Inquires from a number of companies and recent headlines about arrests of company executives, celebrities and their companions and the resulting fall out, including job loss, raises an issue that many California employers may not be aware of. The state Labor Code prohibits employers from taking adverse action against applicants and employees for an arrest when the arrest does not lead to a conviction. While employers can ask about pending arrests, the statute (Labor Code Section 432.7) prohibits an employer from using arrest status as a basis for imposing discipline or other terms and conditions of employment. Indeed, some years ago an employee successfully sued his employer, a school district, because it demoted him after receiving notice that he had been arrested.

All is not lost, however. Employers confronted with this situation should investigate the allegations. The statute permits employers to inquire about pending arrests, but not act upon the arrest status. Discipline that is imposed as a result of an investigation or the employee’s failure to cooperate in it should be permissible. In conducting an investigation, be sure to ask the employee what happened and if he committed the crime. You may be surprised – he could confess! The investigation likely should meet the legal standards for establishing a termination for good cause – a good faith belief the employee committed misconduct. The employee should not be faulted if he cannot provide a copy of the police report because it has not been released or if the authorities fail to cooperate in the investigation. Also, remember that the adverse action may need to be job related and consistent with business necessity or it could open the door to a discrimination claim.