Background Checks by ClearCompany: Handling Adverse Actions and Candidate Disputes

Juan Burgos

Edited May 08, 2026 22:44

After a candidate completes a background check, the screening report may return with a flag indicating a criminal record match or missing information. Candidates have the right to dispute these findings. To remain compliant, you must follow specific steps when reviewing flagged reports. Depending on your organization's hiring process, flagged results may disqualify a candidate from the position. This guide explains when to send Pre-Adverse and Adverse Action notices, how to manage candidate disputes, compliance timelines, and retention requirements

In this article:
Overview of Pre-Adverse and Adverse Action
Adverse Event Process Summary
Send Pre-Adverse and Adverse Action Letters
Candidate Dispute Process
Common Dispute Types and Where to Direct Candidates
Additional Resources

Overview of Pre-Adverse and Adverse Action

Pre-Adverse Action (Pre-AA): Notifies a candidate that information in their background check may affect an employment decision. It provides the candidate with a copy of their summary of rights and a copy of their report. It gives the candidate time to review or dispute the findings.
Adverse Action: Sent after the required waiting period if you decide not to move forward with the candidate based on the background check results, if a dispute has not been filed, or only sent after a dispute has been completed.

Note:

The system sends reminders, but your team controls whether and when an Adverse Action letter is sent. All forms are available in Background Checks by ClearCompany Forms.

Adverse Event Process Summary

Completed reports with flags can be seen by navigating to the Completed Reports tab of your Background Check Dashboard. A flag icon will be listed in the flag column for the applicant row whose results returned a discrepancy that should be reviewed. (click images to enlarge)

When your company decides not to move forward with a candidate based on background check results, complete the following steps to remain compliant:

Select the candidate’s name from the Completed Reports list.
Scroll to the Search Results section and locate the search(es) with flags.
Review each search marked with a flag. Analyze all flagged searches before making a final decision.
After reviewing the background check and completing your assessment, if you determine that the report disqualifies the candidate from employment, send a Pre-Adverse Action notice using the steps listed below.
The candidate is given a minimum of five business days to respond or to dispute the report. An applicant can follow the steps outlined in Dispute a Background Check Result to complete this process.
- If the candidate does decide to dispute the report, continue with the Candidate Dispute process outlined below.
If the candidate does not dispute or does not respond within the five-day timeframe, initiate the final adverse action letter, alerting the candidate that you will not be moving forward with employment. (Confirming this can be included)

Send Pre-Adverse and Adverse Action Letters

When a report contains a flag, specific notices must be sent before withdrawing employment or rescinding an offer.

In the background check dashboard, navigate to Reports > Completed Reports.
Select the candidate’s name from the Completed Reports list.
On the candidate report, scroll to the Disclosures and Forms section.
From the Select Disclosure or Form dropdown menu, select the letter/form to send to the candidate.
- Pre-Adverse Action: This is the first email used to notify the candidate that their report contains information that may affect employment eligibility.
  - The candidate has five business days to respond or dispute the results. If deciding to dispute, the email provides instructions on how to do so, but you can also send the candidate to Dispute a Background Check Result.
  - If five days have passed with no response, use the appropriate Adverse Action letter (based on their hiring status) to indicate that you will not be moving forward with employment.
To send the selected letter, click Email. Confirm by clicking Yes.

During this step, based on state regulation and compliance, you may be asked to enter the specific reason for employment denial.
You will receive an email reminder in five business days to send out the final Adverse Action Letter if there have not been any disputes received.
Adverse Action (Employment Denial): The employment denial letter is used when no offer has been extended to the applicant, and your company has decided not to move forward with employment based on the background check results.
Adverse Action (Employment Withdrawal of Offer): The employment withdrawal of the offer letter is used if an offer letter has already been extended to the applicant, and your company has decided to withdraw employment based on the background check results.

If you would like to customize the contents of these letters or the email sent to the candidate, please reach out to backgroundchecks@clearcompany.com.
Once the email has been sent, a timestamp of the letter's history will be stored in the Client Notes section. The system logs an audit trail with timestamps showing when letters are sent and viewed.

Candidate Dispute Process

If a candidate disputes the background check results, we recommend pausing hiring decisions for the role until the investigation is complete. Follow the steps below to manage a candidate dispute claim.

After receiving the Pre-Adverse Action letter, the candidate is alerted to the flag on the report and given the option to dispute or respond.
The applicant is advised to fill out the Candidate Dispute Form. A visual example of this form can be viewed below, and a PDF copy of the form is listed in Background Checks by ClearCompany Forms.
ClearCompany receives the dispute request and notifies your organization.
ClearCompany’s research team investigates the claim.
Once the review is complete, both you and the candidate receive the final report.
After receiving the final report, determine whether to move forward with the candidate.

Important: Pre-Adverse Action Cannot Be Canceled

⚠️ Once a Pre-Adverse Action notice is sent, it cannot be canceled, even if the candidate has not yet viewed it.

The notice is retained on file for compliance purposes.
It cannot be removed from the system.
The notice can be hidden from standard view (CRA view), so a record is still available.

If a Pre-Adverse Action was sent in error:

Leave the notice on file and hide it from view if needed.
Add a note in Client Notes instructing the client to disregard the notice.

Common Dispute Types and Where to Direct Candidates

Criminal record disputes

Candidates must complete the dispute form and submit it with a copy of their ID.

Motor vehicle record (MVR) disputes

Candidates dispute directly with the reporting provider.

If records were updated before the report was run, the candidate may dispute.
If records were updated after the report was run, you must order a new MVR at your discretion.

Credit report disputes

Candidates dispute directly with the credit bureau.
Dispute results are confidential to the candidate.

Drug screening disputes

Urine tests: Candidates contact the Medical Review Officer directly.
Oral tests: Retesting requires a new specimen. Translation services are available.

Education verification disputes

Candidates dispute directly with the National Student Clearinghouse. They may then provide documentation to ClearCompany for review and updates.

Customization and Templates

Pre-Adverse and Adverse Action letters are customizable.
State-specific language is applied automatically when required.
Sample forms and templates are available upon request.

If you need help reviewing templates, customizing notices, or confirming compliance, contact the background checks team.

F.A.Q.

Why is the Email option missing when I select a Pre-Adverse or Adverse Action letter?

In most cases, the Email option is unavailable because the letter requires additional information to meet state-specific compliance requirements.

What to do:

Select Edit on the letter.
Review the required fields shown on the screen (for example, Reason for Denial).
Enter the required information and save your changes.
Once all required fields are completed, the Email option will become available so you can send the letter to the candidate.

This commonly occurs for candidates in states with stricter requirements, such as New York.

How long are Pre-Adverse and Adverse Action forms retained?

Forms are searchable in the portal for two years.

Forms are securely stored for seven years to support compliance and audit requirements.

This retention policy applies to all background check disclosures, authorizations, and action notices.

Additional Resources

To review or download a PDF copy of the adverse action and candidate dispute forms, refer to Background Checks by ClearCompany Forms.

Instructions for how the candidate should dispute a background check report can be found in Dispute a Background Check Result, which can be shared directly.