Adverse action is the process an employer must follow before and after making a negative employment decision based on a background check. This is the definition, the two required notices, the waiting period between them, and the jurisdictions that require more.
Short answer
Adverse action is the two-step notice process an employer must follow under the FCRA before rejecting a candidate because of a background report.
Send a pre-adverse action notice with a copy of the report and the CFPB Summary of Rights, wait a reasonable period — five business days is the widely used standard — so the candidate can dispute or explain, then send a final adverse action notice naming the consumer reporting agency and the candidate's right to a free file copy and to dispute its accuracy. 15 U.S.C. §1681b(b)(3).
Adverse action, in one sentence
Adverse action is any decision that denies or negatively changes employment — a declined application, a rescinded offer, a denied promotion, a reassignment, or a termination — made in whole or in part because of information in a background check, and it requires two written notices with a waiting period in between.
The Fair Credit Reporting Act defines adverse action broadly. In the employment context it covers any decision that is unfavorable to the interests of a current or prospective employee: refusing to hire, withdrawing a conditional offer, denying a promotion or transfer, reassigning to a lesser role, and terminating. The trigger is not the severity of the decision — it is whether a consumer report contributed to it.
Two details are missed most often. First, the report only has to be a partial basis for the decision. Second, the obligation applies to existing employees, not just applicants — an annual driving-record review that leads to a route reassignment is adverse action.
The two required notices
1. Pre-adverse action notice
Sent before the decision is final. It must include a copy of the report the decision may rely on and a copy of A Summary of Your Rights Under the Fair Credit Reporting Act. Its purpose is to give the candidate a real opportunity to correct an error — a mismatched identity, a sealed or expunged case, a charge reported as a conviction — before the outcome is locked in.
2. Final adverse action notice
Sent after the waiting period, once the decision is made. Under §1681m(a) it must state that adverse action was taken, identify the consumer reporting agency by name, address, and toll-free number, state that the agency did not make the decision and cannot explain the reasons for it, and describe the candidate's right to a free file disclosure within 60 days and the right to dispute the information.
Both letters are available as downloadable drafts on the Sample forms page, and can be generated for a specific candidate and jurisdiction with the Adverse action letter generator.
How long to wait between the two notices
The FCRA says "a reasonable period of time" and never quantifies it. In practice, five business days is the common floor and seven to ten business days is the safer norm. Several jurisdictions override the default:
New York City Fair Chance Act — a minimum holding period after the individualized-assessment analysis is shared with the candidate.
Los Angeles Fair Chance Initiative — an extended response window plus written notice of the specific conviction at issue.
San Francisco Fair Chance Ordinance — an extended response window plus documentation of the individualized assessment. Amendments effective August 10, 2026 (Ordinance No. 128-26) also require the employer to confirm receipt of the candidate's response within 14 days, issue the final decision within 30 days of receiving it, and disregard out-of-state convictions for conduct that is lawful in California.
California and Washington — statewide fair-chance rules that add their own written notice content on top of the federal sequence.
Fair chance steps, forms and timing by jurisdiction
These six places require written fair chance documentation before a final decision based on criminal history. Each card lists the steps in order, the official form or sample, the minimum timing, and the primary sources. These steps add to the federal two-notice process above.
New York City, NY
Employers covered by the NYC Human Rights Law, for applicants and current employees in New York City.
Documentation: Fair Chance Employment Notice with the written Fair Chance Employment Analysis
Steps
After the conditional offer, run the background check and ask the applicant for any information relevant to the Article 23-A factors (for convictions) or the Fair Chance factors (for pending cases).
Complete the written Fair Chance Employment Analysis, with specific facts for each factor and the reason for the outcome.
Give the applicant a complete copy of everything relied on (the background report, printouts, public records) and the Fair Chance Employment Notice, on the city's form or a comparable notice.
Hold the position open while the applicant responds, and consider anything they send.
If the decision stands, tell the applicant the final decision in writing.
Timing
Hold the job open at least 5 business days from the applicant's receipt of both the background information and the analysis.
The employer must consider a reasonable request for more time to gather information.
Employers with ten or more employees, for people who work at least two hours a week on average in the City of Los Angeles.
Documentation: Individual Assessment and Reassessment Form
Steps
Before any adverse action, complete a written assessment linking specific parts of the criminal history to risks in the job's duties, considering at least the EEOC factors.
Send written notice of the proposed adverse action with a copy of the written assessment and any other information supporting the decision.
Do not take the adverse action or fill the job while the applicant has time to respond.
If the applicant sends information, consider it and complete a written reassessment.
If the decision stands, notify the applicant and include a copy of the written reassessment.
Keep applications, assessments and reassessments for three years.
Timing
Wait at least 5 business days after the applicant is told of the proposed adverse action.
Keep records for 3 years from receipt of the application.
Employers with five or more employees, for people who work at least two hours a week on average in unincorporated Los Angeles County. In effect since September 3, 2024.
Documentation: Initial and Second Individualized Assessments, Preliminary and Final Notices of Adverse Action
Steps
Complete a written Initial Individualized Assessment of whether the criminal history has a direct, adverse and negative bearing on the job's duties.
Send the Preliminary Notice of Adverse Action with the assessment and the background report, explaining how and by when the applicant can respond.
Hold the job open while the applicant responds in writing, asks for more time, or asks to respond orally.
Review the response and complete a written Second Individualized Assessment.
If the decision stands, send the Final Notice of Adverse Action.
Timing
At least 5 business days to respond to the Preliminary Notice.
10 additional business days if the applicant asks for more time in writing within those 5 days.
Second assessment and final decision no later than 30 calendar days after a timely response.
Mailed notices without delivery confirmation count as received 5 calendar days after mailing to a California address.
The applicant may ask in writing, within the 5 business days, for 10 more business days to gather information, or ask to respond orally; an oral meeting takes place within 10 business days of the request.
Documentation: Individualized assessment, written preliminary notice and written final notice
Steps
Make an individualized assessment of whether the conviction history has a direct and adverse relationship with the job's specific duties.
Send a written preliminary decision notice naming the disqualifying conviction(s), with a copy of the conviction history report and an explanation of the right to respond and the deadline.
Consider any response before deciding.
If the decision stands, send a written final decision notice that covers any internal challenge process and the right to file a complaint with the Civil Rights Department.
Timing
At least 5 business days to respond to the preliminary notice.
At least 5 additional business days if the applicant disputes the report's accuracy in writing within the first 5.
If, within the 5 business days, the applicant says in writing they dispute the report and are getting evidence, they get at least 5 more business days.
Private employers with five or more employees located or doing business in unincorporated San Diego County. In effect since October 10, 2024; California's statewide rules also apply.
Documentation: Written individualized assessment, reassessment, preliminary and final notices
Steps
Complete a written individualized assessment of whether the criminal history has a direct and adverse relationship with the job's specific duties.
Send a written preliminary notice with the disqualifying conviction(s), a copy of the background report or other source, the right to complain to the county Office of Labor Standards and Enforcement and to the state Civil Rights Department, and how and by when to respond.
Consider the response and complete a reassessment.
If the decision stands, send a written final decision notice.
Keep records related to the applicant's criminal history review.
Timing
At least 5 business days to respond to the preliminary notice.
At least 5 additional business days if the applicant disputes the report's accuracy.
At least 5 more business days if the applicant disputes the report's accuracy, as under the state law.
EEOC guidance discourages blanket disqualification rules and recommends weighing three factors: the nature and gravity of the offense, the time that has passed since the offense or completion of the sentence, and the relationship of the conduct to the specific duties of the job. Where local fair-chance law applies, that analysis usually has to be written down and shared with the candidate before a final decision.
Sending one combined letter instead of two separate notices.
Sending the pre-adverse notice after the requisition has already been filled — the decision is final in fact, even if the paperwork says otherwise.
Omitting the Summary of Rights, or attaching an outdated version of it.
Treating an arrest without a disposition as a disqualifying record.
Applying a five-day wait in a city that requires longer.
No record of what was sent, when, and to which address.
Frequently asked questions
What does adverse action mean?
Adverse action means a decision that denies or negatively changes employment — declining an applicant, rescinding an offer, refusing a promotion, reassigning, or terminating — based in whole or in part on information in a consumer report. The term comes from the Fair Credit Reporting Act, 15 U.S.C. §1681a(k).
What is a pre-adverse action notice?
A pre-adverse action notice is the first of two required letters. It tells the candidate an employment decision may be made based on the report, and it must include a copy of the report and the CFPB's A Summary of Your Rights Under the Fair Credit Reporting Act. It is sent before the decision is final, so the candidate has a chance to dispute or explain.
How long do you have to wait between the pre-adverse and final adverse action notice?
The FCRA requires a 'reasonable period' rather than a fixed number. Five business days is the widely used floor, and many employers use seven to ten. Several jurisdictions set longer minimums — Los Angeles and San Francisco fair-chance ordinances, and New York City's Fair Chance Act, all require more time.
What must the final adverse action notice include?
Under 15 U.S.C. §1681m(a): notice that adverse action was taken, the name, address, and toll-free number of the consumer reporting agency, a statement that the agency did not make the decision and cannot explain it, notice of the right to a free file disclosure within 60 days, and notice of the right to dispute the accuracy or completeness of the information.
Does adverse action apply to current employees?
Yes. Any report-based decision that negatively affects an existing employee — termination, demotion, reassignment, denial of promotion — is adverse action and triggers the same two-step notice sequence.
What is an individualized assessment?
An individualized assessment weighs the nature and gravity of the offense, the time elapsed, and the relationship of the conduct to the specific job duties, and gives the candidate a chance to respond. EEOC guidance recommends it, and several state and municipal fair-chance laws require it in writing before a final decision.
What happens if an employer skips the pre-adverse action step?
Skipping it is one of the most commonly litigated FCRA violations. Statutory damages run from $100 to $1,000 per violation for willful noncompliance, plus actual damages, punitive damages, and attorney's fees — and class actions aggregate those figures across every affected applicant.
