What To Do If a Background Check Leads To a Rejection of Hire

Last Updated on January 20, 2023 / Recruitment

HR Question:

What steps need to be taken after I reject an applicant based on the results of a background check? What are pre-adverse and adverse action notices? When do I need to send them?

HR Answer:

When considering the addition of a new employee to your team, background checks are an essential final screening tool that many employers use. But, what happens when the results of a background check are concerning? Can you simply reject this applicant and move on to the next one? Think again!

If hiring decisions are made as a result of the findings on a background check, employers are legally required, under the Fair Credit Reporting Act, to take certain steps in order to remain compliant.

Pre-Adverse Action Notice

Before making a final decision, a “Pre-Adverse Action Notice” must be sent to the applicant. This notice should inform the applicant that there were questionable findings on the background check, but should not cite specifics. After the notice is sent, a reasonable amount of time must be given to the applicant to dispute these findings. Although the Fair Credit Reporting Act does not define a “reasonable” amount of time, the Federal Trade Commission and Consumer Financial Protection Bureau state that a minimum of 5 business days can be considered “reasonable.” Along with the Pre-Adverse Action Notice, the applicant must be sent a copy of the background check and a copy of the Fair Credit Reporting Act’s, “A Summary of Your Rights.”

Adverse Action Notice

If, after a reasonable amount of time, the applicant has not disputed the background report findings, then an “Adverse Action Notice” must be sent to the applicant. Along with the reason for denying employment, this notice must include several key pieces of information:

The name and address of the Consumer Reporting Agency, along with a statement that the adverse action is based upon information in the background check.
A statement noting that the Consumer Reporting Agency who supplied the report did not make any decisions regarding the adverse action.
A statement outlining the applicant’s right to dispute any information included in the background check.
A notice stating that the applicant can receive a free copy of the report within 60 days.

Often your background check provider can help you through this process and may even provide the forms and an online tool to initiate the notices.

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