Adverse Action, We’ll see you in court!

background screening services Across the country, employers have seen a somewhat surprising increase in the number of lawsuits being brought against them for not following proper adverse action protocol as outlined in the FCRA. Penalties can range greatly depending on the circumstances and the ubiquitous punitive damages outlier. So, let’s talk about how to avoid being a casualty.
Prior to running a consumer report or investigative consumer report (Background Check) on any individual, you must disclose your intent to do so. This step has always seemed to be a no-brainer to us because the simple advisement of your intent to do a background check, will help keep applicant’s honest and weed out some bad fruit quickly.
Next, you have to obtain the written consent from the individual allowing you to perform the background investigation. It is usually good timing to also provide to the individual the summary of that individual’s rights under the FCRA (Fair Credit Reporting Act) which is provided by the FCRA. Each individual must be notified of their rights.
Most of the aforementioned steps are common knowledge however there is confusion about what to do when you get unfavorable and potentially adverse information back on your report. This is exactly what you must do.
If you intend to take adverse employment action against the individual when that action is based in whole or in part on the information that was contained in your background report, you must notify the individual of your intent to take adverse action. With that notification, you need to also provide to the individual a copy of the report that was prepared on them and also provide in writing again, the summary of the individual’s rights under the FCRA document. This process is often referred to as Pre-Adverse Action.
Be aware that adverse action may not necessarily be denial of employment but could also include consideration for a raise, promotion, or extension amongst other things.
It is the opinion of the FTC (federal trade commission) that a reasonable amount of time must pass from when you notified the individual of your intention to take adverse action and actually taking adverse action. The reasonableness depends on the needs of the particular employer. Some of the considerations of this are 1) how long does it take to process an applicant? 2) Is the employer continuously hiring or are applications taken well in advance of the need? As a generality, 5 business days seems to be acceptable but can potentially be shorter depending on the organization.
After your reasonable amount of time has passed you can then complete the adverse action. You do not need to complete the action should you decide to not take adverse action or take adverse action for different reasons other than information that was provided to you within the background report. Now, I know what you are thinking. It is not a good idea. In an effort to avoid this process, many employers will state that adverse action is being taken for reasons other than information that was provided within the background report. This can certainly be true but you must be prepared to defend that in litigation. If there was anything on the background report that could influence your decision, defending the previous point in court would be an uphill battle.
To complete the process, you must provide notice to the individual of your decision to take adverse action. With that notice, you must also provide the name, address and telephone number of the background screening company that furnished the report to you. The notice must also inform the individual that they have a right to receive at their request, a free copy of the report and have the right to dispute any records through the background screening provider. It is important that you notify the individual that the background screening company cannot provide specific reasons why adverse action was taken.

We have made it easy for you to comply with this whole process right within our software. If you utilize our quickapp feature, where you simply enter an individual’s name and email address, you are guaranteed that the individual will receive and sign all the proper documents every time. After a report has been run through our system, you also have access to customizable and compliant pre-adverse and adverse action letters. The letters will pre-populate with the individuals information and include everything for you so all you need to do is print it and give it to the individual. Best of all, everything is free.
Contact a VICTIG representative right away with any questions!