FCRA Adverse Action Process: A Step-by-Step Guide for Employers
When an employer relies on a consumer report from a background screening company to make an unfavorable employment decision, the Fair Credit Reporting Act (FCRA) requires specific steps. Adverse action is a process — not simply a rejection notice sent after a decision has already been made.
Start with the requirements that come before the report
Before obtaining an employment background report from a consumer reporting agency, employers generally must provide a clear, written disclosure in a stand-alone format stating that a consumer report may be obtained for employment purposes, and obtain the applicant's or employee's written authorization. Employers should also determine whether state or local requirements apply to the position or candidate.
Step 1: Review the report carefully
If information in a background report may affect an employment decision, the employer should first review the report in the context of its screening policy and the role involved. Background information should be used consistently, and federal equal employment opportunity requirements continue to apply when employers consider criminal history or other background information.
Step 2: Send the pre-adverse action materials
Before taking the final adverse action, the employer must provide the individual with a copy of the consumer report relied upon and a copy of A Summary of Your Rights Under the Fair Credit Reporting Act. This step gives the person an opportunity to review the information and identify possible inaccuracies before the employer finalises its decision.
Step 3: Allow an opportunity to respond
The FCRA is designed to give consumers an opportunity to address information in their report before an adverse employment decision is finalised. Employers should have a consistent process for handling candidate questions or disputes and should consider any additional waiting-period requirements that may apply under state or local law.
Step 4: Provide the final adverse action notice
If the employer ultimately takes adverse action based in whole or in part on the consumer report, the employer must provide a final adverse action notice. Among other required information, the notice identifies the consumer reporting agency, explains that the screening company did not make the employment decision, and informs the individual of the right to dispute inaccurate or incomplete information and request an additional free copy of the report within 60 days.
Consistency matters
A written background screening policy can help hiring teams apply the same process across similar roles. The EEOC also advises employers to avoid using criminal-record policies in ways that unlawfully discriminate and to consider whether criminal history is relevant to the job and circumstances involved.
Accurate Screens supports employers throughout the employment background screening process with accurate reporting and responsive service. Because legal requirements can vary by jurisdiction and situation, employers should work with their own legal counsel on specific compliance questions.
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