Background screenings are an important and necessary part of the hiring and onboarding process, giving employers a lot of critical insight into a candidate. By scrutinizing an applicant’s financial, employment, education, and criminal histories, companies like yours get a better sense of whether he or she truly has the right qualifications for the job. It also helps you understand the individual’s character and if he or she can be trusted to be reliable and responsible. All of this is crucial for making sure you hire the right people to protect yourself from poor performance and misconduct that can have a negative impact on your operations and reputation. However, it’s important to remember that these screenings should be conducted with care. Otherwise, your organization could be accused of adverse action.
Under the Fair Credit Reporting Act (FCRA), employers are required to take certain steps to prevent adverse action. This means they must take care not to harm the applicant’s chances of finding another job with a different employer during the background screening process. As an employer, it’s in your best interests to avoid adverse employment action because it can lead to serious legal repercussions. Read on to learn more about adverse action, why it matters, and how your organization can avoid it.
Understanding the Fair Credit Reporting Act
Established to protect consumers and their credit information, the FCRA sets forth extensive regulations regarding the collection and use of such sensitive data. As it pertains to the hiring process, it means employers must provide a disclosure of any details they find during a background check that could be considered grounds for not hiring an individual. For example, discovering that a candidate for a financial position had been prosecuted for embezzlement would certainly be a red flag that would make an employer reconsider hiring that person.
But even though such a discovery would drastically reduce the chances of that person being hired, that doesn’t mean the employer simply closes the book on that candidate. Background checks, while important and necessary, are not infallible. Even the most diligent screening can bring up false or misleading information. Whether due to outdated records, inaccurate reporting, or identity theft, a screening can bring about false or misleading results. This is why the FCRA provides protections for job applicants to dispute or refute these results, and employers need to understand their role in providing them the opportunity to do so.
Adverse Action in Employment
If your organization does not follow proper protocols for disclosing the results of a background screening, it can lead to severe consequences for you as well as the applicant. This is because job candidates who aren’t given the chance to respond to the findings may choose to litigate. Discovering something negative during a background check can tarnish an applicant’s reputation and harm his or her prospects of employment elsewhere. This can be damaging enough, but it becomes even more so if the negative results are mistaken or misinterpreted.
In these cases, failure to provide the applicant with proper notice of the screening results can lead to your organization being sued. If it’s found that your company failed to comply with FCRA and other relevant legislation in your home area, there’s a high likelihood that the organization will be hit with sanctions that include significant financial penalties. This is the primary reason why your company should do everything in its power to prevent an adverse action incident from occurring.
The Process of Complying with Adverse Action Requirements
To protect your company from the unintended consequences of a background check, it’s extremely important to follow the proper procedures. In general, you should make sure you stick to the following protocol:
- Conduct the Background Check: Performing your due diligence during the hiring process means taking a close look at a candidate’s history. This includes reviewing his or her education, verifying his or her employment history, looking up personal financial records, and conducting a thorough criminal history check.
- Share Any Adverse Findings With the Candidate: If the screening turns up any negative details that may impact your decision not to hire the candidate, you are obligated to provide notification. A pre-adverse action letter should notify that applicant of your findings and include a copy of the background check report as well as a summary of the candidate’s rights under the law.
- Provide Time to Respond: You must provide the candidate with an appropriate amount of time to respond to the pre-adverse action letter. There is no set timeframe for this period under the FCRA, but in many cases courts have determined that five to seven days is considered reasonable. During this time, the candidate can thoroughly review your findings and formally explain or dispute them.
- Conduct a Complete Review: If the applicant provides you with a response to the initial letter with corrections or explanations for the findings, you need to give them due consideration.
- Deliver Notice of Adverse Action: In the event you are not satisfied with the candidate’s reasonings for disputing the results of the background check and you decide not to move ahead with the hiring, you are required to provide an adverse action notice explaining this. This adverse action letter can take the form of either a hard copy document or an email notice. If you were working with a third-party provider to conduct the screening, you must include information about the provider as well as a statement that the hiring decision was made by your company alone.
- Dispose of Any Sensitive Information: The results of a background screening often are of a highly sensitive nature. This means the FCRA requires your company to destroy those records once your decision is made regarding the individual candidate. This means shredding or incinerating paper records as well as deleting any electronic records in such a way as they cannot be recovered.
Navigating Adverse Action With PlusOne Screening Solutions
Given how important it is for your company to conduct background screenings with the utmost care and attention to detail, it’s critical to choose a partner who will look out for your interests. PlusOne Screening Solutions is one of the leading providers of employment background check services, meaning we go to great lengths to ensure your hiring process is as clean and compliant as it should be.
Working with us means you’ll have extensive expertise and legal knowledge on your side throughout the pre-employment screening process. Our team works closely with you, making sure you’re fulfilling all your obligations regarding the law. We make it easy for your company to navigate the adverse action procedures as successfully as possible, minimizing your legal risks and supporting ethical hiring practices. If you’d like to learn more about how our services can give you the most successful and compliant pre-employment screenings possible, reach out and discuss your needs with one of our experts today.
