As we pass the midpoint of 2026, background screening compliance remains one of the most dynamic landscapes for Human Resources and employment law. State legislatures and local city councils are aggressively enacting applicant protections, changing how employers evaluate everything from criminal histories and consumer credit to drug testing and remote identity verification. Below is recap of the major state, local, and federal employment background screening developments that have taken effect in 2026 to date.

  1. Fair Chance & Local “Ban the Box” Mandates

Fifteen states, along with the District of Columbia and 21 localities have enacted Ban-the-Box laws, delaying criminal inquiries until after conditional offers while restricting specific categories of conviction data. Several have expanded their requirements in 2026:

  • San Francisco Fair Chance Ordinance (FCO) Amendments (Effective August 10, 2026):
  • Out-of-State Offense Protections: Explicitly bars employers from considering out-of-state convictions or arrests for conduct that is lawful in California (such as reproductive healthcare, gender-affirming care, and related care activities).
  • Tightened Timelines: Employers must acknowledge receipt of mitigating evidence submitted after a pre-adverse action notice within 14 days, and final adverse action decisions must be issued within 30 days.
  • Washington State (HB 1747 – Effective July 1, 2026): Implemented strict statewide Fair Chance mandates for employers with 15+ employees. Criminal convictions inquiries must be delayed until post-offer, non-conviction arrests and juvenile records are completely excluded, written individualized assessments are mandatory, and pre-adverse action review holds must last at least two business days.
  • Philadelphia (Effective January 6, 2026): Updated its Fair Chance Hiring law, shortening the permissible misdemeanor lookback period from seven years to four years and banning the consideration of summary offenses.
  1. Expansion of “Clean Slate” Automatic Record Sealing

Employers are prohibited from using automatically sealed or expunged records in adverse employment decisions even if a legacy database accidentally surfaces them. Fourteen states now operate active automated court record-sealing systems. The 2026 jurisdictions are as follows:

  • District of Columbia (Ramp-up Effective January 2026): Enacted its Second Chance Act, restricting early criminal history disclosures and mandating automatic expungements for minor and decriminalized offenses.
  • Virginia (Effective July 2026): Officially launched its automated Clean Slate court system to automatically seal qualifying low-level misdemeanors and non-violent offenses after statutory waiting periods.
  • New York Clean Slate Implementation: State court systems continue expanding the automated sealing of qualifying records (3 years for misdemeanors, 8 years for eligible felonies).
  1. Credit Check Restrictions

One of the most consequential shifts in employment background screening occurred this spring, further restricting the use of credit history in employment decisions:

  • New York State Employment-Purpose Credit Ban (Effective April 18, 2026): New York State expanded New York City’s long-standing Stop Credit Discrimination in Employment Act to cover all employers statewide. The law prohibits employers from requesting, using, or evaluating a candidate’s consumer credit history for hiring, compensation, or promotional decisions unless an exemption applies (positions that legally require credit checks, law enforcement/security clearance positions, or high-level fiduciary roles with direct signatory authority over significant financial assets).
  1. State Workplace Drug Testing Resets

Twenty-four states offer some protections against marijuana-related adverse employment decisions. Effective July 29, 2026, for reasonable suspicion testing, Maine now requires written documentation of specific “observable behaviors” prior to testing, and all employer testing policies must be pre-approved by the Maine Department of Labor.

  1. Form I-9 Enforcement & Remote Verification

Federal immigration authorities updated Form I-9 inspection and audit protocols early in the year, applying stricter financial penalties for procedural errors previously treated as minor technical violations. To combat identity fraud in remote hiring workflows, employers are increasingly pairing E-Verify protocols with automated digital document and biometric validation.

The Trend

The overarching trend is that background screening compliance is becoming increasingly local. Fair Chance laws, Clean Slate initiatives, individualized assessment requirements, record-sealing statutes, and drug testing regulations vary substantially by jurisdiction. For employers operating nationally, the greatest compliance risk often stems not from federal law, but from failing to adapt screening practices to state and municipal requirements.

 

Disclaimer: This communication is for general informational purposes only and does not constitute legal advice. The summary provided in this alert does not, and cannot, cover in detail what employers need to know about the amendments to the Philadelphia Fair Chance Law or how to incorporate its requirements into their hiring process. No recipient should act or refrain from acting based on any information provided here without advice from a qualified attorney licensed in the applicable jurisdiction.