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Employment Adverse Action Letter

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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 may be due to criminal history, employment history, or a background check on the individual that made the employers think the applicant would not be suitable for employment.


Why It’s Important

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 on 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.

The Adverse Action Process

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 complete the following steps:

1 – Issue the Pre-Adverse Action Notice

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.

2 – Wait 5-10 Days

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.

3 – Send the Adverse Action Notice

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.