What is it and who should do it?
This article is intended to be used for admin and adjudicator roles when learning about Adverse Action.
If there is any information on a potential employee’s background check that would keep them from holding a position at your company, you are required to fulfill the requirements of the Fair Credit Reporting Act (FCRA) Adverse Action protocol. You, the employer, are the ultimate party responsible and liable for the process.
PLEASE NOTE: This article does not contain legal advice; it is written with the intention of product guidance. For questions regarding employment protocol about Adverse Action or other processes such as adjudication, please consult with your legal counsel.
Why is this important for companies?
When dealing with background checks, Adverse Action is any action your company takes based on a consumer report that could impact a person’s employment. It could mean not offering the job, but it could also mean refusing a transfer or promotion of employment, or any number of other negative actions.
Adverse Actions affect people negatively so it is a common realm of compliance risks or litigations for companies. The Fair Credit Reporting Act requires employers to follow a set of guidelines based upon background check information.
The steps in Adverse Action are crucial as they allow the applicant to dispute concerns about their background screening report. All employers, even those who independently contract, are required by the FCRA to comply with the protocol. Companies often wish to ignore any declined job applicants; however, if there is not an Adverse Action process there could be potential legal issues.
What is an Adverse Action Protocol?
To ensure that your company is compliant and avoiding possible legal issues, you are required a process put in place by the FCRA.
If a background screening report returns a criminal record, this is not a reason to immediately disqualify the candidate in question. Create a detailed process for adjudication that allows the nature of any crimes to be considered. Distinctions could include the severity of the crime as well as the time which has passed since the crime was committed. Also consider if the crime is relevant to the position or duties the job entails.
An Adverse Action process that is compliant for deciding employment of a candidate would include these elements:
- A notice of Pre-Adverse Action: this would alert the candidate that the company, based on information in their background report, is considering not continuing with the employment
- A period of waiting time: the FCRA doesn’t mandate a period of time (Best practice: typically 5-7 business days, or could be more depending on the state) before a company makes a final decision. This allows the applicant time to dispute any incorrect information from the screening report.
- A notice of Adverse Action: after the waiting period or any time needed for dispute resolution, the company must provide the applicant with a final decision notice if they have chosen to not hire the applicant.
Pre-Adverse informs any applicant that the information on their background screening report could potentially affect they employment decision negatively. Candidates would also be able to contact the company with rehabilitation evidence or other information for consideration. If the applicant does not dispute the ACUTRAQ background report, the notice of Post-Adverse Action (or Adverse Action) is required to be sent to him or her.
The FCRA does require companies to wait a reasonable amount of time after sending the notice of Pre-Adverse Action. The normal time frame is five to seven business days, but there are some jurisdictions that require longer amounts of time. Philadelphia, Pennsylvania requires companies to wait for ten days.
The reason for the waiting period is to give the candidate sufficient time to receive the Pre-Adverse Action notice. The candidate can review the screening results, then have a chance to offer a dispute.
In 2012, the Equal Employment Opportunity Commission, or EEOC establishes a guidance for employers to consider arrest and conviction records. That guidance is called Individualized Assessment. Employers need a written policy that sets the base line for how its process will take place.
The 4 criteria employers should consider:
- The nature and severity of the crime, offense, or behavior
- The amount of time since the incident or since the completion of any sentencing
- The type and requirements of the job in question
The goal of the EEOC guidance was to help people in demographic groups with higher incarceration rates get jobs. This gives more opportunities and helps ensure persons are not automatically excluded from the candidate pool due to a criminal record.
Individualized assessments are not required for all jobs. For example, a daycare provider can screen out applicants with past convictions for child molestation without assessing the applicant further.