Adverse Action and Ban the Box Laws

As laws and regulations governing employment and background checks evolve, there is often much confusion on the part of both employers and employees in terms of what is legal and allowable. One area that is especially prone to confusion is fair hiring laws, including adverse action and ban-the-box laws.

Ban-the-Box Laws Explained

Ban-the-box laws refer to a national movement that is gaining support that prevents employers from asking questions about an applicant’s criminal history on job application forms. The rationale behind these laws is to remove some of the stigma associated with previous convictions – especially those for minor or non-violent offenses – and give all applicants a fair chance at employment.

There are no federal ban-the-box laws, which means that policies can vary from one state or municipality to the next. This lack of uniformity can be a challenge for employers. Additionally, some employers struggle with balancing giving applicants with criminal histories a fair chance and becoming liable for negligent hiring if an incident occurs.

Supporters of ban-the-box laws cite that an estimated 77 million Americans have arrests or convictions on their record that make it more difficult to secure a job, even when they work in a highly skilled industry. Additionally, securing employment is a huge factor in reducing recidivism rates. Therefore, the argument behind these laws is that creating an even playing field during the application phase can help some job candidates get an interview, increasing their chances of securing employment. It’s good for the economy, good for job seekers, and can be good for employers who struggle to fill open jobs.

Detractors of ban-the-box laws argue that these laws can cause unnecessary exposure to potential crime. Many companies also believe it can increase the possibility of non-compliance, penalties, and fines. They also believe it complicates the hiring process.  

What is Adverse Action?

Ban-the-box laws do not prohibit employers from running a background check, but they often require that this step only be done after the initial job interview or a conditional offer is made. Adverse action describes the required process employers must follow if they rescind an offer to an applicant due to the results of a background check. Adverse action can also apply to the termination or reassignment of already-employed individuals when the action is taken due to the results of a periodic background check.

Adverse actions are dictated by the Fair Credit Reporting Act, which outlines the steps an employer must follow when taking adverse action. These steps include:

  1. Send pre-adverse action notice: A pre-adverse action notice lets the applicant know that information from their background check has caused your company not to want to move forward with the hiring process. With the pre-adverse action notice, you must include a copy of the background check report and a document titled “A Summary of Your Rights Under the FCRA.” Employers may also want to check state and local laws for additional disclosures or required documentation.
  2. Provide a waiting period: Under the FCRA, the candidate is allowed a reasonable amount of time to respond, which allows them to review the background check and dispute any inaccurate or outdated information. Generally speaking, this should be at least seven days, although some states and municipalities require longer waiting periods.
  3. Review the response: The applicant is also entitled to respond to your notification of adverse action. If the applicant finds inaccurate or outdated information on the background check, they may dispute it with the consumer reporting agency, which will investigate and resolve the dispute. In some instances, this can result in not moving forward with the adverse action. However, if there are no changes to the background check report, if the changes do not materially change the substance of the changes, or if the candidate does not dispute the report or provide an updated report by the end of the waiting period, then the employer can send the final adverse action notice.
  4. Send a final adverse action notice: If you don’t want to move forward with employment, you must send a final adverse action notice. This notice must inform the candidate of the right to dispute the decision and inform them they are entitled to another copy of their background check report.

Hiring can be complex in today’s environment, which is subject to many regulations. Working with a reputable and knowledgeable background check provider can simplify this process and ensure you remain compliant with all applicable laws. To learn more about adverse action, ban-the-box laws, and background checks, contact USAFact today!

USAFact Global Screening Services provides comprehensive background and criminal checks for employers that comply with federal and local laws. By helping you eliminate high-risk applicants through tailored solutions, USAFact enables you to create a safe and productive work environment and a foundation for future success.