California Courts Cannot Second-Guess the Outcome of an Employer’s Individualized Assessment Under the State Fair Chance Act

The California Fair Chance Act (CFCA), which was enacted in 2018, requires that employers engage in several procedural steps before requesting or relying on an applicant’s criminal history. For example: 

• Employers may not inquire about an applicant’s conviction history until after first providing a conditional job offer. 
• Employers must conduct an individualized assessment of whether the applicant’s conviction history has a “direct and adverse relationship” to the duties of the job. 
• Employers must provide applicants with notice before deciding to rescind a conditional job offer.

The state agency that oversees and enforces the CFCA, the California Civil Rights Department (CRD), has investigated CFCA claims aggressively and even initiated litigation. The CRD has also required strict compliance with the CFCA’s requirements. The plaintiffs’ bar has taken note and filed dozens of lawsuits, including class actions, contesting the outcome of the employer’s individualized assessments and seeking damages and attorney’s fees even for technical CFCA violations. A recent published decision from the California Court of Appeal provides employers with some much-needed relief.  

In McInerney v. Regents of University of California, the plaintiff applied for a position in 2021 as an office assistant in the Graduate Student Resource Center with UCLA. The position was “forward facing,” meaning the assistant would have contact with members of the campus community, including students. However, a background check revealed four convictions in 2005 and 2007 for possession of a controlled substance and possession of a controlled substance for sale. Ultimately, UCLA declined to hire him. The plaintiff sued, alleging that UCLA could not consider crimes over seven years old, alleging multiple procedural violations of the CFCA, and alleging that his criminal history did not have a “direct and adverse relationship” to the job duties of an office assistant. The trial court granted summary judgment on the plaintiff’s individualized assessment claims and ruled that UCLA could consider convictions over seven years old, and a jury rejected the plaintiff’s claims that any technical violations of the CFCA caused him damages. The plaintiff appealed and the Court of Appeal affirmed.    

With regard to the plaintiff’s individualized assessment claims, the Court of Appeal ruled that the CFCA does “not permit a court or jury to second-guess an employer’s individualized assessment.” Instead, the court ruled, the CFCA “requires certain procedures that must be followed before denying employment to an individual based on his conviction record.” Importantly, the court rejected the plaintiff’s argument – often asserted by the CRD – that the outcome of the assessment must satisfy the “direct and adverse relationship” standard, reasoning that the text and legislative history of the CFCA established only specific procedural requirements. The court contrasted the CFCA’s text with statutes in other states, such as New York, that restrict employers from relying on criminal records unless substantially job-related or posing a safety risk.

The Court of Appeal further ruled that a trial court or jury could examine whether an employer complied with the CFCA’s procedures. However, in order to recover damages, a plaintiff must prove that any technical CFCA violations, such as the deficient notice at issue in the case, caused him actual harm. That is, a plaintiff must show that the employer would have hired him but for the procedural deficiencies. Here, again, the court contrasted the text of the CFCA with other laws that afford fixed statutory damages for violations, such as the California Investigative Consumer Reporting Agencies Act (ICRAA).¹

Finally, the Court of Appeal ruled that the CFCA does not prohibit employers from considering criminal convictions more than seven years old. However, should the applicant file a disparate impact claim based on race under Title VII or the Fair Employment and Housing Act, consideration of such convictions may give rise to a rebuttable presumption that the convictions are not “job-related and consistent with business necessity” under the CRD’s regulations.    

Employers in California must comply with the CFCA’s procedural requirements and any applicable local fair chance hiring laws, including the ordinances in the City of Los Angeles, the County of Los Angeles, the County of San Diego, and the City of San Francisco. Employers considering background check reports also must comply with the fair credit reporting laws, including the federal Fair Credit Reporting Act (FCRA). The recent split in the Courts of Appeal has spawned dozens of new FCRA class actions in 2026 and the trend is likely to continue in 2027. However, this ruling reinforces the core premise that, under the CFCA, the employer, not the applicant or the CRD, has ultimate discretion over hiring decisions for applicants with criminal convictions.