Pre-Adverse & Adverse Action Notifications
If a consumer report raises any kind of problematic issues, additional FCRA requirements apply, including:Pre-Adverse Action Notice
If the employer is considering taking adverse action against a candidate—e.g., the individual will not be hired or promoted, will be terminated, etc.—based in whole or in part on the results of the report, the individual must be notified before the decision is final. This notification must include a copy of the report along with the document, “A Summary of Your Rights Under the Fair Credit Reporting Act.” This notice provides the consumer an opportunity to review information in the report and contest the results of the report (commonly referred to as a dispute) with the consumer reporting agency. Often, employers will include contact information for their organization as well, in order for the candidate to reach out and explain any issues for the employer’s possible reconsideration.Notice of Adverse Action
A reasonable period of time must be allowed to pass after the pre-adverse action notice and then a hiring decision can be finalized. If the adverse action will stand, the employer must notify the applicant accordingly. The adverse action notice requires specific language be included per the FCRA. As mentioned above, employers should have their pre-adverse and adverse action notices reviewed by qualified legal counsel!Additional Issues to Consider
It is vital to follow the above steps in full. Unfortunately, accounting for the FCRA doesn’t mean an employer is out of the woods regarding the use of background reports for employment purposes.
For one thing, the Equal Employment Opportunity Commission has scrutinized the use of background checks in hiring for potential negative impact on protected classes. We talk about that issue in greater detail in a whitepaper, “Evaluating Background Checks,” available here.
Moreover, there are numerous local and state laws—commonly referred to as ban the box or fair chance laws—that may impact the adverse action process. For example, some laws may require employers to wait a specific period of time (such as 7 or 10 business days), identify the “specific reason” for the decision, or even hold the position open during the process. Further, some states, such as California, have their own versions of the FCRA, which employers must consider.
To ensure compliance with all potential laws and regulations that may impact the background screening process, employers should consult with legal counsel on which laws apply, taking into consideration the where the company is located, where the individual resides, and where the position will be located.
Given these complexities, a background check system with built-in compliance controls can provide an extra level of protection. If you are interested in working with such a background investigation partner, contact us at 800.906.2035.