Adverse Action Notice
Are You Hiring? Then You Need to Understand Adverse Action in the Workplace.
If your hiring process involves conducting background checks on job applicants (and it should), then you need to understand adverse action in the workplace. You must also make sure your organization complies with relevant federal and state laws, including the Equal Credit Opportunity Act (ECOA) and Fair Credit and Reporting Act (FCRA).
What is Adverse Action?
The word "adverse" means "harmful" or "unfavorable." So an adverse action is a harmful or unfavorable action taken against a person (or sometimes a business). The action itself is typically the denial of credit, insurance, employment, promotion, or some other benefit due to the person's credit and/or criminal history.
As an employer, you are required by law to inform job applicants that you will be conducting credit and criminal history checks as a basis for their employment. You are also required to get their explicit consent regarding these background checks.