Introduction and Understanding Adverse Action
The term “adverse action” plays a critical role in the employment process, especially when it comes to the background check procedure. It refers to a decision made by an employer that negatively impacts a candidate or employee, usually due to findings from a background screening. Adverse actions can have serious consequences for both job candidates and employees, as well as for employers who must navigate this process legally and fairly.
In this section, we will explore what constitutes an adverse action, how it impacts various stakeholders, and provide real-world examples to illustrate how adverse actions occur in the context of employment.
What is Adverse Action?
Adverse action is any decision made by an employer that can negatively affect a candidate’s or employee’s status based on information uncovered during the employment screening process. This action is often triggered by the findings in a background check, but it may also involve other factors such as the results of a drug test, a credit report, or performance evaluations.
Adverse actions are not limited to job applicants but can also apply to current employees if their background check reveals concerning information or if they experience other negative circumstances (such as legal issues, performance concerns, or behavioral problems). In most cases, adverse actions must be handled according to specific legal requirements, ensuring fairness, transparency, and the protection of the individual’s rights.
Common Examples of Adverse Actions
Some of the most common examples of adverse actions in the context of employment include:
- Job Rejection: If an employer decides not to hire a candidate due to findings in their background check—such as criminal history, credit issues, or discrepancies in their resume—that decision is considered an adverse action.
- Demotion: An employer may choose to demote an employee if their background check uncovers issues such as a revoked professional license, security clearance problems, or behavior that conflicts with the company’s values or regulations.
- Termination: In more severe cases, an employee might be terminated from their position due to adverse findings in their background screening, such as a criminal conviction or violation of company policies.
- Denial of Promotion or Salary Increase: Employers may decide against promoting an employee or granting them a salary increase if background screening results reveal issues that the employer deems relevant.
- Suspension: An employee may be temporarily suspended pending further investigation if a background check reveals concerning information, like pending criminal charges or policy violations.
While adverse actions are often a direct result of background checks, they can be influenced by a variety of factors, including organizational policies, the nature of the job, and the role’s level of responsibility.
Why Does Adverse Action Matter?
Adverse action matters for several reasons, both for the employer and the employee or job candidate. Let’s break it down:
Impact on Job Candidates
For job applicants, receiving an adverse action due to the results of a background check can be disheartening and challenging. It is essential for candidates to understand that adverse actions do not automatically mean they will be rejected or fired. In some cases, applicants may be given an opportunity to dispute or explain the findings.
However, adverse action can severely limit employment opportunities, especially if the reason for rejection or termination is related to issues that are difficult to resolve, such as criminal convictions or credit problems. These challenges are especially pertinent for individuals re-entering the workforce after incarceration or those with a history of financial hardship.
Impact on Employees
Employees can also face adverse actions if their employer uncovers something in their background check that impacts their role or job duties. This can lead to disciplinary action, demotion, or termination. For employees, the key concern is the impact on their career and livelihood, as an adverse action may result in job loss, loss of seniority, and reduced earning potential.
Impact on Employers
For employers, adverse actions are not just a matter of policy but also legal compliance. They must follow strict regulations when making decisions based on background checks. Employers should also be cautious when making adverse decisions to avoid discriminatory practices. Failing to comply with the Fair Credit Reporting Act (FCRA) or similar laws could expose the employer to legal challenges, penalties, or lawsuits.
Employers must carefully consider each adverse action’s legal ramifications and how it may impact their business reputation and employee morale. Fair, transparent processes are critical to maintaining a positive work environment and ensuring compliance with applicable laws.