What is Pre-Adverse and Adverse Action in the Hiring Process?

During the hiring process, you are going to come across information about applicants that causes you to decide to pick a different candidate. It happens. What some employers aren’t aware of, however, is that there are steps required by law for notifying applicants that you’ve decided to not move forward in the hiring process with them. It’s called Pre-Adverse and Adverse action notices.

What Is It?

This process is connected to the Fair Crediting Reporting Act (FCRA). According to this law, there are a few steps employers must take during the hiring process if they plan to run background checks and use a consumer reporting agency for background screening.

• Pre-Adverse Action – After you’ve run the background check, if you are inclined not to move forward with that applicant, you must provide them with a copy of their report, a pre-adverse action letter, and a copy of their rights according to the FCRA. Here’s an example of a pre-adverse action letter from SHRM.
• Adverse Action – The last step is an Adverse Action letter. If the employer has not heard from either the applicant or their background screening company for 5 business days* after the pre-adverse notice was given, the employer may then proceed with their final employment decision and send the applicant the Adverse Action Letter. Find out more about Adverse Action at the FCRA website.

*Please note: industry standard is 5 business days, but this can vary by State & county

The above list is just a basic overview of the process. The key is for employers to understand that the process is required by law, that they understand their requirements, they set up processes to ensure they are met, and that they operate fairly when it comes to making hiring decisions.

What Happens if You Don’t Send the Letters?

If an applicant does decide to take your company to court over a hiring decision, the court system will check to ensure these processes were followed. Courts residing over FCRA cases have approved damage awards that have cost employers millions of dollars for failing to follow these technical rules. This process is a shield when it comes to protecting your business.

If this seems like a lot to take in, don’t worry. Accucheck Screening can help you with the entire background check process, including compliance. Our team provides the forms through our online portal and we also review them on a regular basis to ensure they stand up to legal challenges. With AccuCheck Background Screening, you can reduce turnover rates from bad hires, reduce cost per hire, and rest easy knowing you are fully informed on your applicants. We also provide onboarding tips through job-fit assessments to speed integration into your culture. Streamline your hiring process today with Accucheck Screening.