What Is Adverse Action in Background Screening?

Background checks help organizations make informed hiring decisions - but they also come with legal responsibilities. When an employer, school, or organization considers denying employment, volunteer placement, or access based on a background check, they must follow the adverse action process. This guide explains what adverse action is, why it matters, and how to handle it correctly.  

What Is Adverse Action in Background Screening?

Adverse action refers to any negative decision made about an applicant, employee, or volunteer based in whole or in part on information found in a background check.

Examples of adverse action include:

• Not hiring a job applicant
• Rescinding a job offer
• Denying a volunteer application
• Terminating employment
• Reassigning or limiting duties
• Denying access to a school or facility

Adverse action requirements are governed by the Fair Credit Reporting Act (FCRA).

Why Adverse Action Matters

1. It Protects Applicant Rights

The adverse action process gives individuals a chance to review and dispute incorrect or outdated information.

2. It Is a Legal Requirement

Failing to follow adverse action procedures can lead to fines, lawsuits, and regulatory action.

• FTC enforcement overview: https://www.ftc.gov

3. Background Reports Can Contain Errors

Criminal records may be incomplete, misattributed, or outdated.

4. Schools and Employers Face Increased Scrutiny

Education, healthcare, and youth-serving organizations are especially vulnerable to compliance violations.

5. Proper Adverse Action Reduces Liability

Following the correct process demonstrates fairness and consistency in decision-making.

How the Adverse Action Process Works

Step 1: Review the Background Check Carefully

Before taking action, organizations should:

• Confirm the record belongs to the correct individual
• Consider the nature of the offense
• Evaluate job or role relevance
• Apply consistent adjudication criteria

EEOC guidance on fair hiring: https://www.eeoc.gov/prohibited-employment-policiespractices

Step 2: Send a Pre-Adverse Action Notice

Before making a final decision, you must send a pre-adverse action notice that includes:

• A copy of the background check report
• A copy of the “Summary of Your Rights Under the FCRA”
• A notice that adverse action is being considered

Step 3: Allow Time for Response

Applicants must be given reasonable time to:

• Review the report
• Dispute inaccuracies
• Provide context or documentation

Most organizations allow 5 business days, though longer periods are recommended.

Step 4: Review Any Disputes or Clarifications

If the applicant disputes information:

• The background check provider must reinvestigate
• Corrections must be made before proceeding

Step 5: Send the Final Adverse Action Notice

If the decision stands, the final adverse action notice must include:

• The decision taken
• The background check provider’s contact information
• A statement that the provider did not make the decision
• Notice of right to request another free copy of the report within 60 days

Benefits of Following the Adverse Action Process Correctly

Organizations that follow adverse action procedures gain:

• Legal compliance with FCRA
• Reduced risk of lawsuits
• Fair and transparent hiring practices
• Better applicant experience
• Stronger documentation for audits
• Consistent decision-making

Common Adverse Action Mistakes to Avoid

• Skipping the pre-adverse action notice
• Acting before the waiting period ends
• Failing to provide required documents
• Using inconsistent decision criteria
• Relying on non-compliant background check providers

Related Blogs

• https://www.bib.com/blog/what-shows-up-on-a-background-check-for-volunteers
• https://www.bib.com/blog/understanding-legal-terms-a-glossary-for-employment-screening
• https://www.bib.com/blog/eeoc-strategic-enforcement-plan-2024-2028-forging-ahead-for-fair-and-inclusive-workplaces
• https://www.bib.com/blog/background-check-red-flags-what-employers-look-for
• https://www.bib.com/blog/how-to-choose-the-right-type-of-background-check-for-your-organization

Conclusion

Adverse action is a critical part of compliant background screening. By following the required steps - pre-adverse notice, waiting period, and final notice - organizations protect applicants’ rights while reducing legal risk.

Need help staying compliant?
Bchex supports FCRA-compliant background screening with built-in adverse action workflows to help organizations follow the process correctly every time.

FAQs About Adverse Action in Background Screening

Q: What triggers adverse action?
Any negative decision based on a background check triggers adverse action requirements.

Q: How long must I wait after pre-adverse action?
Most organizations wait at least 5 business days, though longer is safer.

Q: Does adverse action apply to volunteers?
Yes - if the decision is based on a background check.

Q: Can I make exceptions to adverse action?
No - the process must be followed consistently.

Q: What happens if I skip adverse action?
You risk fines, lawsuits, and compliance violations.