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What is the Adverse Action Process?

What is the Adverse Action Process?

Creditors and potential employers must follow certain rules if they deny someone based on their credit, consumer or criminal history. This process, called diverse action, legally requires employers to notify the applicant when they have been denied a position or promotion based on their background check. In many situations adverse action is unlawful, though there are other instances where criminal history is a perfectly valid reason to deny employment, such as in federal office.

Any adverse action decisions must precisely “by the book.” If an employer or creditor makes a decision based on the results of a background check, they must follow a certain procedure to comply with the Fair Credit Reporting Act.

Sending a Pre-Adverse Action Letter

Before adverse action is taken, the employer must notify the employee or potential employee that their background check may influence their decision. By giving notice, the employer leaves the employee with the option to dispute the report.

Providing Information About Consumer’s Rights

The employer should provide the individual with the pre-adverse action letter, as well as a copy of the background check and a summary of the consumer’s rights according to the Fair Credit Reporting Act.

The Adverse Action Letter

Once the decision has been made, the employer must send the adverse action letter notifying the applicant of the verdict and why. In other words, they must tell the applicant that they were denied the job because of the information in their background check.

The letter should be sent with the following information:

  • The consumer reporting agency’s name, address, and phone number
  • A statement saying the consumer reporting agency did not take the adverse action and cannot provide the applicant with any reason for the adverse action
  • The notice of the consumer’s right to a copy of the same report from the consumer reporting agency (must be within 60 days)

It is the right of the consumer, should he or she choose, to dispute the information in the report because of any inaccuracies or lack of sufficient information.

The time between sending the per-adverse action letter and the adverse action letter is not strictly specified under the Fair Credit Reporting Act. The minimum amount of time is 5 business days, because this is a reasonably fair amount of time for the applicant to contact the employer and discuss the report or explain their dispute.

Each letter, and the supplemental material, should be sent with a return receipt so that the employer can be sure the applicant received and opened the letter. This could be via mail, or email.

If an employer or creditor does not follow the adverse action process in any way, they could suffer punitive damages and actual damages. If you were denied a job because of your background check, but your potential employer did not follow the proper adverse action process, contact our federal employee attorneys.

At Pines Federal, our experienced lawyers know the ins and outs of employment law, both from the perspective of businesses and individuals. We have more than 20 years of legal experience working with federal agencies and individual employees to protect their rights. Our firm is based in Houson, but we will handle any federal employment case throughout the nation. If you have an employment issue you need legal help with, we can help. Being denied employment because of your background is serious, and if an employer does not follow the proper process, you may have a case.

Contact Pines Federal to learn more about the adverse action process.