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What You Need to Know About Adverse Action

Adverse action offers many compliance woes for HR managers. These well-intentioned regulations can add confusion and take up valuable time for those who are unfamiliar with the FCRA’s adverse action rules. Adverse action provisions have been the source of many lawsuits for employers across the U.S. With ban-the-box regulations popping up at local and state levels, navigating the employment-screening part of the hiring process can be even more cumbersome.

Understanding what the FCRA requires under its adverse action regulations is the starting point for compliance. Here’s what you need to know:

What is adverse action?

Adverse action is the process that all employers must follow when rejecting potential employers and terminating, reassigning, and failing to promote current employees due to the results of an employment background check. The FCRA provides these regulations and the three steps that employers are required to follow when taking an adverse action. These steps include:

Pre-adverse action: When you receive adverse information, you must notify the applicant that a decision is currently pending and that their background check results are in the review process. The Summary of Rights under the Fair Credit Reporting Act and a copy of the background check must also be provided to the candidate.

Waiting period: You must wait a minimum of five business days before taking final adverse action. KRESS Employment Screening recommends providing the candidate with more days to review their background check and the adverse information.

Final adverse action: After the waiting period, if your company decides to take adverse action on a candidate due to their background check results, you must send a final adverse action notice to the candidate. The FCRA requires that the notice contain specific information in order for the candidate to understand how to get a free copy of the background check and to contact the background checking company to dispute incorrect information.

How do I comply with the FCRA’s adverse action regulations?

One way to remain in compliance with the FCRA’s adverse action requirements is to automate your response to any adverse information that a background check finds. KRESS offers automated adverse action, which you can learn more about in our infographic.

To learn more about KRESS’ automated adverse action process, contact us for a free consultation today.

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