ADVERSE ACTION: Better Safe Than Sorry...or Sued

Letting a job applicant go with flaws on their background check may be easy to quickly dismiss. If a background check discloses a current employee with a criminal history, you might think it’s as simple as terminating that person. But that’s not the case. These job candidates and employees are protected by the FCRA (Fair Credit Reporting Act). It’s essential for HR professionals to use standard adverse action practices to make sure they are fully complying with the FCRA.

Employers, lenders or landlords who base a decision after the results of a third-party Consumer Reporting Agency must deliver adverse action notifications correctly and quickly.There are three steps required in the adverse action notification process.

STEP 1, PRE-ADVERSE ACTION
First, a pre-adverse action notification is required. It does not have to overly specific, but it must be done in writing. The letter basically informs the individual that based on the information provided in the report, their application will be denied.  The pre adverse action notice should come with a copy of his/her background report, and finally a copy of “A Summary of Your Rights under the Fair Credit Reporting Act”.  

STEP 2, THE WAITING GAME
According to the FCRA, there is no specifications on how long an employer must wait after the pre-adverse action notice before actually taking adverse action. The suggested time is usually five business for the applicant to contest the results of the background check.

Experts advise the clients not talk to the applicant once the pre-adverse action notification has been sent out. You do not owe any kind of explanation. That’s the purpose of the notice.
STEP 3, ADVERSE ACTION
If the applicant hasn’t refuted the claims after the five day period, the final adverse action notification is sent. This is a clear explanation as to why the candidate was not hired based on the findings of the background screening report. In addition to the information in the report that lead to the decision not to hire, include the following:

• The name, address, and toll free telephone number of the CRA you used.
• A statement that the CRA supplying the background report had no hand in the decision to take adverse action and cannot give specific reasons for it.
• A notice of the applicant’s right to dispute the accuracy or completeness of the provided information. This is from the pre-adverse action notice.
• A notice of applicant’s right to another free consumer report. This is provided upon request of the CRA within 60 days.

MBI’s easy Adverse Action process will streamline the simplified process and take care of everything in a timely and compliant manner.  If you have more questions about how adverse action works or would like for MBI Worldwide to handle the entire adverse action process for you at a very minimal cost, contact MBI at (866) 275-4624.

Written by M. Moyers