Adverse Action – Your Guide to Compliance
The Fair Credit Reporting Act (FCRA) requires that the employer give the applicant a reasonable opportunity to ensure that the information reported in a Consumer Report or Investigative Consumer Report is correct before adverse action is taken. The FCRA requires that you utilize a two step process when adverse action is taken against an applicant or employee.
** The term Adverse Action is defined as declining or withdrawing an offer of employment. **
Before you decline an applicant or withdraw an offer of employment, you must provide the applicant with a Pre-Adverse Action Letter that puts them on notice that you have received information which could lead to adverse action; and this notification must be sent to the applicant within three days of making your initial decision. You must:
1. Provide them with a letter advising them that adverse action is being considered,
2. Provide them with a copy of the report provided to you by Application Researchers®, and
3. Provide them with a copy of their rights under FCRA.
This will provide the applicant with the opportunity to dispute the validity of the information contained in the report with Application Researchers® before adverse action is taken.
If the applicant does not dispute the accuracy of the information, then you may move to Step Two.
If the applicant does dispute the accuracy of the information contained in the report, the letter provides them with our toll-free phone number so that they may contact us to start the dispute process. Upon being contacted by the applicant, we will begin a formal dispute process and report the re-investigation results back to you and the applicant. We give priority attention to the dispute process to ensure a fast turnaround of the updated report.
Once you receive the re-investigation report, you are then able to make a final hiring decision. If that decision is to decline the applicant or withdraw the offer of employment, then you are required to take the second step of this process because you are taking adverse action against them.
Now that you are ready to take adverse action against the applicant, you are required, under the FCRA, to do the following:
1. Provide them with a letter advising them that adverse action is being taken, and
2. Provide them with the updated report of the re-investigation (where applicable).
Application Researchers® is committed to helping our clients maintain compliance with this process while making your job easier. We offer current clients the ability to complete this process within Zip24AR®. Simply log in and locate the applicant in question. At the bottom of the screen, you will see “Adverse Action”. There, you will find both letters, as well as the summary of rights under FCRA. Simply open the letters and edit them to include your company name, contact information, and the applicant’s information. Print them on your letterhead and send them off! Make sure you keep copies of the letters in your records, as Zip24AR® does not maintain copies and does not document the adverse action process.