Adverser Action: How MBI Can Save You Millions in Class Action Litigation

A Simple “How-To” in Processing Adverse Action

When you utilize employment background screening during your hiring process, you are taking the first step in precautionary means to protect your customers and employees. But what happens when that employment background check report yields negative results? The next move seems obvious: Move on with the next applicant!  Right?

Not exactly.

If your reason for deciding not to move forward with hiring, retaining or promoting an individual is related to information contained in their background check report, you are bound by the FCRA (Fair Credit Reporting Act) to fulfill adverse action.

What is adverse action?

Simply put, Adverse Action is a two- step process to inform potential employees that their background screening yields negative results that could make them ineligible for hire, retention or promotion within your organization.

Pre-Adverse Action:

Step one of the Adverse Action process is known as a Pre-Adverse Action letter. This letter is sent before adverse action is actually taken and informs the individual that based on the information in the consumer reporting agency’s report, their application will be denied. This pre-adverse action letter, allows time for the applicant to dispute any data that they feel is inaccurate.

The FCRA does not specify exactly how long an employer must wait after the pre-adverse action notice is sent before taking adverse action, but the individual must have a “reasonable” amount of time” to review their report and respond before adverse action is taken. According to the FTC, a reasonable amount of time is no less than 5 business days.

Adverse Action:

Step two of the Adverse Action process will be sending the official Adverse Action notice. If, after a reasonable amount of time, the applicant has chosen not to appeal the pre-adverse action letter, (the employer) must proceed with compliant FCRA obligations by sending an official Adverse Action notice. This notice can only be sent to the applicant after they have been given an opportunity to dispute the findings from the consumer reporting agency.

By choosing to utilize MBI Worldwide’s Adverse Action Notice Services, you have at your fingertips an easy and cost-effective way to avoid millions of dollars in litigation and legal fees.  MBI Worldwide knows that Good Screening is SMART Business®, and choosing to screen your employees with an NAPBS Accredited, Soc 2 Certified and compliant screening company is the first step to SMART business.

For your organization, the timing and completeness of your adverse action and pre-adverse action notices is of utmost importance to remain in compliance with the many regulations included in the FCRA. If you have any questions regarding Adverse Action letters, or would like to know more about how MBI Worldwide can simplify your Adverse Action process, please feel free to sign up for our free November 2017 webinar by clicking the link below:

https://www.mbiworldwide.com/2017/10/25/webinar-background-screening-compliance/

Written by: Timothy Howard
MBI Worldwide Executive Project Administrator

DISCLAIMER – MBI WORLDWIDE CANNOT PROVIDE LEGAL ADVICE OR COUNSEL
Although we strive to support you with alerts and resources regarding critical compliance matters, please understand that MBI Worldwide CANNOT provide legal advice regarding forms, contracts, or compliance topics.  Nothing in this statement or any other communications with MBI Worldwide should be construed as legal advice.  If you have legal questions, please consult with legal counsel, who can best advise you on the legalities of obtaining and using consumer reports.