An Employment Adverse Action Letter is sent to a job applicant to inform them they were not accepted for the position they applied for. It is used when the hiring company ran a background check on the applicant and found disqualifying info. This can be due to criminal, employment, or a background check on the individual, and made their official after the hiring company determined the individual should not be hired due to disqualifying information found in a background check.
The term “adverse action” itself doesn’t directly relate to rejecting a candidate for a job position. It covers any decision made by an employer that negatively affects a person’s job outlook, which can include rejecting promotion and demoting.
Issuing an adverse action notice is a requirement of the Fair Credit Reporting Act (FCRA), which provides transparency into the consumer reporting process. It gives the candidate the reason(s) for their rejection and provides them with disclosures that inform them how they can obtain a copy of the report (for free), and who to talk to regarding their rejection. A company can open themselves up to being sued should they neglect to send the notice.
After collecting a candidate’s application, receiving their consent to run a background check, and finding information that may lead to their rejection, the employer will need to do the following:
The pre-adverse action letter is a document that informs the candidate that the employer may need to take adverse action regarding their application. If the employer finds a reason for their rejection due to information not found in a consumer report (background check), the notice does not necessarily need to be issued. The letter should be sent via certified mail – this provides the employer with verifiable proof that the notice was sent to the candidate.
The FCRA states a “reasonable” amount of time must be provided to the applicant. Five (5) to ten (10) business days is considered acceptable, although it’s worth noting state laws may have their own requirements.
As long as the candidate has not claimed inaccuracies in the report, the employer can proceed with issuing the adverse action notice. Like the pre-adverse action notice, this should be sent via certified mail as well, although the FCRA permits the notice to be given verbally or electronically as well.