Minimize Legal Risk by Enforcing Compliance in the Adverse Action Process – Part II

March 6, 2019 | Antique Nguyen

In Part I of this blog series, we examined Adverse Action at a high level and provided insights into employer obligations under FCRA.  Part II offers employers key areas of consideration when when outsourcing adverse action notices and guidance into the proper sequencing of steps to ensure compliance and avoid expensive and brand-destroying class-action litigation.

Litigation Avoidance

There are no fail-safe solutions to avoid litigation, but the employer can take steps to ensure compliance and mitigate risk. Part of the compliance problem may be that company employees who are tasked with initiating the notices are uncertain as to when notices are required or what must be in those notices. The problem can be further exacerbated by having insufficient tools with which to track the timing, delivery and receipt of such notices. Some employers are understandably cautious about outsourcing this function.

The FCRA makes it absolutely clear that the employer is ultimately responsible for compliance in this area, but this function is often best outsourced to the consumer reporting agency performing the background, and is the practice that Cisive recommends.  When contemplating an outsourced arrangement, the employer should consider the following:


1. Defined Scope of Work

A clear and conspicuous statement of work should be included in the service agreement that spells out the notification requirements and the duties of both the employer and the party to whom the pre-decision/adverse notification function is outsourced.

  • There should be agreement on the form and content of the notices.
  • The employer should stipulate a mechanism to verify that the most recent form of the prescribed CFPB Summary of Rights is delivered to the applicant in accordance with the FCRA and analogous state statutes.


2. Defined Triggers

Both parties should agree upon the triggers for the notifications, and agree who is responsible for each triggering action:

  • Items to consider include whether the sending of the pre-adverse action notices should wait until:


(i) all leads on a case are completed, (all the employment and education verifications, all criminal record checks and any other elements of the background are completed), or

(ii) completion of a major section of the background investigation (such as all of the criminal record checks).

  • Will a matrix be used to determine relevancy of potentially adverse information, or will anything other than “clear” result where no record is found trigger a pre-decision action? If a matrix will be used, has it been reviewed by legal counsel to the employer for content and the consumer reporting agency for practical applicability? A relevancy matrix is recommended for Equal Employment Opportunity law purposes to screen out those offenses which are not job relevant and therefore should not be considered or reported to the end user, and to identify any convictions which may create statutory bars to employment for a specific position.
  • Once the pre-decision notice has been sent, there should be systemic controls in place to prevent a decision from being made or an adverse action notice being sent, until sufficient time has passed to allow the candidate time to receive and to respond to the pre-adverse action notice.


3. Transmission and record keeping

Regardless of how pre-decision and adverse notices are delivered, detailed logs of each event should be kept. The further advantage of electronic notification, where possible, is that not only do you have the opportunity to log outgoing events, but you can also log views and receipts to positively track delivery. (Some employers have attempted to confirm mail delivery using registered or overnight mail. Not only are those options very expensive, but it is the experience of the authors that such delivery is often refused by candidates who are not expecting it and are suspicious of unexpected “official” mail delivery). Finally, electronic delivery is the fastest means of delivery allowing employers and candidates to quickly resolve outstanding issues and fill positions faster, while those positions are still available.

Disputes and Individual Assessments

Employers should make it easy for candidates to either file a dispute of any information contained in the report, or to initiate an individual assessment of the factors recommended for consideration by the Equal Employment Opportunity Commission (“EEOC”) in its April 2012 guidance on the use of arrest and conviction information.[1] It is therefore strongly recommended that along with the required and prescribed documents delivered in compliance with the FCRA pre-adverse action notification that appropriate forms and instructions are provided to the candidate to facilitate any dispute or statement they wish to make. Once again, this is most efficiently done when electronic notification guides the candidate to a secure site and then guides the candidate through the dispute process and/or allows the entry of information in support of an individual assessment using the factors recommended in the EEOC guidance.

Providing online forms not only makes the process easier for candidates, but it also speeds up the process ensuring that the employer can fill positions as quickly as possible. Providing the forms or a method for the candidate to communicate is only the first step. Any dispute must be thoroughly investigated and documented by the consumer reporting agency, and the individual assessment must be thorough and documented by the employer. An adverse action, if any, and subsequent notice of that adverse action should not be taken until any investigation or assessment is complete. Should either the dispute investigation or the assessment result in a positive employment action, (a hire, retention or promotion), then the systemic control should be in place to eliminate the final adverse action notification step. For this process to work properly there needs to be a tight integration between the screening provider and the employer to ensure that steps are not missed or taken prematurely.


There is no foolproof way to avoid litigation or enforcement action, but establishing and enforcing strict compliance procedures can certainly reduce exposure. The challenge that many companies face when it comes to complying with FCRA notification requirements is that the pre-adverse action notification is a triggered event that is not required for every employment background (it only comes into play if an adverse action is possible based in whole or in part on the contents of the report), and the final adverse action notification is also a triggered event that is not required for every pre-adverse action notification, only in cases where an adverse action ultimately is taken. Not covered in this blog but worthy of careful consideration are effects of various ban-the-box laws, Fair Chance, and other similar state and local requirements that can alter the period to respond to adverse information that an applicant has, which can as a result alter the timing of any final adverse action letter.

Proper sequencing of these events also requires close coordination with the employer’s screening provider. Because of the irregularity of these events and the coordination required, employers can find it challenging to execute them properly, and decision makers such as recruiters and managers are often not fully aware of the employer’s responsibility. Education of decision makers helps. However, proper execution requires that they have the tools to comply. The best tools contain systematic, gated controls implemented by electronic workflow that recognize the triggers and guide those responsible through the compliance process. These tools exist today and employers should aggressively engage in evaluation, selection, and implementation of the right tools to realize compliant pre-decision and adverse notification and avoid expensive and brand-destroying class-action litigation.


Cisive contact
David Bennett
Chief Operating Officer




[1] Equal Employment Opportunity Commission, “Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964” (April 2012) (available online at:

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