What Employers Need to Know About Conducting Background Checks – Part 3 – Reviewing the Report and Adverse Action

Reviewing the Background Report

Now that you’ve received the information you’ve requested, here’s what you need to know as you allow what you’ve learned to influence your hiring decisions:


Again, regardless of the source of the information, federal law prohibits you from using the information to discriminate. As a rule of thumb you should always:


  • Judge everyone according to the same standards. This means that if you decide not to reject an applicant of a one ethnicity despite certain financial or criminal histories, you must also consider applicants of other ethnicities who have the same or similar histories.
  • Pay close attention to and revise if necessary hiring policies and practices within your company that have, in legal terms, a “disparate impact” on certain protected demographics, and which are not “job related and consistent with business necessity.” This means that you must be careful not to follow policies that base hiring decisions on issues that may be more prevalent among individuals of a certain race, color, national origin, sex, or religion, and among those who have a disability or are aged 40 and older, and which aren’t a fair indicator of whether or not the individual will be an effective and safe employee.
  • If the report reveals a problem that is connected to an individual’s disability, be open to allowing the individual to demonstrate their ability to perform the requirements of the job. Unless doing so results in significant difficulty for your organization both financially and operationally, the candidate should not be automatically disqualified based on negative information that was directly caused by their disability.

The FCRA and Adverse Action

If your findings prompt you to take adverse action (the decision to fire an employee or not to extend a job offer to an applicant), the FCRA has outlined a certain protocol that must be followed to protect yourself from penalties:


  • Prior to finalizing any adverse action, you must provide the employee or applicant with:
    • a copy of the consumer report that informed your decision
    • a copy of a document called “A Summary of Your Rights Under the Fair Credit Reporting Act.” This document should have been made available to you through the screening company that provided the report.


By providing prior notice, a copy of the report, and informing them of their rights, the individual will have the chance to review, dispute, and/or explain the information in question. Should your decision remain unchanged, you must follow these steps:


  • After taking adverse action, you must provide the individual in writing, orally, or electronically with the following information:
    • that they were rejected for the position because of information revealed in the report
    • the contact information of the CRA or screening company that sold the report
    • that the third-party company is uninvolved in all hiring decisions and can’t provide further information on the adverse action
    • that they have 60 days to dispute the contents of the report and to request another report for free from the same third-party vendor
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