The Fair Credit Reporting Act (FCRA) requires all end users (clients) who intend to make an adverse hiring decision based in whole or in part upon information in the applicant’s consumer report to notify the applicant about information that may impede the applicant from getting hired. When an employer conducts a background check on an applicant and discovers derogatory information (e.g., criminal records) that will affect the hiring decision, the employer must notify the applicant prior to taking any adverse action.
This must happen in the form of a pre-adverse action letter. This letter notifies applicants of their rights under the FCRA and provides them with a copy of the consumer report along with the name, address, and toll-free phone number of the background screening company that prepared the report.
The applicant then has a reasonable period of time (usually five to seven business days) to dispute any information on the report. If the consumer does not dispute the report, the end user must send an adverse action letter to the applicant advising that he or she was not employed based on the information contained in the consumer report. If the applicant disputes the information in the report, the employer must hold off on the hiring decision until the dispute is properly investigated, which happens within 30 days.