Adverse Action is a process often misunderstood by employers, and this two-step process, if done incorrectly, can land you in court. KRESS offers employers automated Adverse Action, and it starts with the click of a button.
To see how it works, view the infographic.
To learn more about Adverse Action, continue reading.
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What is Adverse Action?
Section 603(k)(1) of the Fair Credit Reporting Act (FCRA) states that an adverse action is “a denial of employment or any other decision for employment purposes that adversely affects any current or prospective employee.” These decisions include not hiring, not retaining or not promoting an individual.
What does this mean for my company?
If your company uses a consumer report/investigative consumer report in whole or in part to deny someone employment or promotion, you are obligated under the FCRA to provide BOTH the Pre-Adverse and the Adverse Action Notifications to those applicants/employees.
What is a Pre-Adverse Action Notification?
The notification must contain information stating that an adverse employment action will be taken, a copy of the consumer report/investigative report, and a summary of the applicant’s/employee’s rights. The disclosure must also include the consumer reporting agency’s name and contact information. Once the applicant/employee receives the disclosure, he or she must be given reasonable time to dispute the information. While there is no time limit specified in the FCRA, legal opinion states five to seven business days as reasonable. KRESS gives 14 calendar days between notices.
What is an Adverse Action Notice?
The Adverse Action Notice contains wording similar in nature to the Pre-Adverse Action Notice and must be done in a reasonable amount of time after the Pre-Adverse Action Notice. The disclosure informs the applicant/employee of the final decision made by your company in not hiring, not retaining or not promoting an individual.
Do I need to do both the Pre-Adverse Action and the Adverse Action Notices?
Yes. Both are required under the FCRA.
If a report is disputed, do I need to keep the position open until the dispute is resolved?
Legal opinions have varied; however, there is nothing in the FCRA that states an employer must consider any correction that a reporting agency may make. The job should be kept open during the five to seven business days to allow the applicant to dispute the information, but after that, whether or not the information is disputed by the applicant, the employer can make a hiring decision. An employer may choose to wait until the dispute is resolved, but there are no requirements in the FCRA to hold a job open for a long period of time.
What are the penalties for not complying with these procedures?
Failure to comply with the Fair Credit Reporting Act imposes civil liability which may result in litigation and costly penalties for your company.
How can KRESS help me?
KRESS has created a seamless solution for the Adverse Action Notifications by doing this entire process for you. Once you have determined you will not be hiring a potential employee based on the consumer report we provide you, simply contact us or log into your account online to begin the process, as we will not send the notifications without your approval to do so. Once the notifications have been mailed or e-mailed, you will receive copies of the letters in a final report for your records.