What is adverse action?

You can Proceed or start the Pre-Adverse Action process

Updated this week

You’ve decided not to move forward with a candidate who is currently in Consider status, but not sure what to do next? You’ve come to the right place.

While this process can feel daunting and complex, Yardstik has built-in measures to our platform to help you communicate with candidates effectively and follow requirements.

What is the Adverse Action process?

The Adverse Action process is followed when information is found in a background check that may adversely affect someone’s employment. If a company determines this adverse information may impact the ability to employ, retain, promote or transfer the candidate, the company then has the option to initiate the Adverse Action process.

The purpose of the Adverse Action process is to give a candidate the opportunity to see the results of the consumer report that is being used to make the decision to move forward or not. The Fair Credit Reporting Act (FCRA) requires a specific three-step process that is followed for these situations and is detailed below. The purpose of this multi-step process is to give candidates the opportunity to correct any incomplete or inaccurate information provided in the consumer report results.

While not one of the three steps, there is also the ability for the candidate to reach out to the hiring company, if they choose, to explain any background or circumstances with their report.

Launch Adverse Action

When a candidate report is completed with a Consider status, you will have the chance to review the information in the report and decide on taking one of two actions:

1. Proceed the Candidate - If you decide to move forward with the candidate, click on the green Proceed button. The Pre-Adverse Action letter will not be sent to the candidate.

2. Send Pre-Adverse Action Notice - If you decide not to proceed with hiring the candidate, click on the red Pre-Adverse Action button.

On the next screen, select the violations that led to your decision, or use the text box to enter a custom reason and select Send Notice. Any information selected or typed here will be visible to the candidate. If no violations are selected or written into the custom field, no violations will appear on the letter to the candidate. Some states require that the reason for the Pre Adverse notification must be included in this communication.

The candidate has a specific amount of time to respond. The Yardstik application is set by default to seven days but this can be changed in Account Notifications.

Cancel Adverse Action

If you have started the Adverse Action process but then determined you want to continue the hiring process with the candidate, you can stop the Final Adverse Action letter from being sent to the candidate.

In the Yardstik app, return to the candidate’s report and select Cancel Adverse Action. Canceling will move the candidate back to Consider status where you can select Proceed or Pre-Adverse.

You are not able to Cancel Adverse Action once the report is in Final (Post-Adverse) Adverse status.

The FCRA three-step Process

These components are built into Yardstik to help you with compliance and peace of mind. When you initiate Adverse Actions, here’s what happens next:

1. Pre-Adverse Action Letter – This letter to the candidate references how the applicant can contact Yardstik to dispute any information returned by the background screen as well as how to contact the hiring company that the applicant is working with if the consumer requests an individualized assessment. Specific requirements exist for what must be sent with this pre-adverse letter per the FCRA.

Note: Yardstik is only involved in researching any details a candidate may present as being inaccurate on his/her consumer report. If the candidate requests to explain the candidate’s completed report and how it should not impact hiring, the Yardstik end user/client is responsible for doing an individualized assessment.

2. Waiting/Review Period – Law requires the hiring company to wait a reasonable period to allow the applicant to receive the pre-adverse letter and act upon its results, if desired. The wait period for the Yardstik end user is set at the number of days the end user selects in system settings. This is set under the Settings tab and can be set at any number between 7-31. The default is seven days.

3. Final Adverse Action Letter – If the candidate fails to supply additional information by the end of the waiting period or the Yardstik end user decides the information provided does not meet their company requirements, the Final Adverse letter will be sent at the end of the waiting period. This is also followed if no additional information is provided. Specific FCRA requirements exist for what must be sent with this final adverse letter that Yardstik follows.

If you have any questions, we're here to help! Please message our support team directly using the purple chat icon in the bottom right-hand corner of this screen.

Disclaimer: These resources provided do not constitute legal advice and are intended for educational purposes only. We encourage our customers to seek legal counsel on adherence related to your practices and compliance with applicable state and federal laws.

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