Rescinded Job Offer Costs City $93,000

The City of Signal Hill in Los Angeles County made a costly mistake when it rescinded a conditional job offer based on an applicant’s criminal history without first conducting the individualized assessment required under the state’s Fair Chance Act (FCA). Their $93,000 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.

History

In 2025, an applicant complained to the California Civil Rights Department (CRD) alleging that they were unlawfully rejected for a job within the city’s Public Works Department as a water systems operator. The job duties included making pipeline repairs, reading meters, and treating groundwater. The applicant claimed they had successfully completed multiple rounds of interviews at which point the city made a conditional offer of employment.

Rescinding the Job Offer

After a background check, the city rescinded the offer, without conducting an individualized assessment of the applicant’s conviction history. According to the complaint, the city also ignored information submitted by the applicant that challenged the accuracy of the background check and the fact that the criminal history information was more than seven years old and had no connection to the job.

Settlement Requirements

Following the CRD’s investigation, the parties resolved the matter through mediation. Without admitting wrongdoing, the City of Signal Hill agreed to not only pay out $93,000 in compensation to the applicant, but they were also required to modify their hiring policies, update notices to new applicants, train staff on FCA requirements, and report any job denials tied to criminal history to the CRD for one year. Ouch!

Take Aways

The Signal Hill case reminds California employers of two important elements when they conduct background checks as a part of their hiring process:

1. Convictions Should Not Equal a Rejection

The FCA doesn’t allow employers to reject an applicant simply because a background check returns a conviction. In fact, the law requires that you conduct a fact-specific analysis by asking, “Does this particular conviction have a direct and adverse relationship to this particular job?” For example: If someone is hired as a cashier and you learn during the background check that they have multiple DUIs, you would be hard-pressed to prove that this information negatively impacts their ability to be a cashier. However, if your open position was for a truck driver, you’d have a much stronger reason to pull back your conditional job offer.

CEA recommends that every assessment be documented in writing and address the nature of the conviction, the time elapsed since the conviction, any evidence of rehabilitation, and the specific duties of the job.

2. Job Applicants Have the Right to Respond

Once an employer provides notice of a preliminary decision to rescind a job offer based on criminal history, the applicant still has the right to respond. That response may include evidence challenging the accuracy of the background check or documentation of rehabilitation, and as the employer, you should allow at least 10 business days to resolve things one way or the other.

Here’s why:

• The applicant must be given at least 5 business days to dispute the accuracy of the background check and/or provide mitigating or rehabilitative information.
• If, after considering the applicant’s response, the employer still intends to rescind the offer, it must provide a final written notice of the rescission and allow the applicant an additional 5 business days to respond before the offer can be finally rescinded.

In Summary

If a California employer (with five or more employees) wants to rescind a conditional job offer due to an applicant’s criminal history, they must follow a specific process and allow time for the applicant to respond before making a final decision.

This law is not new. In 2013, California initiated a Ban the Box law, prohibiting public sector employers from inquiring into an applicant's criminal history until after the applicant had met all other qualifications for a job. In 2018, this ban-the-box law was extended to all employers in California with five or more employees under the FCA.