Illinois recently joined the growing list of jurisdictions that have specific requirements for employers that take adverse action against applicants and employees. Not only do employers have obligations under the Federal Fair Credit Reporting Act (FCRA), they may also have additional responsibilities under more localized laws depending on where their candidates reside and work, and
sometimes even based on the employer’s location.
Before diving into the new Illinois requirements, we will first discuss adverse action in general. In relation to employment, the FCRA defines “adverse action” as “a denial of employment or any other decision for employment purposes
that adversely affects any current or prospective employee.” It is important to note that not only do adverse action requirements protect applicants for employment, they also apply to existing employees. What makes up an adverse action can also be broad and not limited to termination or failure to hire. For example, deciding not to promote an employee based on information in his or her consumer report is considered an adverse action. FCRA § 604 outlines an employer’s responsibilities regarding adverse action. If the consumer report is being used for employment purposes, before taking adverse action based on the report, in whole or in part, the employer must provide specific documentation to the consumer. The employer must provide a pre-adverse action notice to the consumer as well as a copy of the consumer report and a copy of the “A Summary of Your Rights Under the Fair Credit Reporting Act.”
The purpose of the pre-adverse action letter is to inform the applicant or employee that the employer is considering taking adverse action against him or her. The applicant or employee should then review the consumer report and dispute any inaccurate or incomplete information if applicable. The employer must allow a reasonable time period for the individual to review the report and should consider any information the individual provides, such as extenuating circumstances surrounding a conviction. While the FCRA does not list a specific time period, industry-standard recommends at least five days. If the employer decides to take adverse action after the waiting period has ended, it must provide a written adverse action letter that explains its decision. FCRA § 604 outlines the required contents for an adverse action notice, including that adverse action has been taken based in whole or in part on a consumer report provided by a consumer reporting agency, the contact information for that consumer reporting agency, a statement that the consumer reporting agency did not make the decision to take the adverse action and cannot provide the specific reasons why adverse action was taken, and the consumer’s right, upon providing proper identification, to request a free copy of a report and ability to dispute with the consumer reporting agency the accuracy or completeness of any information in a report.
While the FCRA provides an opportunity for applicants and employees facing adverse action to review and correct any inaccuracies in their reports and open discussions with the employer, some jurisdictions provide more specific requirements for taking adverse action. Illinois joined the others by passing SB 1480, amending the Illinois Human Rights Act related to the use of criminal convictions when making employment decisions. It is now a civil rights violation in Illinois for an employer to use criminal records when making any employment decision unless one of two exceptions applies. The first exception applies where there is a substantial relationship between the criminal offense and the individual’s employment. The second exception deals with unreasonable risk, specifically that the hiring or retention of the individual would cause an unreasonable risk to property or the safety of others.
Under the “substantial relationship” exception, the job position must provide “the opportunity for the same or a similar offense to occur” or involve similar circumstances that existed during the original offense that are likely to reoccur. Employers are required to consider six mitigating circumstances: 1) the length of time since the conviction, 2) the number of convictions on the individual’s record, 3) the nature and severity of the conviction and its relationship to safety and security of others, 4) the facts or circumstances surrounding the conviction, 5) the age of the individual at the time of conviction, and 6) evidence of rehabilitation efforts. The amendment provides for an interactive assessment between the employer and the individual, requiring the employer to provide written notice of its preliminary decision and the basis for its conclusion that the conviction meets one of the two exceptions described above. While the FCRA is silent as to the waiting period between pre-adverse and adverse action letters, Illinois specifically requires at least five business days between notices. The employer must consider any information provided by the individual before it makes a final decision. If the employer decides to take adverse action, it must provide another notice explaining the basis for its decision. The notice must also outline any internal appeal procedures and notify the individual of the right to file a charge of discrimination with the Illinois Department of Human Rights. Because SB 1480 became effective immediately upon signing, impacted employers should review and update their procedures as soon as possible.
Not only can compliance with the FCRA’s adverse action requirements be daunting but adding in applicants and employees who live or work in different jurisdictions can create a compliance nightmare. AccuSource has a tool that can help our clients. Our ordering system allows an employer to email pre-adverse action and adverse action letters directly from the system. It also provides the option of printing the letters in order to mail them. Additionally, AccuSource has built-in jurisdictional tags based on the applicant or employee’s residence, where he or she will be working, and, in some cases, the location of the employer itself. If a jurisdiction requires that an employer provide specific information or notices, it will populate within the letter. For example, the Illinois amendment requires the employer to list the specific conviction(s) that may be or are the basis for the adverse action. For an applicant or employee who lives or will work in Illinois, the system will require the employer to list the specific conviction(s) in a required field before the employer can email or print the pre-adverse action or adverse action letter. If a jurisdiction requires a more complex process for the employer that cannot be completed within the system itself, such as the New York City Fair Chance Act assessment form, the system will provide instruction to the employer (for example, for the employer to print the notice as well as the Fair Chance Act form, and to complete the form before sending the required documents to the individual).
While AccuSource provides sample pre-adverse action and adverse action letters as well as the ability to enter required information directly into the system, ultimately the adverse action process is an employer responsibility. We recommend reviewing your adverse action program with your counsel, especially focusing on the trend of requiring additional processes beyond the standard FCRA adverse action obligations. If you would like AccuSource to provide a complimentary review of your current background screening compliance program, please contact us at email@example.com.