Guide · For employers
The adverse action process, step by step
Adverse action is a decision against a job applicant or employee that rests, even in part, on a background check report. Federal law sets the steps: a disclosure and authorization before you order the report, a notice before you decide, a wait, and a notice after. This guide explains each step, the two exceptions, what to do when the person disputes the report, and where state and city rules add more.
Reviewed
Primary sources
4 steps · 2 exceptions
What counts as adverse action
The FCRA’s definition, and when the steps apply.
Under the Fair Credit Reporting Act (FCRA), adverse action in employment means “a denial of employment or any other decision for employment purposes that adversely affects any current or prospective employee” (15 U.S.C. § 1681a(k)(1)(B)(ii)). Not hiring someone, withdrawing an offer and denying a promotion are examples. The definition covers employees as well as applicants.
The steps apply when a consumer reporting agency, the screening company, supplied the report, and the report played any part in the decision. That covers everything in the report: criminal history, credit, driving records and verifications. Federal law does not cover information you collect yourself without a screening company, but some states and cities do.
Step 1. Disclose and get authorization
Before you order the report.
Give the person a clear written disclosure that you may get a consumer report for employment purposes. It must sit “in a document that consists solely of the disclosure.” Then get the person’s written authorization, which may go on the same document (15 U.S.C. § 1681b(b)(2)(A)).
Keep everything else off that document: no liability waiver, no application questions, no state notices. The statute allows only the authorization beside it.
If the report will include interviews with neighbors, friends or past employers about the person’s character or reputation, it is an investigative consumer report. You must also mail or deliver a written disclosure of that fact within three days after you request it, with a statement of the person’s right to ask for more detail (15 U.S.C. § 1681d(a)).
Several states add their own disclosure or consent rules. Each state page lists them under its state consumer reporting law.
The disclosure and authorization guide covers this step in full, with a table of the states that add rules.
Step 2. Send the pre-adverse action notice
Before you decide, while the decision is still open.
If you may take adverse action based in whole or in part on the report, first give the person (15 U.S.C. § 1681b(b)(3)(A)):
- A copy of the report
- “A Summary of Your Rights Under the Fair Credit Reporting Act,” the form the CFPB prescribes (
12 CFR pt. 1022, app. K). Use the CFPB’s current version, from March 2023.
FTC staff say this notice cannot be in the same document as the final notice (FTC staff report, 2011).
When criminal history is behind the decision, many states and cities add more: naming the convictions, a written assessment of the record, the person’s right to respond and a deadline, and in some places holding the job open.
The adverse action letter generator writes this notice with the items your state, county or city adds. More: the Summary of Rights guide and the individualized assessment guide.
Step 3. Wait before you decide
Give the person time to point out an error.
The FCRA names no number of days. In a 1997 letter, FTC staff said a proposed wait of 5 business days “appears reasonable” (FTC staff letter, 1997). The 2011 staff report says no specific period applies, and the facts may call for more time.
Some states and cities set a minimum for decisions based on criminal history, from 2 business days in Washington and Seattle to 10 in Philadelphia. Some add more days when the person disputes the record. The clock starts when the person receives the notice, not when you send it.
The waiting period calculator finds the earliest date to decide under every rule that applies to the job. Waiting longer never breaks a waiting-period rule. Deciding early can.
Step 4. Send the final adverse action notice
After you decide.
Tell the person about the decision. The notice may be oral, written or electronic, and it must include (15 U.S.C. § 1681m(a)):
- Notice of the adverse action
- The name, address and phone number of the consumer reporting agency that supplied the report, with its toll-free number if it is a nationwide agency
- A statement that the agency did not make the decision and cannot give the specific reasons for it
- Notice of the right to a free copy of the report from the agency, if the person asks within 60 days
- Notice of the right to dispute the accuracy or completeness of the report with the agency
- If you used a numerical credit score: the score and the related facts the law lists
A written notice gives you a record. The letter generator writes the final notice too, with any items your place adds.
When the person disputes the report
What the screening company must do, and where you must wait longer.
The person disputes errors with the consumer reporting agency. The agency must reinvestigate free of charge and finish within 30 days after it receives the dispute, in most cases (15 U.S.C. § 1681i(a)(1)).
The FCRA itself sets no waiting period for you, for a dispute or otherwise. Some places do. In California, when the person tells you in writing within the waiting period that they dispute the record and are getting evidence, you add 5 business days. Los Angeles County adds at least 10. San Diego County adds 5 when the person tells you within the first 5 business days, in any form. Read what the person sends you: an error in the report, or facts about the record, can change the decision.
The calculator adds these extensions when you tell it the person disputed the record. The disputes guide covers the screening company’s deadlines in full.
Two federal exceptions
Some transportation jobs. For some transportation jobs, when all contact so far was by mail, phone or computer, you give one notice within 3 business days after the decision, in place of both notices (15 U.S.C. § 1681b(b)(3)(B)).
Misconduct investigations. A communication about an investigation of suspected misconduct, under the conditions in § 1681a(y), is not a consumer report. It needs no pre-adverse action notice, but after the action you give the person a summary of its nature and substance.
Where states and cities add more
Mostly for decisions based on criminal history.
- Limits on when you may ask about criminal history, often not until after a conditional offer
- A written individualized assessment of the record before the pre-adverse action notice
- Extra statements and copies of records in the notices
- A longer wait, more time on a dispute, and in some places holding the job open
- Limits on what a report may include, and on credit checks
Background check laws by state covers each state and the cities within it, with the law behind every rule.
Questions employers ask
Do I need a pre-adverse action notice if the report played only a small part?
Yes. The notice applies to adverse action based in whole or in part on the report. If the report played any part, send it.
Can I send the pre-adverse and final notices together?
No. The pre-adverse action notice comes before the decision, so the person can respond while it is still open. FTC staff say the two cannot be in the same document.
Do the steps apply to current employees?
Yes. The FCRA’s definition covers any current or prospective employee, so a report behind a firing, demotion or denied promotion triggers the same steps.
What if the person never responds?
After the waiting period ends, you may decide. Then send the final notice. If your pre-adverse action notice gave a later deadline, wait until it passes.
How long do I have to wait?
Federal law sets no number of days; 5 business days is the common guide. Several states and cities set their own minimum. The calculator gives the date for the job.
Sources
- 15 U.S.C. § 1681a, definitions
- 15 U.S.C. § 1681b(b), disclosure, authorization and the pre-adverse action notice
- 15 U.S.C. § 1681d, investigative consumer reports
- 15 U.S.C. § 1681i, disputes and reinvestigation
- 15 U.S.C. § 1681m(a), the final notice
- 12 CFR pt. 1022, app. K, Summary of Your Rights
- FTC staff letter (June 27, 1997), Weisberg
- FTC staff report (2011), 40 Years of Experience with the FCRA
State and local rules: the sources on each state page, the calculator and the letter generator.
Last reviewed · General information, not legal advice.