What is Adverse Action in Employee Background Screening?

Organizations turn to employment background checks to protect against a myriad of hiring risks. Through employment screening, hiring managers can check for prior criminal behavior, verify employment records, test for substance abuse, obtain employment references, and much more. The net result is the ability to create a safer and more productive workforce that builds an organization’s competitive edge. Today’s economy brings with it a heightened risk for adverse action complaints. After all, if an individual makes it as far as becoming a finalist for your open position and is then denied the position due to information in a background report that individual may be disappointed or disgruntled enough to try to pursue legal avenues.

But what happens when a background check yields information about a candidate that, if true, would cause the employer to deny employment to the individual? How does an employer handle such a situation in a fair and legally compliant manner? It wasn’t long ago that the challenge facing employers was how to hire all the workers they needed to fill the demand for their products and services. Today the challenge has turned to know how to turn many desperate workers away – both legally and gracefully. Many times, an offer to one individual means saying no to many other often equally-qualified candidate. As an employer, if your process isn’t "buttoned up" you face significant risks when it comes to defending against a complaint.

What is Adverse Action?

In the context of background screening, an adverse action is any action that an employer takes on the basis of background check report of a candidate, that negatively affects his/her employment. So if the background check report revealed that the candidate has provide a fake education certificate and if you want to reject the candidate based on this report, it would be an Adverse Action. As an employer you should always consult your background checks company to draft a suitable and legally complaint adverse action procedure as part of your background screening policy.

How does Adverse action works?

Adverse action describes the process employers must follow when rejecting, terminating, reassigning, or failing to promote an individual due, in part, to the results of a background check. The FCRA sets out three important steps that employers must follow when taking adverse action:

• Pre-adverse action: You must notify the candidate that a decision is pending and that background check results are under review. A copy of the candidate’s background check and a "Summary of Rights under the Fair Credit Reporting Act" must also be provided.

• Waiting period: You must wait at least five business days before taking final adverse action.

• Final adverse action: If, after the waiting period, you decide you still want to take adverse action on a candidate due to the results of a background check, you must send a final adverse action notice. The FCRA requires this notice contain specific information to help the candidate get a free copy of the background check and to contact the background screening company to dispute information.

Providing training for managers and HR staff on the topics of workplace rights and adverse action will also help a business avoid making poor decisions for the wrong reasons.

Conclusion

All in all, while complying with adverse action regulations in employee background screening may seem daunting, the effort is well worth for its benefits. When you take the time to check your employees’ past you’ll find yourself with a safer and more productive workforce that results in significant benefit to the organization as a whole.

About The Author

Nivedita Gupta is a content marketer and writes on business topics for various clients including cFIRST Background Checks, a leading background check company in the US.