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Adverse Action

Adverse Action Results in Background Checks

Adverse action is a term many employers would rather avoid. It complicates the hiring process and adds time to it, but it is required by law as part of  pre-employment screening.

Advances in technology and data sharing over the last decades have made background checks a routine part of our lives. Surveys vary but on average 73% of companies now utilize some form of background screening in the hiring process.

Background checks are a form of insurance for employers. Just like we hope we never have cause to make an insurance claim, employers hope that the background check yields no negative results when screening a potential employee. Unfortunately, we live in an imperfect world with imperfect people and many times these reports do find flaws.

So, what are the steps that an employer needs to take when the results are less than perfect?

The Pre-Adverse Action Letter

The first step when a background check comes back with negative information is to extend a copy of the consumer report to the applicant. This report should be accompanied with what is known as a pre-adverse action letter.  The letter should include a transcript of the “Summary of Your Rights Under the Fair Credit Reporting Act”.  This simply put is a letter which explains why the applicant is not being hired and informs them of their legal rights to dispute any information found.  Be sure to include the newest copy as this form is updated from time to time.

The letter should also include the name and contact information of the Consumer Reporting Agency (CRA) and make it clear that the CRA was not responsible for the choice to take adverse action.

While the FCRA requires that time be given to applicants to dispute the findings by the CRA, it does not give guidance on what that amount of time is. It merely states that reasonable time should be given. Most companies follow a 5-10 day timeline for an applicant to take action. It is always best to contact the FCRA or an attorney who specializes in FCRA practice if you have any questions about the process. The smallest mistake can lead to the biggest lawsuit.

The Adverse Action Letter

After the allotted time has passed following the pre-adverse action, employers are required to send the final notice, also known as an adverse action letter.

The adverse action letter should include the same information that the pre-adverse letter contained, including name and contact information of the CRA, an additional copy of the Summary of Rights and a statement that the CRA was not part of the hiring decision.

The applicant should also be informed that they have 60 days to order additional copies of the consumer report at no charge.

Are Reports Ever Disputed?

Yes. There are instances where reports are disputed. Mistaken identity, incorrect court records or simple human error can all factor into a report being disputed. Typically, a reputable CRA will be able to determine these issues before reporting the information, but the pre-adverse and adverse action stages allow for those times when that doesn’t happen.

Recently a Georgia man, Wayne Cheek, applied for a gun permit and was turned down because his background check showed him as a felon. It turned out that the courts had made a clerical error and misclassified a misdemeanor as a felony. Cheek realized that he had time and again been turned down for jobs after a background check was done, never being given the proper adverse action documents from the employers.

In another case, Kevin A. Jones was turned down for a job after his background check showed significant criminal activity including being jailed twice. Jones disputed the report and it was found that the background check reported on a man, Kevin M. Jones with the same birthday as Kevin A. Jones.

Clearly these mistakes happen. While following the FCRA guidelines can reduce lawsuit liability, it is important to choose a reputable and knowledgeable CRA to conduct your background screening.

Sentinel Background Checks has extensive experience and provides the most comprehensive screenings in the industry. We will guide you through the screening process and we don’t charge extra for adverse letters like many other companies. We’ll be there with you every step of the way. Call 888-725-2535 today to discuss the many services available.