adverseaction

Adverse action is a term used in law to describe a negative decision or action taken by an organization that harms an individual's employment status, opportunities, or other rights. While the concept appears in different domains, the common thread is that the action results in an unfavorable outcome for the person involved, and it may be subject to legal protections and disclosure requirements.

In employment law, adverse action refers to actions that negatively affect terms and conditions of employment. Examples include dismissal, demotion, suspension, denial of promotion, disciplinary measures, or unfavorable reassignment. Prohibitions typically apply when the action is based on a protected characteristic (such as race, color, religion, sex, national origin, age, disability, or genetic information) or in retaliation for engaging in protected activity (like filing a complaint or participating in an investigation). Employers must have legitimate, non-discriminatory reasons for such actions and document the bases for decisions.

In consumer finance and housing, adverse action denotes a denial or unfavorable change in terms of credit, insurance, or housing eligibility based on information from a consumer reporting agency or other data sources. When an adverse action occurs, the entity generally must provide an adverse action notice, including the name and contact details of the reporting agency, a statement that the report was used, and information about the consumer’s right to obtain a free copy and dispute inaccuracies. Additional pre-action requirements may apply in certain jurisdictions or programs.