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FCRA Adverse Action Process: Steps for Employers

If you might turn down an applicant or act against an employee because of a background check, the Fair Credit Reporting Act (FCRA) sets the steps. Before you get the report, give a stand-alone written disclosure and get written permission, and certify compliance to the screening company. Before you decide, send a pre-adverse action notice with a copy of the report and the Summary of Rights, then wait a reasonable time. After you decide, send a final adverse action notice. Some states and cities add more. This is general information, not legal advice.

Updated October 24, 2026 · Checked against the official sources listed at the end

Step 1: Disclosure and written authorization

Before you get a background report for a job, you must give the person a clear written disclosure that a report may be obtained. It must be in a document that consists solely of the disclosure. You must also get the person's written authorization (15 U.S.C. 1681b(b)(2)).

The FTC says the notice cannot be part of a job application. The authorization can be on the same document as the disclosure. If you want to be able to run reports throughout someone's employment, the FTC says to state that clearly.

Step 2: Certify to the screening company

The screening company, called a consumer reporting agency, can give you a report for employment only if you certify that you have followed the disclosure and consent rules, will follow the adverse action rules, and will not use the report to break equal employment opportunity laws (15 U.S.C. 1681b(b)(1)). Screening companies usually build this certification into account setup or ordering.

Step 3: Pre-adverse action notice

Before you take any adverse action based in whole or in part on the report, you must give the person (15 U.S.C. 1681b(b)(3)):

A copy of the report.
A copy of A Summary of Your Rights Under the Fair Credit Reporting Act. The FTC says the screening company should have given it to you.

Step 4: Wait before you decide

The FTC says the point of the advance notice is to give the person a chance to review the report and tell you if it is wrong.

The law does not set a specific waiting period. An FTC staff report says some reasonable period must pass, and the minimum depends on the circumstances. In a 1997 staff opinion letter, FTC staff said a proposed period of five business days appeared reasonable, though a particular situation may call for a different time. Staff opinions are not binding on the Commission. Five business days is a common practice, not a federal rule.

If the person says the report is wrong, they can dispute it with the screening company, which must investigate unless the dispute is frivolous.

Step 5: Final adverse action notice

If you go ahead, you must tell the person, orally, in writing or electronically (15 U.S.C. 1681m(a)). The notice must include:

The name, address and phone number of the screening company that supplied the report.
A statement that the screening company did not make the decision and cannot give the specific reasons for it.
Notice of the person's right to get a free copy of the report from the screening company within 60 days.
Notice of the person's right to dispute the accuracy or completeness of the report with the screening company.

State and city rules can add steps

Fair chance laws in some places change when you can run a criminal search and what you must do before deciding. Two examples:

California (Gov. Code 12952): employers with five or more employees may not ask about or consider conviction history until after a conditional job offer. Before rescinding an offer over a conviction, the employer must make an individualized assessment and send a written preliminary decision with a copy of the conviction history report. The applicant gets at least five business days to respond, and five more if they dispute the report and are getting evidence. A final denial must be in writing and mention the right to file a complaint with the California Civil Rights Department.
New York City (Fair Chance Act): applies to employers with four or more employees. Employers may not ask about or consider criminal history before a conditional offer. To withdraw an offer based on criminal history, the employer must give the applicant a copy of the inquiry, a written Fair Chance Analysis and at least five business days to respond.

Keep records, then dispose of reports securely

Keep a record of each step: the signed disclosure and authorization, the date you sent the pre-adverse notice and what was in it, and the date of your final decision. EEOC rules (29 CFR 1602.14) generally require covered employers to keep hiring records for one year from when the record was made or the decision was taken, whichever is later.

When you are done with a report, the FTC says you must dispose of it securely, for example by shredding paper and destroying electronic files so they cannot be read or reconstructed.

How Pact fits in

Pact sells two background checks through Checkr: Standard for $32 and Premium for $70. Checkr has the person being checked enter their details and sign the disclosure and authorization before anything runs. If you use a report to make a job decision, the adverse action steps above are still yours to follow.

If you run checks on your own screening account, a Pact employer account tracks the steps: the person's consent, the pre-adverse notice and the wait before a final decision. You read the report and make the decision.

Common questions

How long do I have to wait after a pre-adverse action notice?

The FCRA does not set a number. The FTC says a reasonable period must pass. FTC staff said in 1997 that five business days appeared reasonable, and that is common practice. California and New York City set at least five business days by law for decisions based on criminal history.

Can the disclosure be part of the job application?

No. The FCRA requires a document that consists solely of the disclosure, and the FTC says it cannot be in an employment application.

Do I have to send both notices?

Yes, if you take adverse action based on the report. The pre-adverse notice comes before the decision and the adverse action notice comes after. The FTC says they may not be in the same document.

Does the final notice have to be in writing?

Federal law allows oral, written or electronic notice. Written or electronic notice gives you a record. Some state and local laws require writing.

Who sends the Summary of Rights?

You do, with the pre-adverse notice. The FTC says the screening company that gave you the report should have given you a copy.

Is this legal advice?

No. This is general information. Talk to an employment attorney about your state and city.