As an employer, you can take adverse action during the hiring process if you feel a job candidate or current employee does not qualify for the position based on the contents of their consumer reports. When an employer takes adverse action it means they are not hiring or possibly even terminating the employment of someone because of information uncovered in a consumer report. A consumer report contains all of the relevant background information compiled by a Consumer Reporting Agency (CRA), such as JDP, on a job candidate or employee. This information can be gathered from criminal records, social media, driving records, previous employers, and other various sources. If you decide to take adverse action and deny a candidate the position, fire a current employee, or deny a promotion to an employee, there are a few things you are required to do under the Fair Credit Reporting Act (FCRA).

FCRA Requirements

After you review an individual’s background history in the form of a consumer report and decide they are not qualified based on the report, you must notify the individual. This notice must include a copy of the consumer report as well as a copy of their rights under the FCRA.  Employers are required to provide this information in case of mistakes in the consumer report. This allows the individual to correct or explain any inaccurate information contained in the report and which may have lead to the employer taking adverse action.

You must also notify the individual that you made your decision based on the contents of the background check report. This notice must include the following information and acknowledgments:

• Contact information for the Consumer Reporting Agency

• A statement that the CRA who conducted the background screening check did not make the decision
• And you must recognize the individual’s right to dispute the accuracy of the information gathered by the CRA

Individuals who receive an adverse action notice have several rights under the FCRA. First, they are entitled to the information leading to the employer’s decision to take adverse action. They are also allowed to dispute the accuracy of the report and they can request a free consumer report from the CRA their employer used in addition to the copy provided by their employer.

Before taking adverse action, you should check the requirements specific to your state in addition to updates for federal requirements. In 2012, the Equal Opportunity Employment Commission (EEOC) updated background check policy to make it more difficult to disqualify a candidate based on criminal records alone. And with the increasing implementation of ‘Ban-the-Box’ legislation, which differs from state to state, knowing your state’s adverse action laws is essential. If you have any questions regarding consumer reports and adverse action, feel free to contact us.

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