Preadverse and Adverse Action - What You Need to Know

Let’s imagine you, as a recruiter or human resources associate, are super excited about hiring Sochelle Woeker.  She applied, her resume looks amazing, and she claims she has no convictions or pending convictions.  She nailed the interview and you send her off to Commercial Investigations to have her background check run.  That’s when the very timely and accurate background investigation comes in.  OH NO! Sue’s education was from a dreaded diploma mill, her employments are adverse, and she has a criminal conviction that directly affects the business you’re in!  You’re disappointed, but you know it’s now time to take action.  Preadverse and adverse action, that is.

FCRA (Federal Credit Reporting Act) compliance is a must when running and utilizing a background report completed by a CRA (Consumer Reporting Agency).  Knowing when and how to take preadverse and adverse action is a must in order to remain compliant.  If the background investigation report provides adverse information that directly affects the consumer or subject in a negative way, there is a proper protocol to follow.

The first step in the process is to send the preadverse action letter including a copy of the report, FCRA summary of rights, and if it’s a New York applicant/employer, Article 23 A.  This lets the applicant know that you are intending on taking adverse action against them due to information found in their background investigation.  It’s highly recommended this is sent via certified mail to ensure you have delivery receipt.  No one wants an applicant to say they never received the letter!  In CIware 2.0, adverse action letter templates are readily available.  You can use it as is, copy and paste the letter onto your own letterhead, or we can upload a copy of your version into the software. 

Next, you must wait a reasonable amount of time before sending the adverse action letter, giving the applicant time to dispute any information found on the background investigation.  What is reasonable?  Seven to ten business days should be enough time for the applicant to receive the letter and dispute any inaccurate information they feel is on their report.

You’ve waited ten full agonizing business days, and double checked with CI (don’t worry, if a subject does dispute the findings we will ALWAYS let you know) to make sure the subject hasn’t disputed the information.  You can now send the adverse action letter.  The adverse action letter can be auto-populated in CIware 2.0.  Again, you can use it as is, copy and paste the letter onto your own letterhead, or we can upload a copy of your version into the software.

If the subject has disputed information, and the information is either unchanged or has been corrected, you will receive notification of any changes and the subject will be sent a copy of the updated report.

Sorry Sochelle, better luck next time!  Luckily for you, you used Commercial Investigations, and have the peace of mind that you’re getting a full and accurate report on your applicants.  Now it’s back to the drawing board.  Oh hey, Carrie Okie looks like a good candidate!