A Practical Guide to Doing Adverse Action Right

When you feel you should deny an employment opportunity to a job applicant on the basis of information uncovered in a background report, the process can feel daunting. One false step could result in unintentional discrimination and can even land you in court.

A wave of recent lawsuits show that trial lawyers have learned how to turn even small mistakes in following the Fair Credit Reporting Act’s (FCRA) rules on using background reports into class action claims that can be very costly. This is compounded by compliance requirements in using criminal background checks as outlined by the Equal Employment Opportunity Commission (EEOC) in its Enforcement Guidelines, and by similar rules in the many Ban the Box (BTB) statutes.

The legal exposure puts a premium on knowing and following the required steps. On a more personal side, it’s important to realize that the laws and guidelines are established with the core goal of promoting fairness in hiring.

The adverse action process might feel sticky at first, but you can implement it in a way that achieves what you need, to hire the right people, and only exclude people fairly and legally. The three-pronged regulatory environment makes compliance tricky, especially because rules in different jurisdictions vary. As a rule of thumb, you should develop an adverse action procedure that complies with the most stringent requirements among these.

Doing so will help to keep the general purpose of these laws in mind. The aim of FCRA, EEOC and BTB is to ensure fairness in hiring, and to avoid rejecting applicants based on discriminatory or irrelevant criteria. There are 5 key themes in these rules:

  1. Fairness: The laws aim to give otherwise disadvantaged applicants a fair chance at a job.
  2. Accuracy: Employers and consumer reporting agencies have a responsibility to ensure that information used is accurate.
  3. Targeted evaluation: Only background information relevant to the job in question should be gathered and used.
  4. Individualization: Candidates should be treated as individuals, not as members of a class.
  5. Transparency: Candidates should be informed throughout the process, and given a meaningful opportunity to respond.

Following these themes in your hiring process will keep the focus on the individual in question, and ensure that you will avoid excluding him or her unfairly.

To help, we have created a new resource for hiring managers called, A Practical Guide to Adverse Action in Hiring. Download the free guide and use it to help design or reform your adverse action process to improve your compliance and reduce your risk.

About Michael Gaul

Michael is a results-oriented marketing executive with over two decades of experience in employment screening, physical security, and business process management. Michael has deep experience in human capital risk management and a passion for educating business leaders and HR professionals on strategies that tangibly protect their interests. Michael serves on the Board of the Secure Cash and Transport Association (SCTA) and is a member of the National Association of Professional Background Screeners (NAPBS), and the American Society of Industrial Security (ASIS).
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