Adverse Action Notices
Adverse Action Notices are Required by Law
Adverse action is any action that is taken based off of information that is derived during a background check that negatively impacts an individual’s employment, credit, insurance, etc. By the rules of the Fair Credit Reporting Act (FCRA), employers are required to abide by specific requirements when making any type of hiring decision. Failing to follow the guidelines set forth by the FCRA could lead to fines, lawsuits, etc. for non-compliance.
The adverse action process is important because it allows the candidate to address and/or dispute any concerns that came back to negatively impact their hiring consideration. Surprisingly, many companies fail to properly abide by the adverse action process even though that failure puts them at great risk of lawsuits.
The Adverse Action Process
In order to remain compliant and mitigate legal risk, it’s important for employers to follow the FCRA guidelines of the adverse action process properly. A compliant adverse action process will include the following:
- Pre-Adverse Action Notice - The employer will inform the applicant that something adverse returned in the background check, which could possibly affect their hiring decision.
- Chance to Dispute – The applicant is given an opportunity to file a dispute before the employer takes final adverse action. The FCRA does not define a set number of days, but the standard is a 5-day period for an applicant response, which can vary by employer policies.
- Adverse Action Notice – This only needs to be sent if the employer denies the applicant based off of information returned from the background report. If the applicant is denied for other reasons, such as a lack of qualifications to perform the job, then sending an adverse action notice is not required.
When it comes to the adverse action process, DISA provides corporate customers three email notifications that include:
- Pre-adverse notice
- Summary of rights under the FCRA
- Copy of the background report
- An adverse notice (required only if employment is denied based solely on the background check)
DISA provides this information to corporate customers, and therefore it is the customer’s responsibility to pass it along to the candidate. Following FCRA guidelines, the employer, not DISA, is responsible for implementing the adverse action process.
*For those who are enrolled in DISA’s consortium (site access) program, we will directly mail the applicant the adverse action letter.
DISA’s Background Compliance Team can assist employers with FCRA compliant background screening requirements, including the adverse action process.
To meet your background compliance needs contact DISA at 281-673-2530