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An Adverse Action Notice in hiring is a written notice an employer must provide to a job candidate when information found in a background check may lead to a negative employment decision, such as deciding not to hire, promote, or retain someone. It also informs the candidate of their rights to review and challenge the information under the Fair Credit Reporting Act (FCRA).
What Does “Adverse Action” Mean in Employment Screening?
In employment screening, adverse action means an employer makes a negative employment decision based on information found in a background check report. The negative hiring decision itself is refered to as an “adverse action” and the notice of this impending action is required under the Fair Credit Reporting Act (FCRA).
Examples include:
- Refusing to hire an applicant
- Rescinding a job offer
- Denying a promotion
- Terminating employment
- Deactivating a gig employment app
When Is an Adverse Action Notice Required?
An adverse action notice is required when an employer takes adverse action based wholly or partly on information in a background check. This is because background check companies are considered consumer reporting agencies (CRA) under the Fair Credit Reporting Act (FCRA), which requires this type of notice.
What Laws Require Adverse Action Notices?
The Fair Credit Reporting Act (FCRA) is the federal law that regulates notice requirements when employers plan to take an adverse action against a job candidate based on information provided in an employment background screening report. Notice requirements are one of many consumer rights you can enforce under the FCRA.
What Must Be Included in an Adverse Action Notice?
An adverse action notice must include:
- Notice that adverse action was taken
- The background check company’s name, mailing address, and telephone number
- A statement explaining the background check company did not make the employment decision
- A notice of the right to request a free copy of the report within 60 days
- Notice that you have the right to dispute false or incomplete information
What Is the Difference Between Pre-Adverse and Adverse Action Notices?
The difference between pre-adverse and adverse action notices is when they are sent.
A pre-adverse action notice is forwarded before the employer makes a final decision.
This notice gives the applicant time to:
- Review the report
- Identify mistakes
- Dispute incorrect information
An adverse action notice comes after the employer makes a final decision.
The two notices serve different purposes. One provides an opportunity to respond. The other confirms the employer’s final decision.
What Is the Employer’s Adverse Action Process Step-by-Step?
The employer’s adverse action process step-by-step is to:
- Obtain the background check
- Determine that the information in the report will affect an employment decision
- Send a pre-adverse action notice with the report and FCRA Summary of Rights
- Allow a reasonable time for the applicant to respond
- Review disputed or new information provided by the applicant
- Send the final adverse action notice if the decision remains unchanged
How Long Do Employers Have to Send an Adverse Action Notice?
Employers must provide applicants with a reasonable opportunity to review their background report and dispute incorrect information before sending a final adverse action notice. Many wait at least five business days before sending the final adverse action notice, but some states require longer waiting periods.
What Happens If an Employer Fails to Provide an Adverse Action Notice?
If employers fail to follow the FCRA’s adverse action requirements they may face legal consequences. Job applicants who are denied employment without receiving required notices may have grounds to pursue a legal claim.
Can You Sue for Not Receiving an Adverse Action Notice?
Yes, you can potentially sue for not receiving an adverse action notice, particularly if the employer relied on erroneous background information. Consider speaking with a consumer law attorney about your legal rights.
What Should You Do After Receiving an Adverse Action Notice?
After receiving an adverse action notice, you should:
- Request a copy of your background check report
- Ask for clarification about which information in the report lead to the decision
- Review the report carefully
- Dispute any info that is inaccurate, incomplete, false, misleading, outdated, unreportable, or someone else’s
- Keep copies of every communication between you and your employer or the background check company
- Consult a background check lawyer
How Do You Dispute Errors in a Background Check Before Adverse Action?
To dispute errors in a background check before adverse action: send a dispute letter (by certified mail) to the screening company that prepared the report, explain the error clearly, and provide supporting documents. The company must investigate the dispute and correct or remove inaccurate information, if appropriate.
Who Is Responsible for Sending the Adverse Action Notice?
The employer is responsible for complying with the FCRA and providing the pre-adverse action notice and the final adverse action notice. The employer is not responsible for the errors in the background check report. The background check company is responsible for those.
How Can a Consumer Protection Lawyer Help With Adverse Action Violations?
A consumer rights lawyer can help with adverse action violations by explaining your legal options, helping protect your rights, and pursuing compensation, when applicable.
Frequently Asked Questions
Do employers have to notify you if they don’t hire you because of a background check?
Yes. If an employer uses a consumer report covered by the FCRA to make the decision, it generally must follow the pre-adverse and adverse action process. Background check reports fall into that category.
How long do you have to respond to a pre-adverse action notice?
The FCRA does not set a specific number of days. Employers must provide a reasonable amount of time for applicants to review the report and dispute any errors before making a final decision.
Can I dispute a background check after receiving an adverse action notice?
Yes. You can dispute inaccurate information with the background screening company. Correcting errors may help prevent similar issues in future employment screenings.
Is it illegal for an employer to skip the adverse action process?
If the FCRA applies and the employer fails to provide the required notices, it may be an FCRA violation.
Can you sue an employer for not sending an adverse action notice?
Possibly. If an employer fails to follow the FCRA’s adverse action requirements, you may have the right to pursue legal action.
What is the difference between pre-adverse and adverse action notices?
A pre-adverse action notice is sent before the employer makes a final decision and gives you an opportunity to respond. An adverse action notice is sent after the decision has been made.
Does an adverse action notice mean I won’t get the job?
Usually, yes. A final adverse action notice generally means the employer has decided not to move forward with your application based on information in your background report.