What is Pre-Adverse Action & Adverse Action?

What is Adverse Action?

Adverse action is any action by an employer, based on information found in a consumer report (background check) that negatively affects a candidate’s employment.

Pre-Adverse Action

Under the Fair Credit Reporting Act (FCRA), the applicant must have an opportunity to dispute inaccurate or incomplete information on the report before adverse action is taken.

Before taking an adverse action, that is based on information found in the report, the employer must:

1. Provide the applicant or employee with a copy of the consumer report (unredacted) and a copy of the Consumer Financial Protection Bureau's Summary of Rights under the FCRA. The employer must also include the specific reason(s) their application was rejected. This is typically provided with the Pre-Adverse Action notice.

2. A Pre-Adverse Action notice must be sent to the applicant, even if the information contained within the report disqualifies the candidate based on their adjudication.

3. There must be a "waiting period" before Adverse Action can be taken after sending the Pre-Adverse Action notice. We recommend the employer waits a reasonable amount of time, or one week minimum. State laws may vary.

4. There can be no claim against an employer or anyone else for failing to reverse initial adverse action after the waiting period is complete, regardless of additional information presented by the candidate during that time.

Adverse Action 

The employer or its agent must:

1. Notify the applicant that you have disqualified them based in whole or in part on the background report.
   • For any candidate residing in the City of Chicago, you must identify the specific rejection reason, as it will be included in the Adverse Action letter. 
2. Provide the applicant with the contact information for the Consumer Reporting Agency (Turn) that prepared the report.
3. Provide the candidate with a summary of rights under the FCRA.
4. Explain that the Turn had no role in the decision not to hire the candidate and is unable to explain why the decision was made.
5. Inform the candidate that they have a right to dispute the information that was found in the report.