Employer Pays $93K Over Revoked Job Offer

A California municipality has agreed to pay $93,000 to settle claims that it pulled a conditional job offer based on an applicant’s criminal history without conducting the individualized assessment required under the state’s Fair Chance Act (FCA).

The settlement resolves allegations that the City of Signal Hill in Los Angeles County violated the FCA during its hiring process for a Public Works position, according to an announcement from the California Civil Rights Department (CRD).

Applicant Receives Job Offer

In 2025, the CRD received a complaint from an applicant who’d sought a water systems operator position with the city. The role included responsibilities such as repairing hydrants and pipelines, reading water meters, treating groundwater, and handling customer service.

After completing multiple rounds of interviews, the applicant received a conditional offer of employment.

Job Offer Rescinded After Background Check

The city conducted a background check, then pulled the offer.

According to the applicant, the city failed to conduct an individualized assessment of the applicant’s conviction history – an analysis the FCA requires before an employer can deny employment based on a criminal record. The city also allegedly disregarded information the applicant submitted, challenging the accuracy of the background check. Additionally, the complaint alleged the city relied on a conviction history that was more than seven years old and had no connection to the job.

What the Fair Chance Act Requires

The FCA is a California law that took effect January 1, 2018, and applies to employers with five or more employees. The law generally prohibits covered employers from asking about an applicant’s conviction history before extending a conditional offer of employment.

Once a job offer is made and a background check is conducted, employers can’t simply rescind the offer based on a criminal record. Instead, employers have to conduct an individualized assessment – an analysis of whether the specific conviction has a direct and adverse relationship to the job in question.

Employers must also allow applicants to respond. If an applicant submits information challenging the accuracy of the background report or offers evidence of rehabilitation or mitigating circumstances, the employer must consider that information before making a final decision.

Settlement Includes $93K Payout — Plus Other Relief

Following the CRD’s investigation, the parties resolved the matter through mediation. Without admitting wrongdoing, the City of Signal Hill agreed to:

• Pay $93,000 in compensation to the applicant
• Modify its hiring policies to ensure compliance with the FCA
• Update the notices provided to applicants when employment decisions involve criminal history
• Consider information submitted by applicants before making a final decision
• Train staff on FCA requirements, including how to evaluate rehabilitation and mitigating evidence, and
• Report to the CRD for one year on all job denials tied to criminal history, including the positions involved, the convictions relied upon and whether applicants submitted rehabilitation or mitigation evidence.

HR Takeaways

Ban-the-box and fair-chance hiring laws now cover jurisdictions across the country – including over 150 cities and counties – though the specific compliance requirements vary widely.

For multistate employers, building a consistent hiring process across jurisdictions takes deliberate planning. One practical approach: Build your criminal history review process around California’s requirements. The FCA is widely considered one of the most comprehensive fair chance laws in the country. Employers that meet its standards are well-positioned to satisfy the less stringent requirements in other jurisdictions.

The Signal Hill case offers two lessons for any hiring program, regardless of where your organization operates.

Skipping the Individualized Assessment

The FCA doesn’t allow employers to reject an applicant simply because a background check returns a conviction. The law requires a fact-specific analysis: Does this particular conviction have a direct and adverse relationship to this particular job?

Employers should document that assessment in writing. The analysis should address the nature of the conviction, the time elapsed, evidence of rehabilitation and the specific duties of the role. A blanket policy that automatically disqualifies applicants with any criminal history is a compliance risk in California – and an increasing risk in other jurisdictions moving in the same direction.

Ignoring Applicant Responses

Once an employer provides notice of a preliminary decision to rescind a job offer based on criminal history, the applicant has the right to respond. That response may include evidence challenging the accuracy of the background check or documentation of rehabilitation.

Ignoring that response – or failing to document that it was considered – is exactly the kind of procedural gap that draws regulatory scrutiny. Build the response period into your hiring timeline and document how the applicant’s submission was weighed before any final decision is made.