Lately, we’ve been seeing a myriad of class action lawsuits plaguing businesses around the country for failure to comply with federal Fair Credit Reporting Act (FCRA) guidelines. Among other key violations, employers are neglecting to notify their applicants when a background check results in denial of employment due to adverse information returned in the report.

Class-Action Lawsuits

Disneyland and UPS are just two companies that have recently been in the spotlight for their part in violating the Pre-Adverse Action / Adverse Action aspect of FCRA protocol. Along with the information listed below, JD Supra / Litter also provide additional insight on the Disneyland suit combined with important considerations for companies looking to avoid becoming part of this unfortunate trend.

These class action lawsuits are not solely targeting large corporations: from Mom & Pop shops to Fortune 500 industries, every business that utilizes employee screening services in their hiring practice runs the risk of being hit with a lawsuit if they aren’t following pre-adverse / adverse requirements.

Notice of Pre-Adverse Action; Follow-up Notice of Adverse Action

Applicants must be notified in writing, provided with a copy of their background check (consumer report), and given a copy of their rights under the FCRA. According to the Federal Trade Commission (FTC), this Notice of Pre-Adverse Action is to be completed “before you reject a job application, reassign or terminate an employee, deny a promotion, or take any other adverse employment action based on information in a consumer report.” In addition, employers are required to send out a second Notice of Adverse Action after an adverse decision is made, along with the same report and rights information sent in the first notice.

There is also specific language required by the FTC to be included in these notices, and employers are required to stick to the dispute timeframe listed in their Notice of Pre-Adverse Action, otherwise they could be facing additional legal ramifications.

Cue NationSearch

Because Notices of Pre-Adverse Action / Adverse Action are only used when adverse information will hinder an applicant’s potential employment, this process is a reliable and cost-effective means to protect your business and ensure superior hiring practices are followed.

If your background check procedures lack this key, foundational process, we’d love to bring our expertise to the table, take this process off your hands, and assist you in mitigating your company’s risk.