The Fair Credit Reporting Act (FCRA) requires specific procedures when information in the background check may lead to an adverse decision.
Organizations need a consistent process that follows the FCRA. Otherwise, you risk costly litigation, damaging fines, and a besmirched employer reputation.
Not sure what you’re doing now is foolproof? Here’s checklist to help maintain a consistent, compliant process.
FCRA Adverse Action Checklist for Employers
PHASE 1: Before You Take Adverse Action Because of Information in a Background Report
- Establish background screening and hiring policies when evaluating the results.
- Determine whether information in the background report is contributing to the potential unfavorable employment decisions. If it’s being used in whole or in part, then adverse action requirements DO APPLY.
- Review the background check for relevance to the position. Consider the nature of the information, the requirements of the position, applicable company policies, and relevant federal, state, and local requirements.
- Review the background check report for accuracy before taking action.
PHASE 2: During the Adverse Action Process
- Provide the candidate with a pre-adverse action notice before making the final employment decision.
- Inform the individual that information contained in a consumer report may negatively affect the employment decision. Include a copy of the report and a copy of A Summary of Your Rights Under the Fair Credit Reporting Act
- Give the applicant an opportunity to review the report before you make a final decision.
- Allow the applicant a reasonable amount of time to respond.
- Maintain a consistent waiting period that accounts for any guidance and state or local requirements. (The FCRA doesn’t set a finite number of days employers must wait between the pre-adverse and final adverse action notices).
- Allow the candidate to identify information they believe is inaccurate or incomplete during this period.
- Create and follow a consistent process for applicant disputes.
- Document the process to show that you followed the required adverse action procedures.
PHASE 3: Once You Make the Adverse Action Decision
- Send the Final Adverse Action notice including:
- Name, address, and phone number of the CRA that provided the report.
- Notice of the applicant’s right to obtain a free copy of the report from the CRA (must request within 60 days).
- Notice of the individual’s right to dispute the accuracy or completeness of the information included in the report.
- A statement explaining that the CRA did not make the employment decision and cannot provide the specific reasons for it.
Stay Compliant with Your Adverse Action Process
A consistent adverse action process protects your organization and supports fair hiring decisions. Regularly review your process to stay compliant with the FCRA and changing state and local requirements. For example, California and Illinois require the employer to disclose the specific reason for the adverse action.
Streamline your process with automation. Technology in some background screening platforms can electronically send pre-adverse letters with the copy of the report and the summary of rights automatically and time and date stamp it. Then the system will automatically send the final letter in 5 days unless a dispute has been filed. It’s a smart move to rely on an experienced background screening partner to help you stay informed and on track.
