TL;DR
- California’s CRD continues to investigate employer compliance with the Fair Chance Act.
- A recent investigation resulted in a $93,000 settlement with the City of Signal Hill over alleged violations related to its use of criminal history in hiring.
- California employers should review their individualized assessment, candidate response and adverse action procedures to align their hiring processes with Fair Chance Act requirements.
California employers that use criminal background checks should continue to pay close attention to the state’s Fair Chance Act.
Recent activity from the California Civil Rights Department (CRD) shows that the agency continues to investigate how employers use criminal history when making hiring decisions. In June 2026, CRD announced a settlement with the City of Signal Hill following allegations that its hiring process violated the California Fair Chance Act.
For employers, the case is a timely reminder to review background screening, individualized assessment and adverse action procedures.
What Does the California Fair Chance Act Require?
The California Fair Chance Act generally applies to employers with five or more employees. Under the law, covered employers generally cannot ask about or consider an applicant’s criminal history before making a conditional job offer.
After a conditional offer, an employer may conduct a criminal background check. If information in the report could lead the employer to withdraw the offer, the employer must first conduct an individualized assessment.
That assessment considers factors including:
- The nature and gravity of the conviction or conduct
- The amount of time that has passed
- The nature and specific duties of the position
Employers also have specific responsibilities for notifying candidates and providing an opportunity to respond before a preliminary decision becomes final.
What Happened in the Signal Hill Investigation?
According to CRD, an applicant applied for a water systems operator position with the City of Signal Hill in 2025. The applicant completed multiple rounds of interviews and received a conditional offer of employment.
Following a background check, the city allegedly rescinded the offer without conducting the individualized assessment required by the Fair Chance Act. CRD also alleged that the city relied on criminal history that was more than seven years old and unrelated to the position and did not appropriately consider information the applicant submitted challenging the accuracy of the background check.
CRD ultimately reached a $93,000 settlement with the city. Without admitting wrongdoing, Signal Hill agreed to update hiring policies and notices, provide Fair Chance Act training, consider information submitted by applicants before making final decisions and report criminal-history-related job denials to CRD for one year.
What Can Employers Learn From the Investigation?
The Signal Hill case highlights several areas California employers should review within their hiring process.
Employers should confirm that criminal history is considered at the appropriate point in the hiring process and that individualized assessments are documented when required. Preliminary adverse decisions should also provide candidates with the required information and an opportunity to respond.
CRD guidance states that applicants must generally receive at least five business days to dispute the accuracy of criminal history information or provide mitigating information before an employer proceeds with a final decision. Employers must consider information submitted by the applicant before making that decision.
This makes the workflow surrounding the background check just as important as the screening itself.
Review Your Fair Chance Act Process
For California employers, now is a good time to review:
- When criminal history enters the hiring process
- How individualized assessments are conducted and documented
- Preliminary adverse action notices
- Candidate response procedures
- Final adverse action notices
- Training for employees involved in hiring and background screening
CRD provides sample forms covering several stages of the Fair Chance Act process, including conditional offers, individualized assessments, preliminary notices, reassessments and final notices.
Build Compliance Into Your Screening Workflow
Background screening regulations continue to evolve at the state and local levels. Employers can reduce unnecessary compliance risk by building consistent processes for screening, candidate communication and adverse action.
JDP helps organizations manage background screening through compliance-forward technology, configurable workflows and human support. A centralized screening process can also help HR teams maintain documentation and apply established procedures more consistently across hiring decisions.
Employers should continue monitoring California requirements and work with qualified legal counsel to determine how the Fair Chance Act and other applicable laws affect their hiring practices.
To learn more, visit https://www.jdp.com/contact/