You're about to make an offer to your top candidate in San Francisco. You want to run a background check first. You add criminal history questions to your application and send it over.
Congratulations. You just violated California law and exposed your 8-person startup to a discrimination lawsuit.
Most founders think: "Background checks are standard. We can ask about criminal history whenever we want." What they don't realize: what you can check, when you can check it, and how you can use that information varies wildly by state. California bans asking about criminal history until after you make an offer. Texas just enacted similar rules. Florida doesn't care.
The expensive truth: Founders who use the same background check process in every state violate ban-the-box laws and face civil penalties. Founders who ask about criminal history too early in California or New York get sued. Founders who don't understand their state's restrictions waste money on background checks they can't legally use.
Here's what you can actually check in each state, when you can check it, and what happens if you get it wrong.
Patchwork Problem
Background check laws are not federal. They're state and local.
As of 2026, more than 37 states, D.C., and over 150 cities and counties have enacted some form of ban-the-box or fair chance hiring policy
This means the same background check process that's legal in Miami could be illegal in Manhattan.
California: Strictest "Ban the Box" in the Nation
Who it applies to: Employers with five or more employees
What You CANNOT Do:
❌ Ask about criminal history on application
❌ Ask about criminal history in interviews before conditional offer
❌ Run background check before conditional offer
❌ Consider arrests that didn't result in conviction
❌ Consider dismissed or sealed convictions
❌ Consider juvenile records
❌ Consider records more than 7 years old (with exceptions for high-salary positions)
What You CAN Do:
✅ Make conditional offer
✅ Then run background check
✅ Then conduct individualized assessment
Individualized assessment required: Employers must evaluate each applicant individually, considering the nature of the offense, time elapsed, and relevance to the job
If you want to rescind the offer:
The employer must provide written notice, a copy of the background check report, and at least 5 business days to respond
Example - 10-person SaaS startup, Los Angeles:
Wrong: Put "Have you ever been convicted of a felony?" on application. Candidate checks "yes." You immediately reject them.
Violation: Asked about criminal history before conditional offer. Didn't conduct individualized assessment. Exposed to lawsuit under California Fair Chance Act.
Right: Application has no criminal history questions. Interview has no criminal history questions. You make conditional offer. Then run background check. Criminal conviction appears. You conduct individualized assessment (nature of offense, time passed, job relevance). Provide pre-adverse action notice. Give candidate 5 business days to respond. Then make final decision.
Credit Checks in California
California restricts the usage of credit reports for employment considerably. Most employers can't consider credit as part of a hiring decision. However, there are exceptions for managers and roles that involve handling $10,000 or more in cash daily
Reality: Credit checks essentially banned unless you're hiring for executive/financial role.
Colorado: Ban the Box for Most Employers
Who it applies to: All employers (public and private)
Colorado is one of the most recent states with laws requiring employers to ban the box with its Colorado Chance to Compete Act (CCCA)
What's Restricted:
Public employers: Cannot conduct background check unless applicant is finalist or has conditional offer
Private employers: Private employers can inquire into an individual's criminal history immediately after the initial application
Reality: Colorado law applies to public sector primarily, but check local ordinances in Denver, Boulder, etc.
New York: Strict State Law Plus Stricter NYC Rules
State level: Ban the box applies
NYC level: Even stricter
The New York City Human Rights Law requires employers to conduct non-criminal background checks prior to making a conditional offer of employment, but to delay asking about criminal history and running criminal background checks until after an offer is made
Credit Checks in New York
Big change in 2026: Beginning on April 18, 2026, employers in New York, with few limited exceptions, will be barred from obtaining or using an individual's credit score or consumer credit history during or after hiring of an employee
Who it applies to: Most employers, very limited exceptions (non-clerical positions with regular access to trade secrets, national security positions)
Example - 15-person startup, Brooklyn:
You cannot ask about criminal history until after conditional offer (like California). You also cannot run credit checks for most positions (new as of April 2026).
Texas: NEW Ban the Box Law (September 2025)
Texas enacted its first statewide ban-the-box law, House Bill 2466, effective September 1, 2025. The law applies to public and private employers with 15 or more employees and requires delaying criminal history inquiries until after an applicant is deemed otherwise qualified and either offered an interview or a conditional job offer
Who it applies to: Employers with 15+ employees
When: Cannot ask about criminal history until applicant is deemed otherwise qualified AND has either:
Been offered an interview, OR
Received conditional job offer
Example - 20-person fintech startup, Austin:
Before September 2025: You could ask about criminal history on application.
After September 2025: You cannot ask about criminal history until you've determined candidate is otherwise qualified and you're ready to interview them or make conditional offer.
If you have 14 employees: Law doesn't apply to you (yet).
Florida: Minimal State Restrictions
The absence of ban-the-box laws in states like Texas and Florida generally means less regulation around how employers can consider criminal records in the hiring process
What Florida requires:
✅ Follow federal FCRA (Fair Credit Reporting Act)
✅ Get written consent before background check
✅ Provide pre-adverse action notice if rejecting based on background check
✅ Follow EEOC guidance on considering criminal history
What Florida does NOT require:
❌ No ban-the-box law
❌ No timing restrictions on when you can ask
❌ No individualized assessment mandate
❌ No credit check restrictions
Restrictions are minimal in Florida. It is perfectly fine to report an individual's criminal history during the screening process. The state also allows employers to throw out applications entirely if the conviction relates to the specified job
Example - 12-person startup, Miami:
You can ask about criminal history on application. You can run background check before making offer. You just need to follow federal FCRA requirements (written consent, adverse action process).
What You Can Actually Check (Federal Baseline)
Across all states, you can check:
✅ Criminal convictions (subject to state timing rules)
✅ Employment history verification
✅ Education verification
✅ Professional licenses
✅ Drug testing (where legal)
✅ Reference checks
✅ Motor vehicle records (for driving positions)
What you generally CANNOT check or use:
❌ Arrests without conviction
❌ Sealed or expunged records
❌ Bankruptcies more than 10 years old
❌ Credit history in states that ban it
❌ Genetic information
❌ Records that violate state "clean slate" laws
Know Your State's Rules
State-by-state summary:
California (strictest):
5+ employees: Ban the box applies
No criminal history questions until conditional offer
Individualized assessment required
Credit checks essentially banned except narrow exceptions
5 business days for candidate to respond to pre-adverse action
Colorado:
Public employers: Background check only for finalists
Private employers: Less restrictive but check local ordinances
Credit checks banned except narrow exceptions
New York (strict):
Ban the box applies
NYC even stricter
Credit checks banned as of April 18, 2026 (with narrow exceptions)
Individualized assessment required
Texas (new law):
15+ employees: Cannot ask about criminal history until candidate deemed otherwise qualified
Can ask after interview offer or conditional offer
Smaller employers (<15): Not covered by state law
Check local ordinances (Austin, San Antonio have stricter rules)
Florida (minimal restrictions):
No state ban-the-box law
No credit check restrictions
Follow federal FCRA only
Three actions this week:
Audit your application: Remove all criminal history questions if you're in California, Colorado, New York, or if you have 15+ employees in Texas. Replace with: "A background check may be required for this position."
Know your employee count: Texas law kicks in at 15 employees. California at 5. New York has different thresholds for different requirements. Count carefully.
Document your process: If you're in California or New York and find criminal history, document your individualized assessment: nature of offense, time passed, relevance to job. This documentation protects you if challenged.
The goal isn't avoiding background checks. It's knowing what you can check, when you can check it, and how to use that information legally in your specific state.
One background check policy doesn't work everywhere. Customize by state or you're asking for trouble.
This content is provided for informational purposes only and does not constitute legal advice; for guidance on your specific situation, please consult with an employment attorney licensed in your state.