Let’s start with the worst-case scenario, because it can — and does — happen:
A company working on a project needs to hire some key talent quickly and after recruiting for several weeks, interviews someone who seems like a perfect fit. The company makes a conditional offer, but in the process of conducting the background check, discovers an issue that leads the hiring manager to decline the candidate. Naturally, the candidate is unhappy to receive the bad news, but becomes angry when she learns the background check confused her with someone bearing a similar name.
Given that the candidate only received the record after being declined, she decides to sue, in what later becomes a class-action lawsuit.
This is an extreme— but realistic—example of what happens when Adverse Action processes are not carried out or carried out incorrectly. As we discuss in our latest eBook, The Beginner’s Guide To Background Checks, Adverse Action is defined as any action taken based on the information in a report that negatively affects someone’s employment. That doesn’t just mean declining a candidate for a potential new employment opportunity. It also includes situations where a particular employee who hopes to transfer into a new position is turned down or when a member of a team is denied a possible promotion.
As the challenge to hire, develop, and retain the right talent within organizations increases, making a mistake in the Adverse Action process can expose companies to substantial legal risks. That’s why it’s more important than ever to learn how to document and carry out Adverse Actions and to use the right tools to maintain accuracy throughout the process.
Start With Individualized Assessment
Even before initiating Adverse Action, stop and ask a few key questions. If the background check on a candidate revealed a prior offense, how long ago did it take place? Was it severe? To what extent does it relate to the job opportunity you’ve discussed?
These are some of the key elements in what’s known as an Individualized Assessment. It’s required by the Equal Employment Opportunity Commission (EEOC) and ensures that those hiring put what they discover in a background check into the proper context. Just as it might be tempting to simply decline a candidate and cut off communication, an Individualized Assessment guides organizations in treating all candidates as fairly as possible.
If you still decide Adverse Action is necessary, however, here’s what to expect:
The Fundamentals of an Adverse Action Workflow
You can memorize the basics of an Adverse Action workflow with just three simple words: “Pre,” “Wait” and “Post.”
The process should kick in as soon as a background check unearths something that leads the organization to consider not moving forward with an offer based on the report. It begins with the Pre-Adverse Action notice, which informs the candidate about the decision and what it was based on.
This is more than mere common sense: it’s a compliance obligation under the Fair Credit Reporting Act (FCRA). That means the “Wait” phase, where an employer gives candidates a reasonable amount of time to dispute outdated or incorrect information once they’ve seen the report, needs to be built into the process. A quick side note: make sure to check if you’re working in a jurisdiction that requires more than the typical five to seven days in the waiting period.
What happens during the waiting period will vary greatly depending on the candidate. Some may dispute what’s in the report and bring forward evidence that shows a mistake has been made or perhaps that the information is out of date. In that case, the background check company will conduct a re-investigation that will end within 30 days with a follow-up report focusing on the portion being contested.
Other possibilities include the candidate failing to respond to the Pre-Adverse Action Notice by the time the waiting period ends or that the organization decides to decline regardless of the response. In that case, the candidate should receive a Post-Adverse Action Notice, which transparently provides confirmation about the decision.
The Adverse Action Self-Assessment Checklist
Managing Adverse Action requires a high degree of attention to detail, working in a timely manner and documenting thoroughly at every stage of the process. Use the following questions to reflect and determine your level of preparedness to conduct Adverse Actions in a way that adheres to compliance requirements and minimizes any exposure to legal risks:
- Are you able to communicate Pre-Adverse Action Notices in a consistent and standardized way? Who is responsible? How manual is the process today, and where might errors occur?
- What’s your current adjudication process for checks that come back “Consider?” This doesn’t always need to disqualify a candidate.
- What else, if anything, is particular to your organization that should be built into the Individualized Assessment beyond what’s mandated by the EEOC?
- How will you deliver Pre-Adverse Action Notices? Do you have a dedicated e-mail address that could also receive and track undeliverable messages?
- Depending on the outcome of the waiting period, how might you cancel an Adverse Action? How will it be documented, along with any steps that occur afterwards?
The need for Adverse Actions may not come up often, but organizations that are properly prepared will ensure they handle such situations in full compliance with the law, and in a way that treats candidates with honesty, openness, and fairness. Of course, this isn’t the only area where organizations could educate themselves on these sorts of issues. Download the full copy of our eBook, The Beginner’s Guide To Background Checks, where we walk through some of the information covered in this post and go into more detail about what searches are included in a check, report options, and a lot more.