Denying a job opportunity to a candidate based on negative findings from a background check is called adverse action, and it is tightly regulated. We help employers follow the regulations and avoid fines.
Since 1970, the Fair Credit Reporting Act (FCRA) has promoted accuracy, fairness, and data privacy among consumer reporting agencies that deliver background checks. One of the most important aspects of the FCRA for job candidates is its regulations surrounding adverse action. When an employer takes a negative action in response to the findings from a background check, that is called adverse action, and it must be done carefully to avoid legal consequences.
To help employers navigate the FCRA’s regulations, we offer a checklist of adverse action rules and steps to follow. Two of our most important pieces of advice from this list are to create clear policies for both stages of adverse actions and to never make decisions until the candidate has been given a chance to dispute report results.
First, every employer should have policies in place for stage one (pre-adverse action) and stage two (adverse action.) During the pre-adverse action stage, the employer must send notice to the job candidate about the potential for adverse action, as well as copies of the reports, a Federal Summary of Rights, and all necessary state notices.
After receiving this information, the candidate has a window of time to contest the findings with the consumer reporting agency. If the candidate does not contest the report (or if the agency confirms the accuracy of the information in response to the dispute), then the employer may move to the second stage and deliver formal notification of adverse action. By creating and following policies for both stages, employers are better equipped to meet the FCRA’s regulations and avoid costly mistakes.
Second, it’s crucial that employers do not make a decision until the adverse action process is fully complete. They must remain open to the potential candidate and any disputes they offer to the report until either the agency corrects their mistakes or confirms that their original information was accurate. We are committed to helping employers navigate the entire adverse action process and follow fair and lawful hiring practices.