How to Properly Send an Adverse Action Notification

Adverse action is the highest-risk moment in any background screening workflow. The Fair Credit Reporting Act (FCRA) sets the notice and timing requirements employers must follow before declining a candidate based on a consumer report. The EEOC's Title VII enforcement guidance and a growing list of state and local fair chance laws add the individualized assessment requirement on top. Miss a step in any of these and you open the door to FCRA litigation, state attorney general enforcement, or a class action under disparate impact theory.

This guide walks through the four steps required to send an adverse action notification correctly: the individualized assessment (required by the EEOC and many state and local laws), and the pre-adverse action notice, the waiting period, and the final adverse action notice (all required by the FCRA). It explains what each step requires, who is responsible for it, and how KRESS facilitates the workflow without taking the hiring decision out of the employer's hands.

Step 1: Conduct an Individualized Assessment

Before any adverse action notice is sent, the employer should consider whether the information in the report is actually relevant to the role. This step is called an individualized assessment, and in many jurisdictions it is required by law as a condition of any adverse action based on criminal history.

The EEOC's 2012 enforcement guidance sets the three-factor test that most state and local fair chance laws also follow:

1. The nature and gravity of the offense or conduct
2. The time that has passed since the offense, conduct, or completion of the sentence
3. The nature of the job held or sought

The candidate should also be given a meaningful opportunity to provide context, including evidence of rehabilitation, before the decision is finalized. States and cities including New York, California, Philadelphia, Massachusetts, and Illinois require a written individualized assessment as a condition of any adverse action based on criminal history. For a plain language view of state-specific rules, see the KRESS State-by-State Compliance Guide.

The individualized assessment is the employer's responsibility. KRESS provides optional templates and workflow support, but the assessment itself, the documentation, and the decision that follows belong to the employer.

Step 2: Send a Pre-Adverse Action Notice

If, after the individualized assessment, the employer is considering declining the candidate based on the report, a pre-adverse action notice must be sent before any final decision is made. Under the FCRA, this notice must include:

• A copy of the consumer report the decision is based on
• A copy of the FTC's Summary of Your Rights Under the FCRA
• Contact information for the consumer reporting agency (CRA) that prepared the report
• A clear statement that the CRA did not make the adverse decision and cannot explain the reasoning behind it

Step 3: Observe a Reasonable Waiting Period

After the pre-adverse action notice has been sent, the FCRA requires a reasonable waiting period before any final decision is taken. The FCRA itself does not set a fixed number of days, but the widely accepted floor is five business days. State and local laws extend this:

• New York City requires at least three business days from the day the candidate receives the notice
• California requires at least five business days, with longer windows for some local jurisdictions
• Philadelphia requires at least 10 business days under the 2026 Fair Chance Hiring Law

Most KRESS clients are configured for a 5 to 14 day waiting window, set during onboarding to match the candidate's jurisdiction. The waiting period gives the candidate a meaningful opportunity to review the report, raise a dispute with KRESS, and respond to the employer with additional context.

Step 4: Send the Final Adverse Action Notice

Once the waiting period has passed and the employer has decided to proceed, a final adverse action notice must be sent. The FCRA requires this notice to include:

• A statement that adverse action has been taken based in whole or in part on the consumer report
• Contact information for the CRA that prepared the report
• A clear statement that the CRA did not make the adverse decision and cannot explain the reasoning behind it
• Notice of the candidate's right to dispute the accuracy or completeness of the information in the report
• Notice of the candidate's right to a free additional copy of the report from the CRA within 60 days

Who Is Responsible for the Hiring Decision and Compliance?

All hiring decisions, including whether to proceed with adverse action, are made solely by the employer. KRESS does not make employment decisions or determine candidate eligibility. KRESS facilitates the adverse action process by sending the required notices and managing timelines, including:

• Pre-adverse action notice
• Waiting period
• Final adverse action notice

Due to the frequency of regulatory changes across jurisdictions, KRESS does not guarantee identification or enforcement of all individualized assessment or local compliance requirements. Clients are responsible for consulting their legal counsel and ensuring their hiring practices meet all applicable laws.

How KRESS Supports the Process

For clients who use Automated Adverse Action, the workflow is:

1. The employer reviews the report and conducts the individualized assessment
2. The employer notifies KRESS that adverse action is being considered
3. KRESS sends the pre-adverse action notice with the required FCRA documents
4. The system tracks the waiting period configured for the candidate's jurisdiction
5. KRESS sends the final adverse action notice once the employer confirms the decision
6. A full audit trail is maintained, capturing every notice, every timestamp, and every document delivered

Templates, timelines, and jurisdictional rules are configurable during onboarding. The KRESS team is available to support the workflow at every step. The hiring decision remains with the employer at every stage.

Get Started

If you would like to review your current adverse action process or set up Automated Adverse Action for your team, contact KRESS today.