Suppose your company has job vacancies to fill. In that case, it is a pretty standard procedure to run an employment background check. This utilizes a consumer reporting agency (CRA) that compiles employee background screening information. After receiving all the employee background check data from the employment screening company, the Human Resource Department will make a hiring decision. The next step is if an employer denies the applicant based on any information from the Employee Screening Report.
Adverse Action 101
Adverse Action can be confusing. If your hiring process does not include an adverse action procedure, you are at extremely high risk for a lawsuit. So stop what you are doing and contact your employment attorney right now!
The Fair Credit Reporting Act (FCRA) requires employers and businesses to:
- Send a pre-adverse action notice and an adverse action notice to the job applicant
- Inform job applicants of the reason(s) for denying employment
- Provide the name, address, and toll-free phone number of the CRA who provided the report
Notify the Applicant
The employer should notify the applicant in writing, by phone, or orally before processing the adverse action notice. We do not recommend that you give an oral pre-adverse action notice due to a lack of proof. No one wants to get into a “he said, she said” scenario. Documentation is key.
The final adverse action notice must be sent after the 5th business day (at minimum) from the initial message. Giving five days allows the applicant time to dispute these findings with the CRA that provided the data and the employer. There are no defined maximum days for the employer to enable the applicant to counter. Most employers have their policy on the lapse of time for disputes. Make sure these policies are in place and implemented within your hiring practices.
Notices must Include
All employment-based adverse action notices must include a statement to the applicant. They must provide the information on obtaining a copy of their consumer report free from the agency listed within 60 days. In addition, the denial of employment must state the consumer reporting agency and the credit reporting agency are not responsible for the decision. Therefore, the bureaus cannot tell you why you did not receive the job.
Finally, the adverse action notice will include a Summary of Rights to dispute inaccurate or incomplete credit report information. In conclusion, the Summary of Rights will list a toll-free phone number as well as the address of the consumer reporting agency, allowing the applicant to dispute any errors in the report.
Disclaimer: MBI Worldwide (Midwest Backgrounds, Inc.) is not a law firm and all policies should be reviewed by an HR/Employment attorney for your company’s best practices and all legal procedures, even if you are currently a client of MBI Worldwide. Do not use this article or anything published from MBI Worldwide as legal advice or inclusively for your screening policy.