Employers and Adverse Actions

Background checks are one of the most essential tools in your repertoire for ensuring the hiring and retention of the best possible candidates for your company.

In the process, you may find information about an applicant that reflects poorly on their integrity, qualifications, or ability. Maybe they committed a crime like fraud or assault. Or perhaps they falsified information about previous employment and/or education.

So what do you do as an employer? You might be tempted to simply decline the applicant’s employment without explaining why. However, if you go this route, you risk running up against Fair Credit Report Act (FCRA) mandates regarding adverse actions.

Here’s your guide to adverse actions, what they are, and tips on how to carry them out to be compliant with the law.

What Is Adverse Action?

The FCRA defines an “adverse action” as “a denial of employment or any other decision for employment purposes that adversely affects any current or prospective employee.” Examples of an adverse action include the withdrawal of an existing job offer, withholding a promotion, or terminating employment.

Proper Steps For Taking Adverse Action

For the protection of consumers, job seekers and employers, the FCRA has laid out a step-by-step procedure to take when carrying out an adverse action against a candidate or employee.

By following these three steps, you follow the procedure outlined by the  the FCRA.

1.  Pre-Adverse Action

If a background check reveals information that you makes you decide against hiring a candidate, you must provide them with advance notice in writing. You can do this in an email or in a printed letter. In this letter, you must inform the applicant that you are disqualifying them based on the results of the background check, and provide them with a copy of it.

2.  Waiting Period

While the FCRA does not give specifics regarding an acceptable wait period before taking adverse action, best practice is to allow at least five working days.

3.  Post-Adverse Action

Once the wait period is over, you need to send the applicant another written notice reminding them that they have the right to dispute the decision and that they have 60 days to request another copy of the background check. If you used a third party to conduct the background check, you must specify who that is and clarify that this entity is not responsible for any hiring/firing decisions.

Are You Violating the FCRA?

Do your company policies adhere to the process laid out by the FCRA as described here? If not, it may be time to update those policies to make them FCRA-compliant. If you’re unsure about this, it’s worth it to contract with a reputable background check company like Veriswift who is familiar with the process

What To Do If You Receive an Adverse Action Notice

Have you ever been on the receiving end of an adverse action notice? If so, you know it doesn’t feel good. Don’t get bogged down with your emotions, though; remember that you have only a limited window of time to take action and resolve the problem.

As an employer, you have a responsibility to hire trustworthy employees while adhering to privacy laws. Veriswift has the expertise you need to make sure that happens.