Understanding Adverse Action When Screening Potential Employees
“Adverse Action” when employment screening is concerned, is defined as, a denial of employment or any other decision for employment purposes based in whole or in part on a consumer report which adversely affects any current or prospective employee. FCRA §603(k)(1)(B)(ii) andFCRA §615.
After running a report and receiving the results of a background check take the time to review it, and confirm the applicant meets your company requirements. Employment screening should be approached in a completely different manner than tenant screening.
Be sure when reviewing the reports you are only considering items which may affect the employment requirements (ie: DMV records only if they will be driving for the company, financial records only if they are working in the accounting department, etc.). Some states do not allow certain types of background checks, so please be sure you are compliant with those laws.
We recommend that you give the applicant the opportunity to view the results. Give them an opportunity to respond with mitigating information, before making any adverse hiring decision based on the background check information. All employers, landlords, creditors, and insurers must give a copy of the document, “A Summary of Your Rights Under the Fair Credit Reporting Act,” before they are allowed to take any adverse actions against the applicant.
When taking any type of adverse actions, such as terminating employment, denying employment, denying credit or denying a renters application, you must provide notice to the applicant. The rules and regulations for giving the notice are very specific, and the notice must contain the following information:
- Company information, such as name, address, and phone number of who supplied the background report.
- Brief statement detailing screening company did not make the adverse action decision and are unable to give the applicant any information on the decision made.
- Statement making the applicant aware they have the right to dispute the information in the report and/or receive a free copy of the report from the screening company. It must be requested within 60 days.
Before you take any action from the results of a background screen in hiring, promoting, or suspending an employee, be fully aware of the Adverse Action requirements mandated by the FCRA—the laws are very specific about how and when you must notify an applicant of an adverse decision you’ve made concerning the results of their background check.