Adverse Hiring Decision Process

Adverse action, part of the Fair Credit Reporting Act (FCRA), is a denial of employment, or any other decision for employment purposes, that unfavorably affects any current or prospective employees. The decisions may include not hiring, not retaining or not promoting an individual.

If an applicant’s consumer report returns adverse information, which may result in an adverse hiring decision, the employer is obligated under the FCRA to complete the following steps. If the employer does not take proper action they expose themselves to legal risk.

STEP ONE

Before an adverse hiring decision is made, supply the applicant with the Pre-Adverse Action Letter, a copy of the consumer report and a copy of the Summary of Rights under the Fair Credit Reporting Act. This step notifies the applicant that information on the consumer report could lead the employer to take adverse action.

STEP TWO

Give the applicant sufficient time to respond and/or dispute the information; the Federal Trade Commission suggests five days. This will allow the applicant the opportunity to review the consumer report and dispute the findings if they do not agree with the accuracy of the report.

If the applicant disputes the information on the consumer report, the Consumer Reporting Agency will reinvestigate any disputes and correct or reaffirm the report; an updated report will then be issued to the employer. The timing of the reinvestigation will depend on the issues being investigated; however it will be given immediate attention so a proper hiring decision can be made by the employer.

STEP THREE

If adverse action is taken, send the Post-Adverse Action Letter. This step notifies the applicant that they are no longer being considered for the position or the offer is revoked.