Our compliance series is meant to ensure you are following all Compliance Standards in your background screening process. This week’s topic is Adverse Action.
What is Adverse Action?
Adverse Action includes any decision that is unfavorable toward an applicant, employee, consumer or volunteer that is based all or in part on the results of a background screen.
Adverse Action has multiple stages and paperwork according to federal laws and sometimes state law.
Whenever Adverse Action is taken, steps outlined in the FCRA must be followed in order to properly notify the applicant or employee and allow them the opportunity to dispute any inaccuracies.
What is the Purpose of Adverse Action?
The FCRA outlines the requirements for taking adverse action to accomplish three primary goals:
- Inform the applicant of their rights under the FCRA.
- Ensure the applicant knows adverse action was taken based all or in part on the results of a background report.
- Allow the applicant to review the background report and dispute any inaccuracies.
Inherent in the adverse action process is giving the applicant the ability to correct inaccurate or incomplete information that could influence your decision to continue with an offer of employment. This is the most important goal of adverse action, offering protection for the employer and the subject of the background report.
What are the Stages of the Adverse Action Process
Adverse Action has three stages:
- Pre-Adverse Action Letter
- Waiting
- Post-Adverse Action Letter
The Pre-Adverse Action Letter informs the applicant that an employer is going to take adverse action. Similarly, the Post-Adverse Action Letter advises the applicant that the final decision not to pursue employment has been made.
What is Included in Adverse Action Letters?
Pre- and Post-Adverse Action Letters have the same four components, as listed below.
- A letter stating adverse action has or will be taken that advises the applicant the employer made the decision (not the CRA) and provides the CRA’s contact information.
- A copy of the applicant’s Summary of Rights Under the FCRA
- A copy of the applicant’s background report
- A dispute form
The only difference is the Pre-Adverse Action Letter advises an applicant that you plan to deny employment and the Post-Adverse Action Letter advises you to make a final decision. Although not required by the FCRA, some local laws require employers to specifically inform an applicant why adverse action was taken.
Need Help? Adverse Action Letter Services
Choice Screening offers adverse action letter services. We would like to helps you remain compliant when taking Adverse Action by offering Pre-Adverse Action and Post-Adverse Action services that are routinely audited and overseen by our internal Compliance Director.
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This communication is intended for Choice Screening's current or prospective clients and partners and may not be forwarded outside of Choice Screening, posted online, or otherwise reprinted in whole or in part.
The information contained in this newsletter is not all encompassing and is meant to be informative only, nor contains legal advice, expressed or implied. Consult with qualified legal counsel in all matters of employment, business, and background screening law.
