Sending out adverse action letters is a requirement under the Fair Credit Reporting Act anytime a person/consumer is denied employment, retention, reassignment, promotion, or any action that could be considered negative to the interest of the consumer either solely or partly due to information discovered through a consumer report.
It is a two part process, an End-User requirement (CRA client/prospective employer), and needs to be followed exactly any time the above criteria occurs. This process is divided into two steps, Pre-Adverse Action, and the final Adverse Action. Blueline’s system has two options for the Adverse Action Letter, which are listed below.
The purpose of a pre-adverse action letter is to inform the consumer that you have completed the background check or drug test that was conducted during the application process and that you may or may not be making an adverse decision based on the pre-employment screening.
In this letter you are not denying the consumer employment, promotion, reassignment, or retention. You are providing them with the results from the background check or drug test and stating this information will be utilized in your hiring decision.
The Pre-Adverse Action letter should include the following:
The consumer needs to be provided enough time to review the information contained in the background check and be given the opportunity to dispute any incomplete and inaccurate information before any additional steps are taken. The FCRA does not specify how much time must be provided to the consumer, but the FTC has suggested about 5 business days. Essentially, the consumer will need to be given a reasonable amount of time to review the consumer report and dispute if necessary.
The Adverse Action Letter is sent after the Pre-Adverse, as a follow up, final decision, and the backgrounds system provides two different formats for this letter depending on how the adverse action is being taken. Though there is some formatting differences between the two, either Adverse Action letter must contain the following:
The variations of this letter, available in the backgrounds system, are as follows:
When you receive drug test or background check results that make it necessary to rescind an existing offer of employment, an employment withdrawal of offer letter is the Adverse Action notice you want to send.
This letter is to be sent out to applicants who were denied a job due to the information received in the consumer report when no conditional offer was extended before conducting the background check. The purpose of this is to explicitly state that the consumer report played a role in the application denial, so they should verify the accuracy of the results.