The Fair Credit Reporting Act (FCRA) requires that clients follow an Adverse Action process any time a decision is made in whole or in part based on information in a consumer report that negatively impacts the consumer. This can include denying the candidate employment, terminating an employee, deciding not to promote an employee, or even demoting or taking responsibilities away from an employee based on the results of the background check. The purpose of the Adverse Action process is to allow the consumer to discuss the reports with employers or dispute the results of the report prior to adverse action being taken by the Employer.
Adverse action is a two-step process which consists of a Pre-Adverse (or Preliminary Adverse) Action notice and an Adverse Action (or Final Adverse Action) notice. The Pre-Adverse Action notice must be sent to the individual before an adverse employment decision is made. This Pre-Adverse Action notice must include a copy of the background report, a copy of the “A Summary of Your Rights Under the Fair Credit Reporting Act” and any additional state notice requirements. The notice must also specify the number of days the employer intends to wait before making a final decision. While the FCRA has no requirements as to how many days this should be, certain locations do have minimum waiting period requirements, so it is important for you to check with your legal counsel when creating your Pre-Adverse Action notice.
The Final Adverse Action Notice must include the adverse decision made, contact information of the CRA that compiled the report, a statement that the CRA did not make and cannot explain the decision, a Federal Summary of Rights, and a statement outlining the consumer’s right to another free copy of their background report, and their continuing right to dispute the information.
Info Cubic offers Adverse Action services where we handle the issuing of the Pre-Adverse and Final Adverse Action letters once a client has ordered it. This process cannot be automated based on results as the potential or current employer must make the hiring decision. Please contact us for more details.