As an employer, it is important to be aware of the various ways in which federal regulations and court systems protect employees. Ensuring HR compliance with these regulations is crucial for safeguarding the well-being of your employees and preventing legal actions that could harm your business.
It is crucial to be mindful of Adverse Action and to ensure compliance with the Adverse Action procedures of the Fair Credit Reporting Act (FCRA). Understanding what Adverse Action is, and following the necessary steps when action is required, is essential.
Adverse Action is a set of procedures and negative actions that employers may take when a candidate fails a pre-employment background check.
There are many ways that a failed background check can affect a candidate's prospects at a company. Some companies may deny the application or rescind the job offer. Other companies may offer a job, but a lower-paying job with fewer important responsibilities. These are all examples of an adverse action.
Taking an adverse action is a legitimate process that companies may take if they find certain red flags in the background check. However, sometimes adverse actions can lead to lawsuits. Companies that wish to avoid lawsuits while doing the right thing for their employees must follow the steps to comply with the FCRA.
To stay in compliance with Adverse Action, your company will need to follow three basic steps. These steps need to be written into your company's HR policy, and all hiring managers must be made aware of the steps.
If a job candidate's application is being denied on the grounds of their background check, you must provide them with a written notice called a Pre-Adverse Action letter. This letter can be delivered either electronically or by mail. In the letter, you must inform the applicant of the intention to deny their application based on the information discovered in the background check.
This letter must also include a "Summary of Rights Under the FCRA" notice. It's important to understand that the Pre-Adverse Action letter is not the official adverse action letter. This notification will give the candidate an opportunity to dispute incorrect information in the background check.
Your company must wait a period of time to allow the candidate a chance to dispute incorrect information in the background check. A minimum of five days is recommended to give the applicant time to respond. Your company can choose to set up a longer timeline, but it's important to remember that all candidates must be given the same time period, to be treated equitably. Again, build this time period into your HR and hiring procedures.
While some candidates may go on to request corrections to their background checks that ultimately lead to their hire, other candidates may not. For these candidates, you must then issue an official Adverse Action Notice to explain the decision. You can send this notice either through email or through traditional mail. The notice must include information such as:
After doing this, you must also dispose of the information uncovered in the background check. This action must be performed securely to protect the applicant's private information.
The US Equal Employment Opportunity Commission (EEOC) has established which reasons are considered legitimate grounds for turning down a prospective job candidate. Not everything that shows up on a background check is grounds to deny an application. For example, no one can be turned away from a job due to their gender identity, sexual orientation, race, political affiliation, or age. Even some things that show up in criminal history may not be grounds to deny an application.
Some examples of the kind of information that might lead to disqualification from a job include:
The list above is not comprehensive; your company may consult with experts before deciding on grounds to deny an application. It's also important to keep in mind that just because one of the offenses appears on a person's record, this is not automatic grounds to dismiss their application.
Each background check must be considered on a case-by-case basis, while also considering the applicant's potential job responsibilities, how much time has passed since the crime was committed, if they were convicted, whether they will be working with vulnerable populations, if they will have access to sensitive information and other such factors.
Maintaining compliance with Adverse Action can help your company avoid lawsuits and litigation. Working with HR professionals can help - Orsus Group provides background checks, global investigations, and HR services. Contact the Orsus Group for tailored compliance assistance.