A Recap of Legal Developments from Q1 2026 And Key Areas to Watch in Q2

Written by: Kimberlynn Wilson

Q1 2026 was an active quarter for background screening legal developments. Let’s review what has occurred so far and what to expect in the remainder of Q2.

Proposed Legislation and Expansion of Ban the Box and Clean Slate Initiatives

More than 37 states and 150 cities have implemented various Fair Chance or Ban the Box ordinances. Additionally, 13 states and the District of Columbia have passed Clean Slate legislation. This has been an ongoing trend for several years and is anticipated to continue in 2026.

• Philadelphia’s amendments to the Fair Criminal Record Screenings Standard Ordinance took effect January 6, 2026. The amendments substantially restrict the scope of criminal history information that employers can consider. Misdemeanor convictions are now limited to a four-year lookback period. Employers are also prohibited from considering summary offenses, as well as expunged or sealed records. Read more about the ordinance here.

• Maryland’s proposed Clean Slate Act of 2026 aims to automatically seal non-violent offenses and specific misdemeanors if enacted. Eligible non-convictions and arrests could be sealed after three (3) years, while eligible misdemeanors would be sealed after seven (7) years. Read more about the proposed act here.

• California’s Assembly Bill (AB) 2095 proposes amendments to the state’s current Fair Chance Act. If enacted, the legislation would expand pre-offer restrictions, implement additional prohibitions concerning the costs of background checks and self-disclosure of criminal history, mandate that individualized assessments be documented in writing and shared with the applicant, and extend the waiting period for the adverse action process. Read more about AB 2095 here.

• New York Senate Bill S1220 seeks to amend labor laws to prohibit employers from inquiring about or considering an applicant’s or employee’s criminal conviction history on applications or prior to a conditional offer of employment. Read more about S1220 here.

• Maine Legislative Document (LD) 1911 would have automatically sealed Class D and Class E misdemeanors after a five-year period of remaining crime-free following the completion of the sentence. The bill was approved by the state legislature in April 2026; however, Governor Janet Mills exercised her veto authority to block the legislation. Read more about the Governor’s veto here.

Several Data Privacy and Consumer Privacy Regulations Went Into Effect

Data privacy and consumer privacy remained ongoing areas of focus in Q1. Several states that enacted privacy legislation in 2024 or 2025 have already implemented or are preparing to implement these laws in 2026.

• California Governor Gavin Newsom signed SB 446 into law last year, with the law taking effect on January 1, 2026. The law mandates that businesses notify affected individuals within 30 calendar days of discovering or being informed of a data breach. For breaches affecting more than 500 California residents, organizations are also required to notify the California Attorney General within 15 calendar days of informing affected consumers about the security breach. Read more about SB 446 here.

• Also out of California, the California Consumer Protection Agency (CCPA) Board approved a set of final regulations that became effective on January 1, 2026. These regulations establish new compliance requirements for businesses utilizing automated decision-making technology (ADMT). They encompass provisions related to notices, appeal rights, opt-out rights, consent, human review, risk assessments, and recordkeeping. Read more about the regulations here.

• Illinois’ House Bill 3773, which was enacted in 2024 and became effective on January 1, 2026, includes amendments to the Illinois Human Rights Act and establishes new requirements for employers utilizing AI in hiring, disciplinary actions, termination, or other workplace-related activities. To facilitate compliance with this legislation, in February 2026, the Illinois Department of Human Rights (IDHR) released draft rules for implementing Illinois’ regulations. Read more here.

• Indiana, Kentucky, Oregon, Rhode Island, and Texas also enacted privacy laws that became effective on January 1, 2026. Read more about the privacy laws and their specifications here.

Drug Testing Continues To Be An Evolving Legal Landscape

Marijuana legalization, including both medical and recreational use, continued to be actively considered by state legislatures, with several states having pending bills that involve legislative approval or signature gathering deadlines. Read more about the pending state initiatives here.

Additionally, the U.S. Department of Transportation’s (DOT) proposed rule to add fentanyl and norfentanyl (a metabolite of fentanyl) to drug testing panels for safety-sensitive transportation positions is currently awaiting a final ruling, which is anticipated to be issued later this year. Read more about the proposed rule here.

Recent California ICRAA Settlement

On February 4, 2026, the California Court of Appeal, Fourth Appellate District issued its ruling on Parsonage v. Wal-Mart (2026).

Three years after the plaintiff authorized Wal-Mart to conduct a background check, the plaintiff filed a lawsuit against Wal-Mart for alleged violations of the California Investigative Consumer Reporting Agencies Act (ICRAA). The allegations included failure to identify the consumer reporting agency that conducted the background check and omission of a checkbox that allows the plaintiff to confirm they want a copy of the report.

The plaintiff sought damages of $10,000 for each violation of the ICRAA. The Court of Appeal reversed Wal-Mart’s motion for summary judgment, ruling that the plain language of the ICRAA allows consumers to recover the statutory penalty without demonstrating any additional injury beyond the violation of their rights. More information about the case can be found here.

New York’s Credit Check Ban

On April 18, 2026, shortly into Q2, New York’s credit check ban took effect. Employers operating in or hiring in New York cannot consider a job applicant’s or an employee’s creditworthiness in hiring or employment decisions. Under S3072, it is considered a discriminatory practice for an employer to inquire into or use a job applicant or employee’s credit history for employment purposes unless the employer or position qualifies for one of the law’s specified exceptions.

This law does not supersede existing local laws that provide broader protections. S3072 also restricts consumer reporting agencies (i.e., background screening companies) from providing employers with consumer reports that include credit history information, unless the employer or position is exempt. Read more about the credit check ban here.

Employers should review the law with qualified legal counsel and disclose any relevant exceptions to consumer reporting agencies to continue receiving credit history information.

What’s Upcoming for the Remainder of Q2?

More Fair Chance Laws Coming into Effect

• Illinois’ Clean Slate law was signed into law by Governor J.B. Pritzker in January and will take effect June 1, 2026. Eligible misdemeanor convictions and ordinance violations will be sealed two (2) years after completion of sentence. Eligible felony convictions will be sealed three (3) years after completion of the most recent felony conviction sentence. There are several offenses excluded from eligibility including serious violent crimes, sex crimes (including any requiring sex offender registration), DUIs, reckless driving, and cruelty to animals. Read more about the new law here.

• Beginning July 1, 2026, the first day of Q3, Virginia’s Clean Slate Law and Washington’s enhanced protections under the Fair Chance Act will come into effect.
  • • • • Virginia’s law permits the automatic sealing of non-convictions and certain misdemeanors, such as disorderly conduct and marijuana possession. For other eligible misdemeanors, individuals may petition for sealing after a seven-year waiting period, and after a 10-year period for eligible felonies. Read more here.

• Washington’s law will prohibit employers from conducting criminal background checks until after a conditional job offer has been extended. Additionally, it limits the ways in which information obtained from criminal background checks can be used. The law also introduces new obligations related to the pre-adverse and adverse action processes, including the need for a legitimate business reason before taking adverse employment actions, holding the job position open for two business days, and conducting a written assessment. Read more here.

Monitor Developments in State Privacy Laws

As legislation related to artificial intelligence and consumer privacy continues to be proposed at the federal level, it is important to also stay informed about developments at the state level. Several states have enacted privacy laws in recent years that will take effect in later half of 2026 or in 2027.

Legal Disclaimer: Validity Screening Solutions provides this material for educational and informational purposes only, and shall not be construed as legal advice, express or implied. For questions regarding your organization’s practices and compliance with applicable laws, please consult with your legal counsel.