Hiring complianceRead at source, 24 September 2026
Adverse Action Notice: The Pre-Adverse and Final Notices Employers Must Send After a Background Check
This is for any employer that uses a background check from a screening company. An adverse action notice is the letter you send after you decide not to hire, promote or keep someone because of something in their background check. Under the Fair Credit Reporting Act it is the second of two required steps. First, before you decide, send a pre-adverse action notice with a copy of the report and the federal “Summary of Your Rights Under the Fair Credit Reporting Act.” Then give the person time to respond. Only after that do you send the adverse action notice, naming the screening company, saying it did not make the decision, and explaining the right to a free copy within 60 days and to dispute the report.
What an adverse action notice is
The Fair Credit Reporting Act (FCRA) defines “adverse action” in employment as “a denial of employment or any other decision for employment purposes that adversely affects any current or prospective employee” (15 U.S.C. 1681a(k)). The FTC lists examples: rejecting a job application, reassigning or terminating an employee, or denying a promotion.
The notice rules apply when that decision is “based in whole or in part” on a consumer report. In hiring, a consumer report is typically the criminal, driving, employment or education check you buy from a background screening company. “In part” matters: if the report was one reason among several, the rules still apply.
The notices protect applicants from errors. Background reports mix up people with similar names, list records that should have been sealed, or show a case without its final outcome. The pre-adverse step gives the person a chance to catch that before they lose the job.
The FCRA background check process, start to finish
The adverse action notice is the last of four steps. Getting the earlier ones wrong is just as costly.
| Step | When | What the law requires |
|---|---|---|
| 1. Disclosure | Before you order the report | A clear and conspicuous written disclosure, “in a document that consists solely of the disclosure,” that a consumer report may be obtained for employment purposes |
| 2. Authorization | Before you order the report | The applicant’s written authorization, which may be on the disclosure document |
| 3. Pre-adverse action notice | Before you take adverse action | A copy of the report and the written summary of FCRA rights prescribed by the CFPB |
| 4. Adverse action notice | When you take adverse action | Notice of the action; the screening company’s name, address and phone number; a statement that it did not make the decision; notice of the right to a free report within 60 days and to dispute |
The FTC also says that when you are done with a report you must securely dispose of it and anything you gathered from it, for example by shredding paper and wiping electronic files so they cannot be reconstructed.
Pre-adverse action notice: what it must include
The rule is 15 U.S.C. 1681b(b)(3)(A): “before taking any adverse action based in whole or in part on the report, the person intending to take such adverse action shall provide to the consumer to whom the report relates (i) a copy of the report; and (ii) a description in writing of the rights of the consumer under this subchapter.”
So a pre-adverse action notice has two required attachments:
- A copy of the report you relied on. The whole report, not a summary of the problem item.
- “A Summary of Your Rights Under the Fair Credit Reporting Act.” The current model is in Appendix K to 12 CFR part 1022. Your screening company usually provides it with the report. Use the version it gives you or the one on the CFPB site, not an old copy saved years ago.
The law does not require the letter to state your reasons, but saying which item concerns you makes it easier for the person to respond usefully. Tell them how to reach you and by what date.
How long to wait after the pre-adverse action notice
The FCRA does not set a number of days. The FTC explains the purpose: “Giving the person the notice in advance gives the person the opportunity to review the report and tell you if it is correct.” Wait long enough for that to happen, set one period in your written procedure, and apply it to everyone. A state or city law may set a minimum; California’s is covered below.
If the person disputes the report
Listen, and look at what they send. If they say the record belongs to someone else or has been dismissed, they can dispute it with the screening company, which has to investigate. You can hold the decision while that happens. If the decision rests on something the person has shown to be wrong, making the final decision anyway is the exact outcome the notice exists to prevent.
The pre-adverse action notice is not a formality before a decision already made. It is the one point in the process where the applicant can tell you the report is wrong.
Adverse action notice: what it must include
Once you make the final decision, 15 U.S.C. 1681m(a) requires you to give the person, orally, in writing or electronically:
- Notice of the adverse action.
- The name, address and telephone number of the consumer reporting agency that furnished the report, including a toll-free number if it is a nationwide agency.
- A statement that the agency “did not make the decision to take the adverse action and is unable to provide the consumer the specific reasons why the adverse action was taken.”
- Notice of the person’s right to get a free copy of their report from that agency, including “an indication of the 60-day period” for asking.
- Notice of the right to dispute the accuracy or completeness of the report with the agency.
If you used a numerical credit score in the decision, 1681m(a)(2) requires you to disclose it and related details. If you pull credit reports for finance or cash-handling roles, ask your screening company whether a score is included.
Oral notice is allowed by the statute, but a written or emailed letter gives you a record. Keep a copy with the date sent.
Pre-adverse action notice template
A plain-language starting point. Replace the bracketed parts and have counsel check it against your state’s rules.
Subject: Your background check with [Company name]
Dear [Applicant name],
Thank you for applying for the [job title] position. As part of our hiring process, we obtained a background report about you from [Screening company name]. Based on information in that report, we are considering not moving forward with your application. We have not made a final decision.
A copy of the report and a document titled “A Summary of Your Rights Under the Fair Credit Reporting Act” are attached. Please review the report. If any information in it is wrong or incomplete, or if there is anything you would like us to consider, contact [name] at [phone/email] by [date]. You may also dispute the report directly with [Screening company name] at [phone].
Sincerely, [Name, title]
Adverse action notice template
Subject: Your application with [Company name]
Dear [Applicant name],
We previously sent you a copy of your background report. After reviewing it and any information you provided, we have decided not to offer you the [job title] position. This decision was based in whole or in part on information in a consumer report from:
[Screening company name], [full address], [phone number, including toll-free number if applicable].
[Screening company name] did not make this decision and cannot tell you the specific reasons for it. You have the right to a free copy of your report from [Screening company name] if you ask within 60 days. You also have the right to dispute with [Screening company name] the accuracy or completeness of any information in the report.
Sincerely, [Name, title]
The trucking exception: drivers who apply online or by phone
The FCRA has a shortcut for jobs regulated by the Secretary of Transportation under 49 U.S.C. 31502, or by a state transportation safety agency, when the only contact with the applicant so far has been “by mail, telephone, computer, or other similar means” (1681b(b)(3)(B) and (C)). In that case, instead of the two notices, you must within three business days of taking the adverse action give an oral, written or electronic notice that:
- adverse action was taken based in whole or in part on a consumer report;
- gives the agency’s name, address and telephone number;
- says the agency did not make the decision and cannot give the reasons; and
- says the person may, with proper identification, request a free copy of a report and dispute its accuracy or completeness.
If the driver then asks you for a copy, you must send it with the summary of rights within three business days. Once a driver has come in person, for example to an orientation or road test, the standard two-step process applies to any report you order after that. FMCSA’s PSP form uses this same structure; see our PSP report page.
State and local fair chance laws add steps
Many states and cities regulate when you may ask about criminal history and what you must do before rejecting someone because of it. Those rules sit on top of the FCRA. California is a detailed example. Under Government Code 12952, employers with five or more employees that intend to deny a job because of conviction history must:
- Make an individualized assessment of whether the conviction has “a direct and adverse relationship with the specific duties of the job,” considering the nature and gravity of the offense, the time since the offense and completion of the sentence, and the nature of the job.
- Send a written preliminary decision naming the disqualifying conviction or convictions, with a copy of the conviction history report, and explaining the right to respond with evidence that the report is wrong, evidence of rehabilitation or mitigating circumstances, or both, and the deadline.
- Give at least five business days to respond, and five more if the applicant disputes the report in writing and is taking steps to get evidence.
- Consider the response, then send a written final decision explaining any procedure to challenge it and the right to file a complaint with the California Civil Rights Department.
Where state rules like these apply, one letter can often meet both laws, as long as it contains everything each law requires. Our ban-the-box laws by state page covers when you may ask about records in each state.
What happens if you skip the notices
The FCRA lets applicants sue. For a willful violation, 1681n provides actual damages or statutory damages of “not less than $100 and not more than $1,000,” plus punitive damages the court allows and attorney’s fees. For a negligent violation, 1681o provides actual damages and attorney’s fees. Claims are per applicant, so a form letter that is wrong for every hire is wrong many times over.
Common mistakes
- Sending one letter instead of two. A single rejection letter with the report attached is not a pre-adverse notice, because the decision is already made.
- Leaving out the summary of rights. The pre-adverse notice needs it every time.
- Treating a “soft” decision as not adverse. Withdrawing an offer, moving someone to a lower-paid role, or quietly letting an application go cold because of the report are all adverse actions.
- Forgetting current employees. The same rules apply when a report affects a promotion, transfer or termination.
- Using an old rights form. Get the current one from your screening company or the CFPB.
- Burying the disclosure in the application. Step 1 must be a stand-alone document.
- Not writing down your waiting period. An inconsistent gap between notices is harder to defend.
Every applicant who drops out after a background check has to be replaced at the top of the funnel. In Boostpoint’s 2026 benchmark of 891 managed Meta campaigns, the median campaign cost $13.88 per applicant, and role-family medians ran from $2.71 for customer service to $74.62 for therapy roles. Cost per applicant is not cost per hire. Handling the adverse action steps properly keeps the applicants you do want, and the ones who clear up an error, from walking away.
Related: what a background check covers, healthcare background checks, reference checks, conditional job offers and hiring compliance.
Frequently asked questions
What is an adverse action notice?
It is the notice the Fair Credit Reporting Act requires when you reject, fire, demote or deny a promotion to someone based in whole or in part on a background check from a screening company. It names the screening company, says the company did not make the decision, and explains the right to a free copy of the report within 60 days and to dispute it.
What is a pre-adverse action notice?
It is the notice you must send before you take adverse action based on a background check. Under 15 U.S.C. 1681b(b)(3), it must include a copy of the report and a written summary of the person's rights under the FCRA. It gives the applicant a chance to point out errors before you make a final decision.
How long do you have to wait between the pre-adverse and adverse action notice?
The FCRA does not set a number of days. The FTC says the advance notice gives the person the opportunity to review the report and tell you if it is correct, so wait long enough for that. Set one period in writing and use it for everyone. California requires at least five business days for conviction history.
What must be included in an adverse action notice?
Under 15 U.S.C. 1681m(a): notice of the adverse action; the screening company's name, address and phone number; a statement that the company did not make the decision and cannot give the reasons; and notice of the right to a free copy of the report within 60 days and to dispute its accuracy or completeness.
Do I need to send an adverse action notice if the background check was only part of the reason?
Yes. The FCRA rules apply when the decision is based in whole or in part on the consumer report. If the background check contributed to the decision at all, send the pre-adverse action notice first, wait, and then send the adverse action notice, even if other factors such as the interview also played a role.
Does an adverse action notice have to be in writing?
The federal adverse action notice may be oral, written or electronic under 15 U.S.C. 1681m(a). The pre-adverse notice must include the report and a written summary of rights. In practice, send both in writing or by email so you have a dated record. Some state laws, such as California's for conviction history, require written notices.
Do adverse action rules apply to current employees?
Yes. The FCRA defines adverse action to include any employment decision that adversely affects a current or prospective employee. The FTC lists reassigning or terminating an employee and denying a promotion as examples. If a background report you ordered on a current employee drives that decision, the same two notices apply.
Is there a different process for truck drivers?
Yes, for DOT-regulated positions when the applicant's only contact has been by mail, phone, computer or similar means. Instead of two notices, you give one notice within three business days after taking adverse action, with the screening company's details and the applicant's rights. If they request a copy, you send it within three business days.
What are the penalties for not sending adverse action notices?
Applicants can sue. For willful violations, the FCRA allows actual damages or statutory damages of $100 to $1,000 per person, plus punitive damages and attorney's fees under 15 U.S.C. 1681n. For negligent violations, actual damages and attorney's fees are available under 1681o. State laws can add their own penalties.
Losing good applicants after the background check?
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Book a DemoSources: 15 U.S.C. 1681a(k), 1681b(b), 1681m(a), 1681n and 1681o; FTC, Using Consumer Reports: What Employers Need to Know; CFPB, Appendix K to 12 CFR part 1022; California Government Code 12952; Boostpoint 2026 Social Job Advertising Benchmark. General information, not legal advice. Read at source 24 September 2026.