Important: This page is general educational guidance only. Adverse action requirements vary by state, city, and individual situation. Always consult a qualified employment attorney before sending adverse action notices to applicants. We do not provide adverse action services.
If a background check result is influencing your decision to deny someone a job, a promotion, or any other employment benefit, federal law requires you to follow a specific two-step process before you make that call official. Skip it, and you're looking at potential FCRA violations that can cost you far more than the hire itself.
This is one of the most misunderstood parts of the hiring process. I talk to HR directors and business owners every week who either don't know this process exists or assume their background check vendor handles it for them. Most of the time, they don't. This is on you as the employer.
Here's how it works.
The two-step adverse action process
Federal law under the Fair Credit Reporting Act (FCRA) requires two separate notices before you can take adverse action based on a background check. Not one. Two. And there has to be time in between them.
1
Background check
Result comes back with a record
2
Pre-adverse notice
Send letter + report + Summary of Rights
3
Waiting period
At least 5 business days (varies by location)
4
Adverse action letter
Final decision communicated
Step 1: The pre-adverse action notice
Before you reject anyone based on a background check, you have to tell them it's coming. That's what the pre-adverse action notice is. You're giving the candidate a heads up that their background check results are influencing your decision and giving them a chance to respond.
Along with the letter you need to include two things: a copy of the actual background check report, and a copy of the federal document called "A Summary of Your Rights Under the Fair Credit Reporting Act."
Why does this matter? Because the record on their report might not actually be theirs. Name matches happen. Errors in court records happen. A candidate who received a pardon may not have seen that pardon reflected across every database yet. That process can take six months or more. The pre-adverse notice gives the candidate time to look everything over and dispute anything that's wrong before you make a final call.
If they do dispute something, they come back to us as the consumer reporting agency. We conduct a re-investigation and have 30 days to correct any inaccurate information. If we find records that don't belong, we send an updated report to all necessary parties.
Step 2: The adverse action letter
After you've sent the pre-adverse notice and given the candidate time to respond, you can then send the formal adverse action letter. This is your official communication that a decision has been made.
Industry best practice is to wait at least five business days between the pre-adverse notice and the adverse action letter. Some states and cities require more time than that. More on that below.
The adverse action letter also needs to include a copy of the report and the Summary of Rights again. It also needs to include the name, address, and phone number of the consumer reporting agency that ran the report, and a clear statement that the CRA did not make the hiring decision. That last part matters. The candidate needs to know that we gave you information. You made the call. Those are two separate things.
Free Sample Templates
Letter Templates
Pre-Adverse Action Letter Template (.docx)
Download
Adverse Action Letter Template (.docx)
Download
Summary of Your Rights Under the FCRA
Federal law requires you to include this document with both your pre-adverse notice and your adverse action letter. It comes directly from the Consumer Financial Protection Bureau (CFPB). Use the version that matches the candidate's preferred language.
CFPB Official Documents
Summary of Your Rights Under the FCRA — English
Download
Summary of Your Rights Under the FCRA — Spanish
Download
State and local rules vary
Federal law sets the floor. States and cities can and do require more. Here are a few examples of how local rules change the process.
| Location |
Waiting Period |
Notes |
| Federal (FCRA baseline) |
5 business days (industry standard) |
No specific waiting period defined in statute but 5 days is widely accepted best practice |
| New York City |
5 business days from applicant's receipt |
Fair Chance Act applies. Additional requirements for NYC employers. ↓ See NYC requirements |
| San Francisco, CA |
7 calendar days |
Fair Chance Ordinance sets a stricter timeline |
| Connecticut |
5 business days (FCRA baseline) |
No additional state laws. |
New laws at the state and city level are being added regularly. This is an area where you really do want to talk to an employment attorney who knows your jurisdiction. The consequences of getting this wrong are not worth guessing.
Employer checklist
Before you send the pre-adverse notice:
You have a copy of the background check report ready to include
You have the current CFPB Summary of Rights document ready to include
You know the waiting period required in your state and city
You have documented why the background check result is influencing your decision
Before you send the adverse action letter:
You have waited the required number of business days
You have given the candidate a fair opportunity to dispute the report
The letter includes the CRA's name, address, and phone number
The letter states clearly that the CRA did not make the hiring decision
You are including the report and Summary of Rights again with the final letter
You have consulted with your employment attorney if there is any uncertainty
New York City: Fair Chance Act
If you employ anyone who works in New York City, the NYC Fair Chance Act imposes a specific multi-step process that goes significantly beyond the FCRA baseline. Each step has defined document requirements.
Step 1 — Pre-Adverse Action: Send all of the following to the applicant
Copy of the background check report
FCRA Summary of Your Rights
Pre-adverse action letter
Your completed Article 23-A analysis
A blank Fair Chance Notice so the applicant can complete their own response
Hold the position open and wait a minimum of 5 business days from the applicant’s receipt of the pre-adverse action packet before sending the final adverse action letter
Step 2 — If the Applicant Responds (within 5 business days)
You must genuinely consider their response before proceeding
Re-run and update your Article 23-A analysis taking the rebuttal into account
Step 3 — Final Adverse Action: Send all of the following
NYC Fair Chance Act final notice
Copies of everything sent in Step 1
Your updated Article 23-A analysis (if a rebuttal was received in Step 2)
Records that cannot be used against an applicant under NYC law: Arrests with no conviction • Sealed records • Youthful offender adjudications • Adjournments in Contemplation of Dismissal (ACDs)
NYC Official Resources
NYC Fair Chance Act — Employer Guidance (CCHR)
Download
Article 23-A Supplemental Multiple Records
Download
Common questions
What happens if I skip the pre-adverse notice and go straight to rejecting the candidate?
You've violated the FCRA. The candidate has the right to sue, and FCRA statutory damages run from $100 to $1,000 per violation plus actual damages and attorney's fees. Class action exposure is also a real risk if you've done this across multiple hires. This is not a technicality. Courts take it seriously.
Can a candidate still dispute the report after I've sent the final adverse action letter?
Yes. Even after adverse action is taken, the candidate retains the right to dispute inaccurate information with the consumer reporting agency. The FCRA gives them that right regardless of the stage in the process. That's part of why both letters need to include the CRA's contact information.
Does this process apply to every hire or just certain roles?
If you're using a background check report from a consumer reporting agency to make any employment decision, the FCRA applies. That includes new hires, promotions, reassignments, and terminations. If a consumer report influenced the decision, the two-step process applies.
Does my background check vendor handle this for me?
Usually not. The consumer reporting agency provides the report. The adverse action notices are the employer's responsibility. Some HR platforms have workflow tools that help, but the legal obligation sits with you. Always confirm with your vendor what they do and do not handle.
Reminder: This page is educational only. Adverse action law is nuanced and changes at the state and local level regularly. Always work with a qualified employment attorney to make sure your process is current and compliant.
Rich Dunn
Research Services
