Adverse Action: Why the Process and What is an Employer's Obligation?

By Sandra Christopher, National Sales Representative/Account Manager at B&B Reporting Inc.

The term “adverse action” is defined very broadly by Section 603 of the Fair Credit Reporting Act (FCRA), 15 U.S.C. 1681-1681y. “Adverse actions” include all business, credit, and employment actions affecting consumers that can be considered to have a negative impact as defined by Section 603(k) of the FCRA – such as denying or canceling credit or insurance, or denying employment or promotion.  

Before an Employment Background Check is Requested by the Employer

• Employer provides applicant with a Disclosure and Authorization form written in a clear and conspicuous manner that the applicant understood and was separate from any other document.
• Applicant signs the Disclosure and Authorization form giving you written permission to perform a background check.
• Employer provides applicant with A Summary of Your Rights Under the Fair Credit Reporting Act. It’s important to guide the applicant through the adverse action process so they understand their rights, your rights, and how a final decision will be made.

After A Background Check Report is Received by the Employer

• The results on the background check for this applicant is not favorable and may cause you to disqualify them for employment.

Before Taking Any Adverse Action – Pre-Adverse Action
The employer must provide the applicant:

• A notice of the adverse action – Pre-Adverse Action Notice
• A copy of the background report
• A summary of the applicants right (FCRA version)
• Time for applicant to review/dispute the report.

Decision to Take Adverse Action – Adverse Action Notice
The employer must provide the applicant:

• The name, address, and telephone number of the agency that provided the report (include a toll-free number if the agency is a nationwide CRA).
• A statement that the agency did not make the adverse decision and is not able to explain why the decision was made.
• A statement of the applicant’s right to obtain from the agency, at no charge, the information in the applicant’s file if the applicant requests the report within 60 days.
• A statement of the applicant’s right to dispute directly with the agency the accuracy or completeness of any information provided by the agency.

Adverse action is not a comfortable situation for all involved.  The employer uses this process to make informed decisions that will keep a safe and productive workforce environment. Unfortunately, based upon a background check, not all applicants will qualify for employment with certain companies. Our recommendation is to use an FCRA compliant, Consumer Reporting Agency (CRA) for pre-employment background screening to protect the applicant and your company!
 
About B&B Reporting Inc.
B&B Reporting, Inc. is an employment background screening company that was incorporated in June of 1995 by owner and CEO, Patricia Blankenship. Headquartered in Scottsboro, Alabama with our national sales office in Alpharetta, Georgia, B&B Reporting Inc. provides unparalleled background screening products and services to organizations nationwide and internationally. Our commitment to integrity, accuracy, quality research, and client satisfaction is what allows B&B to prosper in an increasingly competitive market. For more information about B&B products and services, contact Sandra Christopher, National Sales Representative/Account Manager at schristopher@bbreporting.com or (216) 408-1012.