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What Is A Pre-Adverse Action Used For In The Hiring Process?

Pre adverse action notices: let's learn more

CRAs aren’t the only parties with a responsibility to comply with the FCRA. Employers have duties, too.

One of the primary employer responsibilities is proper pre-adverse and adverse action management.

What is a pre-adverse action notice?

A pre-adverse action letter (or, more correctly, a notice) is communicated to prospective hires to alert them that the contents of their background screening report may influence a hiring decision. In short, if there is any question about a candidate’s consumer report, employers should duly notify the candidate that their hiring status may be impacted.

While possible refusal of employment is grounds for a pre-adverse action notice, so is the denial of a transfer or promotion.

It’s important to note that in most states (not all), the pre-adverse action notice doesn’t have to take a particular form/format. It just has to represent a formal communication of some kind to the candidate.

An adverse action letter (or notice) is a formal communication to a prospect or employee that a position, transfer, or promotion is not going to be offered based on the results of their consumer report. An adverse action notice is the communication of a final adverse decision.

Due to the legalities surrounding pre-adverse notice communication, many employers utilize third-party management services to regulate and automate the process. With Peopletrail, these services can be included with your background screening solution.


Learn More: Pre-Adverse Action Letter Management


Pre-Adverse Action Notice: What it’s not

As mentioned before, a pre-adverse action letter is not a notice of any final decision. That is the purpose of the adverse action letter.

Additionally, a pre-adverse action letter doesn’t even have to be a “letter” in most instances. It simply must be a notice that includes a copy of the candidate’s consumer report and a summary of their rights under the FCRA.

Some states, such as California, have more particular specifications. For example, in California, the specific items in the consumer report that are to be factored into a decision must be explicitly detailed. In most other states, however, the criteria for a compliant pre-adverse action notice is fairly general.

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Timing of Action is Important 

After the delivery of the pre-adverse action notice and a copy of their summary of rights is sent, the employer should not immediately proceed with a decision. Applicants must be allowed a reasonable amount of time to question the accuracy of the information presented in their consumer report.

Pre-adverse action letter wait time concept

Although the FCRA does not define how much time is a “reasonable amount,” the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) state that at least five business days should be given to the applicant. This could give the applicant adequate time to communicate with the employer or initiate a formal dispute, if necessary.


Learn More: How Are Background Check Disputes Handled?


A pre-adverse action notice process is necessary to avoid situations where a candidate becomes part of a negative employment action based on incorrect information in the background check report. To ensure fairness, an opportunity to speak to the information in their report is essential.

What happens when the applicant claims the inaccuracy of information but offers no proof?

In this type of scenario, the law states that the employer must grant a fair opportunity to the applicant to refute the information returned in their consumer report. Furthermore, the applicant must be allowed to file a dispute with the CRA.

The CRA will then begin a re-investigation immediately, reporting the results to the employer. If the candidate’s claims are unfounded or frivolous, the employer can proceed with their decision. The CRA will take all claims into consideration. If the CRA is required to make changes to the original report, the employer will be given a restructured copy as well as an explanation of what had changed and why.

NOTE: In most cases, the dispute process is not grounds for concern. While it should be avoided whenever possible, the FCRA allows for this process of due diligence. If the dispute process is carried out appropriately by the employer and the CRA, there is little to be concerned about.

We hope you found this article helpful. For more employment screening information, reach out to us.

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