Adverse Action Procedures Should be Followed Even if the Background Check is Accurate

A recent case reported by Troutman Sanders involved Jerome Ratliff, Jr. a potential employee of A&R Logistics who filed a suit alleging an FCRA violation after they were denied employment. The plaintiff’s complaint alleged the company did not follow proper adverse action procedures. In this case the background check was accurate, but the company failed to provide accurate notice of the potential for denying employment, did not wait for any challenges and did not provide a copy of the background report to Ratliff.

In the adverse action procedures, the potential employee is given a copy of their background check so that they can challenge any inaccuracies. The company must also provide them with a pre-adverse action notice advising that they may be denied employment based on that background check. Generally, once a company ensures the applicant has received the copy of their background check waiting 3 days is enough time to allow for any challenges. Only after the company has provided the required documents AND waited a reasonable amount of time to allow for any challenges may they provide a notice of final adverse action. This simply advises that the company has decided not to hire based on the background check, includes a copy of the background check and a copy of the applicant’s rights under the FCRA.

In the case the court dismissed the case as Ratliff had not suffered an injury in fact based on the Supreme Court Spokeo decision. The court also considered the fact that the background check was accurate. In this case information used to make the hiring decision was accurate so the court found there was no injury. “The Court found that a plaintiff could show “informational injury” if a third party was disseminating inaccurate information about him or her that could cause concrete harm.”

While A&R Logistics was not forced to pay damages or an FCRA fine in this case they still had to go through the trouble of fighting the case. If they had followed the adverse action procedures, there would have been no reason for Ratliff to file. In addition, if the background check information had been inaccurate they could easily have lost this case.

It is imperative that companies understand the required steps for compliance when denying employment based on a background check. Our adverse action page details the steps exactly and the HireSafe portal provides adverse action documents to ensure you follow the required procedures. While the Ratliff case shows a FCRA consideration favorable to employers HireSafe will always stay vigilant to inform our clients and follow the most stringent background check regulations. As an employer stay up to date with federal and state background check regulations to ensure compliance and avoid costly lawsuits.

Legal disclaimer: we are not attorneys and this information is provided based upon the Fair Credit Reporting Act and our experience as a consumer reporting agency. Clients are advised to consult with counsel to create their own policies and procedures with regards to hiring suitability.