A candidate has accepted your conditional offer, the background check has come back with something on it, and the next few days decide whether a failed background check after a job offer ends as an ordinary hiring decision or as a Fair Credit Reporting Act claim. What happens in that window is governed by federal law, and in a growing number of cities and states by rules that give the candidate more time than many employers expect.
This guide is for the hiring side. If you're the candidate waiting to hear back, our guide to what a pending background check after a job offer means is written for you.
What Counts as a Failed Background Check?
There is no pass or fail stamp on a background check report. A screening provider reports what it found and verified, and the employer makes the call. A failed background check means one thing: something in the report crossed a line you drew before the candidate ever applied. Nothing on a background check automatically disqualifies anybody.
Common reasons a background check fails
- Unverified employment history. A gap rather than a finding, and there are several reasons an employment verification fails that have nothing to do with the candidate.
- Education credentials that don't confirm. Often resolvable.
- A criminal offense relevant to the job duties. Criminal history matters where the conduct connects to the role, and not otherwise.
- Driving record violations. These matter where driving is part of the job.
- Drug screening results. In regulated programs a non-negative result goes to a Medical Review Officer before anybody treats it as a positive.
- Employment dates that overlap or don't match what the candidate reported.
Setting Your Criteria for a Failed Background Check
Your company background check policy should specify which checks align with which job descriptions and what results would disqualify candidates: a poor driving record may not mean a failed background check if driving isn't part of the job duties. Decide this before a report lands, then handle each one the same way. For findings that send a report back for review, see our guide to what causes a red flag on a background check.
Can an Employer Rescind a Conditional Job Offer?
Usually yes, but rarely without steps in between. A conditional offer is a genuine offer of employment that depends on conditions being met. In most states employment is at will, so the offer carries no guarantee, but it does carry a process: the moment you use a consumer report to decide, federal law takes over.
The candidate has the right to see the background check report the decision rests on, and the first notice is where that copy arrives. They have the right to dispute inaccurate information in it, and under 15 U.S.C. 1681i(a)(1) the reinvestigation by the consumer reporting agency is free. They also have the right to explain. If KRESS prepared the report, the candidate portal in the KRESS Candidate Help Center is where they open a dispute, so point them there in your first notice.
How to Inform a Candidate They Failed a Background Check
If you're relying on a background check to withdraw a job offer, the Fair Credit Reporting Act requires two notices, and the first has to reach the candidate before any decision takes effect. This is the two step process, and skipping either half turns a hiring decision into a claim. The process starts before the check runs: under 15 U.S.C. 1681b(b)(2), you need the candidate's consent.
Step One: The Pre Adverse Action Notice
Under 15 U.S.C. 1681b(b)(3)(A), before taking any adverse action based in whole or in part on the report, you have to give the candidate a copy of that background report along with the written description of their rights prescribed by the Consumer Financial Protection Bureau. The package should include:
- A written summary of the screening results
- A copy of the background screening report
- The background check company's contact information
- The written description of their rights under the FCRA prescribed by the Consumer Financial Protection Bureau
- Your contact information
The Waiting Period Between the Two Notices
The Fair Credit Reporting Act sets no waiting period between the two notices, but the candidate must be given a reasonable amount of time to respond or dispute the results. Five business days is a working convention rather than a legal requirement, and it traces to a 1997 FTC staff advisory opinion in which staff called a proposed five day period reasonable, while noting that a particular situation might call for a different one. Some states and cities make a minimum period binding, as the state and local section below explains.
Step Two: The Final Adverse Action Notice
Under 15 U.S.C. 1681m(a), the final notice must include:
- Written notification that you are acting on the results of the background check
- The background check company's name, address, and telephone number, including its toll-free number where it maintains files on consumers on a nationwide basis
- Written notification that the screening provider did not make the decision and is unable to give the specific reasons for it
- Written notice of the employee's right to obtain a free copy of their file within 60 days, which the candidate can request from the background check company under 15 U.S.C. 1681j(b)
- Written notice of the employee's right to dispute inaccuracies or the completeness of any information in the report
- A copy of their consumer rights under the FCRA
The statute allows the final notice to be given orally, in writing or electronically, but a written notice is the one you can prove you sent.
With automated adverse action, the first notice goes out from your completed report with the copy of the report and the summary of rights attached, the waiting period runs on a documented clock of 5 to 14 days that we configure at onboarding to match state and local requirements, and the final notice goes out once you've made your decision.
Where State and Local Laws Add Steps
Federal law is the floor rather than the ceiling. Where you're hiring can change the timetable completely, and the state by state compliance guide tracks those differences. Two carry the most weight at the offer stage.
California. The Fair Chance Act at Government Code section 12952 applies to employers with five or more employees, and conviction history can't be considered before a conditional offer. An employer that intends to rescind has to make an individualized assessment first, weighing the nature and gravity of the offense, the time that has passed since the offense and completion of the sentence, and the nature of the job. It must then send written notice of its preliminary decision naming the conviction at issue, and give the candidate at least five business days to respond, plus five more if the candidate says inside that window that they dispute the record and are gathering evidence. You must consider what the candidate submits before making a final decision.
New York City. Under the Fair Chance Act, an employer may ask about conviction history or pending cases only after extending a conditional offer. The Commission on Human Rights requires a reasonable period of at least five business days for the candidate to respond, and during it the employer may not permanently place another person in the position.
The Equal Employment Opportunity Commission's 2012 guidance on the consideration of arrest and conviction records points the same way, discouraging blanket exclusions in favor of a targeted screen followed by an individualized assessment.
Applicable laws vary by state, city and industry. KRESS is a screening company and not a law firm, so none of this is legal advice; if you aren't sure which rules apply, take legal counsel in your state.
Frequently Asked Questions
Can we withdraw an offer the candidate has already accepted? Yes. A conditional offer depends on the conditions being satisfied, and acceptance doesn't remove the condition. The two notices still apply exactly as they would before acceptance.
How long do we have to wait between the two notices? The FCRA sets no fixed waiting period, only a reasonable amount of time to respond or dispute the results. Five business days is the working convention, and California and New York City make at least five business days binding for conviction history.
Do we have to tell the candidate which finding was the problem? Not under the federal notice. You aren't required to itemize which finding tipped the balance. California is the exception for conviction history: the notice of a preliminary decision must name the conviction at issue.
Does an unverified job count as a failed background check? No. Unverified employment history is a gap in the file, and treating a gap as a finding is one of the more common errors employers make without noticing.
Are failed drug tests handled the same way as a criminal record? Often not. A laboratory drug screening result is generally not a consumer report in the way a criminal record search is, so the notice steps may not attach the same way, and your own policy and state law carry more of the weight.
Run Every Notice on a Documented Clock
A first notice sent without the report attached, or a final one missing the dispute language, turns an ordinary hiring decision into an FCRA claim, and the candidate on the other end has 60 days to pull the file and find a lawyer to read it. Talk to the KRESS team in Houston about running your adverse action process on a documented clock, or call us on 888.636.3693.
