What the Law Says About Adverse Action

Adverse action in employment (the process of denying an employment opportunity to a candidate or employee because of something revealed in a background check) can land an employer in a rugged territory of cross-cutting laws and regulations. With the increased coverage of Ban the Box laws in many state and local jurisdictions overlapping the federal Fair Credit Reporting Act (FCRA) and Equal Employment Opportunity Commission (EEOC) guidelines, it’s fair to say that legal compliance in how you exclude someone can be challenging.

In any case, it’s helpful to begin by knowing what your objective is. Employment law on adverse action is driven by the goal of ensuring that applicants are not excluded for discriminatory or irrelevant reasons. The law is complex, but you will be well on your way to compliance by keeping these 5 basic principles in mind:

  1. Fairness: This idea is at the heart of the issue. Do not prejudge an applicant.
  2. Accuracy: Ensure you’re working with reliable information from which your decisions are made.
  3. Targeted: Evaluate applicants against criteria that are directly relevant to the role they will play in your organization.
  4. Individualization: Look into each applicant’s circumstances to fully evaluate their qualification for the job in question.
  5. Transparency: Make sure the applicant knows about and understands how background information might be used in the hiring decision.

With these principles in mind, design your hiring process to start a fully compliant 3-step FCRA adverse action process the moment you choose to use background reports produced by a third-party background screening agency. Even if you avoid the use of a consumer report, you must still comply with local or state Ban the Box (BTB) laws (some of which contain strict adverse action rules) and EEOC anti-discrimination guidelines.

For more information about this critical component of the hiring process, get your complimentary copy of our new ebook, A Practical Guide to Adverse Action in Hiring.

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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