Most of the time, an employment background check simply confirms what you already believe is true. After all, the majority of applicants are honest about their past and qualifications and have committed no grievous mistakes. However, every so often, a background check discovers something that you didn’t expect. If it’s serious enough, it may prohibit the applicant from being hired, promoted, or given a raise. In these cases, adverse action—denying work or demoting an employee in some way—is prudent and necessary.
Understanding the laws of adverse action is imperative to getting the most out of your background checks and guaranteeing that you hire the best employees for your company. The whole process can save you from onboarding a candidate who will do more to harm than help your bottom line—but only if you do it properly.
You Can’t Exactly Fire At Will
Of course, there are some rules and guidelines for when you can take an adverse employment action against someone. Obviously, you can’t do it for any reason related to the personal characteristics protected by the Equal Employment Opportunity Commission. However, the issue may come up over the course of a background check for other reasons.
For example, maybe the applicant led you to believe that they had a specific license that would be necessary to satisfactorily fulfill the position for which you want to hire them, but the background check finds that the license is expired, riddled with disciplinary action, or even entirely non-existent.
In another instance, you may discover that the applicant has a felony or vehicle violation on their record that renders them ineligible to work for your company.
Perhaps a reference didn’t have many nice things to say, or maybe a previous employer’s story about the termination of the individual’s employment doesn’t match what the individual in question told you.
In each of these cases, you may be justified in initiating an adverse employment action. After all, it could damage your company’s productivity or reputation to hire or promote someone who doesn’t properly represent its values and professionalism. As established previously, firing or losing an employee can become an expensive habit, so it’s best to get it right the first time with a background check. However, you will likely be unable to avoid the occasional adverse employment action, despite your best efforts.
The Laws of Termination
The Fair Credit Reporting Act has outlined steps to guide you in correctly enacting an adverse action.
First, after extending a job offer, make sure that you have the applicant’s permission to do a background check. You need to have a signed disclosure/authorization form in which the applicant consents to opening up their education, employment, credit, driving, and criminal history to you.
Second, conduct the background check as you normally would.
Third, if the background check comes up with information that disqualifies the applicant from employment, send them an adverse action letter and a full copy of their consumer report.
Fourth, allow a minimum of five days for the applicant to respond to the letter and contest any of the information in the report that you provided to them.
Fifth, if you haven’t heard anything from the applicant, or if they were unable to defend the information in their report according to your company’s standards and policies, then send them a final adverse action letter rescinding your offer of employment. Make sure that you follow all laws that may be unique to your state as well.
Your background check agency of choice can help with the adverse action process by sending a notice to the applicant at your request, allowing them to receive a copy of their background check and dispute any negative information that was obtained. If they don’t respond or are unable to reconcile the information with the requirements for the job for which they were considered, the adverse action can be finalized for you as well.
It’s No Small Matter
It may seem like a hassle, but if you don’t complete the necessary process, the consequences may cause inconveniences at best and disasters at worst. In one recent case, the Lincoln Property Company offered a job to Lemuel Wright, but upon conducting a background check and discovering that he was guilty of committing a few crimes related to drugs and alcohol, they decided to reject him. Unfortunately, they served him with an adverse action notice without sending him a final consumer report or giving him enough time (usually a minimum of five days) to dispute it. When Wright filed a complaint, the Lincoln Property Company was ruled to have violated the laws of the FCRA, and they are now awaiting trial by jury.
For the Lincoln Property Company, the trial is damaging to their reputation and represents high and unexpected expenses. Your background check agency can help ensure that this doesn’t happen to you by assisting you with the adverse action process. Its their job to be familiar with the regulations laid out by the FCRA and dedicated to keeping your company’s procedures within their parameters.
Be On Guard
When it comes down to it, adverse action is a way of protecting yourself when rejected candidates are trying to protect themselves as well. It can be a complicated and nerve-wracking process, but in the end, it’s a crucial undertaking for helping your company grow and flourish. Truly, it’s like a sentinel that guards against the occasional and unexpected attempted entry of an unworthy employee into your company. As long as you’re careful about following the guidelines, there’s no reason why adverse action shouldn’t accomplish anything other than an increase in productivity toward your company’s goals.
Whatever you choose to do with the information that you obtain from a background check, professional screeners are ready to support you.