Adverse action refers to the formal process an employer must follow when deciding not to hire (or to take other negative employment actions against) a candidate based on information found in a background check. This process is mandated by the Fair Credit Reporting Act (FCRA) to ensure fairness and transparency. The employer should be aware that the process outlined in the FCRA may be modified by applicable state or local laws.
📝 The Adverse Action Process
Pre-Adverse Action Notice: Before making a final decision, the employer must inform the candidate of the potential adverse action. The notice includes:
A copy of the background check report.
A summary of their rights under the FCRA.
Waiting Period: The employer must allow the candidate a reasonable amount of time (typically 5-7 business days) to review the information and dispute any inaccuracies.
Adverse Action Notice: If the employer decides not to hire the candidate after the waiting period, send a final notice informing the candidate of the decision. This notice should include:
The name and contact information of the background check provider.
A statement that the background check provider did not make the hiring decision and cannot provide specific reasons for the employment decision.
A reminder of their right to dispute the accuracy or completeness of the report.
Following this process ensures compliance with federal regulations and promotes fair hiring practices. For a more detailed exploration, you can read the full article here:What is an Adverse Action? Definition, Process, and Best Practices