit San Francisco employers from considering certain out-of-state criminal records in employment decisions where the underlying conduct is legal in California. This change extends the ordinance's reach outside of San Francisco's (and California's) borders and is a response to a growing number of other states that have criminalized or imposed penalties for abortion-related healthcare, gender-affirming care, drag performances, and pregnancy-related conduct. The amendments also add new notice requirements and double penalties for non-compliance. 

Background on San Francisco's FCO

Enacted in 2014, San Francisco's FCO significantly restricts the ability of covered employers to inquire into and use criminal records for hiring and other employment purposes. In many respects, it is stricter than California's statewide Fair Chance Act and imposes additional obligations on employers.

The FCO applies to employers with five or more employees worldwide that are located or doing business in San Francisco, and to positions where the person works at least eight hours per week in the city. The FCO's definition of "employment" remains broad and includes traditional employment relationships as well as temporary or seasonal work, part-time work, contingent work, contracted work, work performed through temporary employment or other employment agencies, and unpaid work performed through vocational or educational training.

The FCO prohibits employers from considering certain criminal activity in employment decisions, requires a statement in job postings that the employer will consider applicants with arrest and conviction records, and mandates that employers conspicuously post a workplace notice. Additionally, covered employers may only inquire about criminal history after extending a conditional offer of employment and can only consider convictions "directly related" to the job when determining whether to rescind the conditional offer. Similar to the statewide Fair Chance Act, the FCO details specific steps and timing employers must follow to revoke an offer based on criminal activity. The latest amendments do not alter these core requirements of the FCO.

Expanded Prohibited Inquiries for Out-Of-State Criminal Records

The August 10, 2026, amendments bar employers from considering or using out-of-state criminal convictions or unresolved arrests for conduct that is lawful in California related to:

• Abortion-related healthcare[1];
• Drag performances[2];
• Gender-affirming care[3]; and
• Spontaneous abortion (i.e., miscarriage).[4]

In addition to these four new categories, San Francisco employers covered by the FCO have been and will continue to be prohibited from considering or using the following when making employment decisions:

• An arrest that did not result in a conviction (except for unresolved arrests);
• Participation in a diversion or deferral of judgment program;
• A conviction that has been dismissed, expunged, invalidated, or is inoperative;
• A conviction or determination in the juvenile justice system;
• A conviction more than seven years old (unless the position supervises minors or dependent adults);
• An offense other than a felony or misdemeanor (e.g., an infraction); and
• A conviction for decriminalized conduct.

New Notice Requirements

The August 10, 2026, amendments to FCO also include additional notice and procedural requirements. 

Prior to taking an adverse action based on criminal history, San Francisco employers are required to provide the applicant or employee with notice of the prospective adverse action and the basis for the decision. The applicant or employee then has seven (7) days to provide a response. The amended FCO now requires the employer to provide a "confirmation" of receipt of a response if the submission is timely, and the confirmation must be sent within fourteen (14) days.  The employer must delay the adverse action for a reasonable time period after sending the confirmation and reconsider the decision in light of what the individual submitted.

The amended FCO also requires employers to withdraw a proposed adverse action if the individual makes a reasonable factual showing that the proposed action rests solely on a conviction that cannot legally constitute a "Directly-Related Conviction," as defined by the ordinance.

If an employer decides to proceed with a final adverse action based upon someone's criminal history, the FCO currently requires that the employer notify the applicant or employee. As of August 10, 2026, the employer will now be required to provide such notice of final adverse action within thirty (30) days of receipt of the individual's response, or, if the individual does not respond, within thirty (30) days of the employer's original notice.

Increased Penalties and Damages

Lastly, the amended FCO doubles the potential administrative penalties for failure to comply as follows: an increase from $500 to $1,000 per individual for the first violation; from $1,000 to $2,000 for the second violation; and from $2,000 to $4,000 for each subsequent violation. Similarly, the amendments increase liquidated damages available in a civil lawsuit from $500 to $1,000 per each individual whose rights were violated. Because these penalties are assessed per applicant or per employee, systemic compliance issues may result in significant aggregate liability for San Francisco employers engaged in high-volume hiring.

Practical Takeaways for Employers

Employers who hire in San Francisco should consider taking the following steps in light of the August 10, 2026, FCO amendments:

• Review background screening policies and related forms to ensure they do not inquire into or rely on newly protected categories of out-of-state arrests and convictions.
• Update internal adverse action procedures, incorporating the new notice and timing requirements. Many employers already have to comply with overlapping state and local laws for background checks. Note that San Francisco's requirements impose additional obligations on top of California's state requirements.
• Make sure San Francisco employees are provided with the updated FCO notice incorporating the August 10, 2026, changes.
• Train recruiters, hiring managers, and human resources personnel regarding the amended requirements.
• Many employers work with consumer reporting agency vendors to conduct background checks. If your company does, be sure to connect with the vendor to ensure they are up-to-date on the San Francisco amendments and have the correct processes and forms in place.
• Discuss with internal IT how to effectively confirm receipt of employee rehabilitation or mitigation circumstances evidence within 14 days and ensure the adverse action notice is sent within the new 30-day deadline.
• Be mindful that the ordinance reaches beyond state borders, within limitations. As detailed in a prior client alert, the California Court of Appeal recently refused to apply California's background check rules to a remote employee who worked outside of California where the termination decision was made by supervisors outside of California. Where an employee works and where a decision is made can matter.

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Jeff Bosley is a partner and Alexa Graumlich is an associate in DWT's San Francisco office. If you have any questions about the San Francisco FCO amendments and their potential impact on your company, please contact the authors or another member of DWT's employment services group. In the meantime, we will continue to monitor this issue and provide updates as developments arise. To stay informed, sign up for our alerts.