How to Explain FCRA Adverse Action to Your Applicants

Sometimes the person you are considering for employment gives you a reason to reconsider. When this “reconsidering” is due to information found on a background check you’ve ordered from a third-party provider and you decide you may have to disqualify the candidate based on what you found, adverse action protocol kicks in.

You understand adverse action. However, your applicant might not. It’s important to guide candidates who may be impacted by a background check through the adverse action process. They need to understand their rights, your rights, and how a final decision will be made.

Here are some key points to communicate:

  • Assuming you’ve followed FCRA pre-background check disclosure and authorization requirements, you can remind your applicant or employee (the subject of the background check) that they have already given their permission for you to obtain a background check, which the FCRA calls a consumer report.
  • Before you take adverse action, you will provide the applicant or employee a notice that includes a copy of the background check/consumer report you used to make your decision and provide them with a summary of their rights under the FCRA. This is commonly referred to as a “Pre-Adverse Action Notice.”
  • Assure them that you will give them time to review the report and respond to confirm or refute what was found in the report. Where applicable, you will perform an individualized assessment that takes into account their individual situation. This is especially important in the case of a candidate with a criminal record.
  • Finally, if you ultimately decide to take adverse action (e.g., denying employment opportunity, terminating employment, or any other action which negatively impacts employment or potential employment), you will give the applicant an “Adverse Action Notice” that includes:
    • the name, address, and phone number of the consumer reporting agency (background screening provider) that supplied the report;
    • a statement that the company that supplied the report did not make the decision to take the adverse action and can’t give specific reasons for it; and
    • a notice of their right to dispute the accuracy or completeness of any information the consumer reporting agency furnished, and to get an additional free report from the company if the person asks for it within 60 days.

Adverse action is an unfortunate situation for both the candidate who hoped to be hired and for the employer who hoped to gain a valuable employee. But, consider that employers have a legal obligation to build a safe, productive workforce and employees have a duty to serve the interests of the organization. Striking the right balance sometimes means employers have to deny some applicants, and terminate some existing employees based on a background check.

Want to learn more? Download our Practical Guide to FCRA 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 Professional Background Screening Association (PBSA), and the American Society of Industrial Security (ASIS).
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