What does pre-adverse action notice mean?
Many new HR professionals are not sure about what is a pre-adverse action notice. During the hiring process, if the employer refuses to accept the application of a candidate, it is known as an adverse action. Companies undertake such action in accordance with the information provided in a background check report that might potentially cause them any kind of harm or damage their reputation.
This could mean not only refusing employment but also involve denying a transfer or a promotion. Pre-Adverse and Adverse Action Notices are part of a procedure to inform the interviewee that the company is refusing to move forward with the process of employment anymore.
Running a background check on a candidate and receiving negative feedback could be awful. But, what must be done in such a situation? The solution to such a problem might seem easy, that is to reject the candidate and advance further to screen other candidates. However, this might be equivalent to risking a lawsuit.
Employers that utilize the services of a CRA or a third-party Credit Reporting Agency must adhere to the FCRA (Fair Credit Reporting Act).
Pre-Adverse Action Notice
Before taking adverse action against an applicant based on negative information in the background screening report, the employer is required to inform the applicant through a letter or notice.
The letter informs the applicant that an adverse action might be taken against them. This is called a Pre-Adverse Action Letter. Alongside the letter, the employer is required to attach a copy of the background screening report with a copy of the summary of their rights under the FCRA.
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Timing of Action is Important
After the Pre-Adverse Action Notice and the copy of the summary of their rights is sent, the employer should not immediately proceed further to deny employment. Applicants must be presented with reasonable time and opportunity to question the correctness or comprehensiveness of the information stated in the report.
Although the FCRA does not define what is ‘reasonable time’, the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) state that at least 5 business days should be given to the applicant. Certain courts do mention a 10-day timeframe. However, in this type of case, it is prudent to check with your state for any existing laws.
Pre-Adverse Action Notice is vital to avoid an applicant from being a part of a negative employment action based on incorrect information in the background check report. So, to ensure fairness, an opportunity to present some evidence regarding the inaccuracy of information is essential.
On the contrary, if the applicant is eligible for the job role applied for, they should not impinge with adverse employment action as indicated by the wrong information in the background check report.
What happens when the applicant claims the inaccuracy of information but offers no proof?
In this type of scenario, the law states that the employer must grant a fair opportunity to the applicant to refute the facts included in the information. Furthermore, the applicant must be allowed to lodge a complaint with the CRA.
At the same time, in these kinds of circumstances, the CRA does not forbid employers from denying employment to the applicant if their justification is unsatisfactory. The CRA will take into consideration all claims of incorrectness reported. In case the CRA finds any errors, the employer will be given a restructured copy of the background check report.