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The Adverse Action Process

An employer that conducts background checks as part of its hiring process will inevitably find that candidates will have negative records. When something shows up in the Criminal/Other Public Search, a Verification, MVR Report, Drug Test, or any other report in a customer’s package that needs to be reviewed it will be presented to the client for a decision.  If it is found that the reportable item may not meet hiring criteria, Adverse Action should be initiated.


Before you take an Adverse Action

Before you reject a job applicant, reassign or terminate an employee, deny a promotion, or take any other adverse employment action based on information in whole or in part  in a consumer report, you must give the applicant or employee:

  • A notice that includes a copy of the consumer report you relied on to make your decision; and
  • A copy of the Summary of Your Rights under the Fair Reporting Act, which the company that produced the report should have provided to the applicant.
  • A reasonable amount of time to dispute the record if there is an error of some kind.

This is called Pre-Adverse Action.

After You Take an Adverse Action 

If you take an adverse action based on information in a consumer report, you must give the applicant or employee a notice of that fact – orally, in writing, or electronically. 

An adverse action notice must include: 

  • The name, address, and phone number of the consumer reporting company that supplied the report; 
  • A statement that the company that supplied the report did not make the decision to take the unfavorable action and can’t give specific reasons for it; and 
  • A notice of the person’s right to dispute the accuracy or completeness of any information the consumer reporting company furnished, and to get an additional free report from the company if the person asks for it within 60 days.

Edge can administer the Adverse Action process for your program for New Hires.  The Adverse Action for Internal promotions is the responsibility of the organization.  We can provide sample letters for your reference, or we can use your existing documentation. We recommend that your legal counsel reviews your pre and adverse notifications. 

Failure to administer Adverse Action properly can result in consequences for the client. Hopefully this information has been helpful to you as we want our clients to mitigate risk. *State laws may apply that need to be followed such as in Illinois for additional information in the Adverse Action letter.