When using a third-party vendor to do a background check on prospective employees, you should be aware of the federal regulations regarding “pre-adverse” and “adverse action” documents. “Adverse action” is defined by the Fair Credit Reporting Act (FCRA) as an action which includes, “all business, credit, and employment actions affecting consumers that can be considered to have a negative impact as defined by Section 603(k) of the FCRA–such as denying or canceling credit or insurance, or denying employment or promotion.”
On occasion, you may receive information in a consumer report that will cause you to not want to hire a particular applicant. When this happens, you must adhere to the following procedure as outlined by the Fair Credit Reporting Act:
This process may seem cumbersome, but it is necessary to be sure that no adverse action can be taken against applicants without their knowledge. It’s important to be sure the company you choose to do your background checks is well-versed in all the pertinent legal processes.