Pre-Adverse Action vs. Adverse Action: An Employer Overview

Two stages with different purposes

When an employer may take adverse employment action based in whole or in part on a consumer report, the Fair Credit Reporting Act generally creates a two-stage notice process. The first stage occurs before the decision is final; the second occurs after a final adverse decision.

The sequence matters because the pre-adverse stage is intended to give the applicant or employee an opportunity to review the report and address inaccurate or incomplete information.

What pre-adverse action generally involves

Official FTC guidance explains that before the final adverse action, the employer generally provides a notice that includes a copy of the consumer report relied on and the applicable Summary of Your Rights Under the Fair Credit Reporting Act.

Employers should use current forms and establish a reasonable, documented review period. State or local requirements may add timing, individualized-assessment, or notice obligations.

What happens during the review period

• The individual reviews the report and may identify information that does not belong to them.
• The individual may dispute accuracy or completeness with the consumer reporting agency.
• The employer should avoid treating a preliminary decision as final while the process is open.
• The employer may need to evaluate updated information or a corrected report.

What final adverse action generally involves

If the employer proceeds after the pre-adverse process, the final notice generally communicates that the decision was based in whole or in part on report information and includes required report-provider and dispute information.

The final notice should not be issued at the same moment as the pre-adverse notice. Combining the stages can undermine the opportunity to review and respond.

Build the steps into the hiring workflow

1. 1

   Document the trigger

   Define when report information may contribute to a preliminary adverse decision.

2. 2

   Generate current materials

   Use current notices, report copies, and required rights documents.

3. 3

   Track timing and disputes

   Pause final action while the applicable review process is open.

4. 4

   Record the final outcome

   Send the appropriate final notice if the adverse decision is made.

Review the broader FCRA background-check process and obtain qualified legal guidance for forms, timing, and jurisdiction-specific rules.