Adverse Action

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Adverse Action
Steps You Must Take Before Adverse Action


Steps You Must Take Before Adverse Action

So, you get a background investigation report that makes you think you might not want to hire the individual that is the subject of the report! What now? Well, both The Federal Fair Credit Reporting Act (FCRA) and many state laws require that you notify the applicant that you are considering making a decision that is adverse to their interests, based wholly or in part, upon information contained in the report. This is called a “pre-adverse action notice” and must be given prior to actually taking the adverse action. Along with the notice you must also give the subject a copy of the report and a “Summary of Rights” provided by the FCRA, if you have not already done so, and provide information identifying the agency that supplied the report and how to contact them.

After delivering the pre-adverse action notice, you must wait a reasonable amount of time before actually taking the action, in order to give the subject the opportunity to challenge the report information. This raises the question as to what a reasonable amount of time is. While there is no legal definition as yet, the general consensus is that 5 business days is adequate, and after the passage of said time period, you may actually take the adverse action by then notifying the subject that they are not being hired, promoted or retained due, wholly or in part, to information in the report.

This may all sound unnecessarily complicated. Why not just tell the subject that someone else is more qualified, or give some other unrelated reason? The reason is primarily due to the explosion of the crime of identity theft, which occurs millions of times each year, and may go unnoticed until long after harm is done. The adverse action procedures are designed to notify consumers that information generated as a result of identity theft, including evidence of criminal activity, may be inaccurately associated with their records and files, and give them the opportunity to address those issues.

Employee Relations has recently added both pre-adverse and adverse action letters to the “My Applicants” section of the client’s website, along with detailed instructions. We’ve made it easy to comply with both the letter and intent of the law. For additional information about adverse action requirements, and solutions, contact Employee Relations at 800-716-7773.
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