An employee logs into their work portal, only to find their title has changed and their responsibilities have been significantly reduced. This unexpected and negative shift is an example of adverse action. In the workplace, adverse action refers to a negative decision made by an employer that affects the terms and conditions of someone’s employment. It is a broad term that covers a range of unfavorable outcomes an employee might face.
Defining Adverse Action in the Workplace
Adverse action is any step taken by an employer that results in a material and negative change to an employee’s job. The term “material” is important; the action must be significant enough to matter, not just a minor or trivial inconvenience. For instance, being excluded from an optional team lunch would not qualify, but having your pay cut or being moved to a less desirable role would.
An action can be considered “adverse” even if it is not illegal on its own. The legality of that action depends entirely on the motivation behind it.
Common Examples of Adverse Action
Firing or Termination
The most definitive example of adverse action is the dismissal of an employee. This involves ending the employment relationship, which has a clear and substantial negative impact. This action directly affects an employee’s livelihood and professional standing.
Demotion or Transfer
A demotion involves reducing an employee’s rank, responsibilities, or seniority. A transfer to a less desirable position, even without a change in title or pay, can also be an adverse action. This could mean a move to a location with a much longer commute, a shift with less favorable hours, or an assignment with significantly diminished duties.
Reduction in Pay or Hours
Any negative change to an employee’s compensation is a form of adverse action. This includes a direct pay cut, a reduction in scheduled work hours that leads to lower earnings, or the elimination of benefits like health insurance or retirement contributions. Such actions materially affect an employee’s financial stability.
Failure to Hire or Promote
Adverse action is not limited to current employees. Refusing to hire a qualified applicant for a job opening can constitute an adverse action. For existing employees, being passed over for a promotion, especially if given to a less-qualified individual, can also be considered an adverse action.
Negative Performance Reviews
While a single, fair critique of performance is normal, a pattern of unwarranted negative performance reviews or disciplinary actions can be a form of adverse action. If these reviews are used as a pretext to deny raises, bonuses, or promotions, or to build a case for termination, they become materially adverse.
Rescinding a Job Offer
Extending a job offer and then withdrawing it is another clear example of adverse action. The candidate may have already turned down other opportunities or made arrangements based on the offer. Rescinding it creates a significant negative situation for the prospective employee.
Unfavorable Changes in Job Duties
Altering an employee’s position to make it less favorable is also a form of adverse action. This could involve removing core responsibilities, assigning menial tasks inconsistent with the role, or creating a work environment so difficult that it could be seen as an attempt to force the employee to quit.
When Adverse Action Becomes Unlawful
An adverse action by itself is not necessarily illegal, as employers retain the right to make business decisions. The action becomes unlawful when the motivation behind it is discriminatory or retaliatory. The most common reason an adverse action is deemed unlawful is discrimination. Federal laws like Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act (ADEA), and the Americans with Disabilities Act (ADA) prohibit employers from taking adverse actions based on an individual’s protected characteristics. These traits include race, color, religion, sex, national origin, age (40 or older), and disability.
The other primary illegal motivation is retaliation. It is unlawful for an employer to take adverse action against an employee for engaging in a “protected activity.” Protected activities are actions an employee has a legal right to take without fear of punishment, such as filing a discrimination complaint, participating in an investigation, or whistleblowing. For example, if an employee is fired a week after reporting safety violations, it could be considered unlawful retaliation.
Adverse Action and Background Checks
The Fair Credit Reporting Act (FCRA) has specific rules for adverse action related to background checks conducted by a third-party company. If an employer intends to take an adverse action based on information in that report, they cannot simply rescind the job offer or terminate the employee. The FCRA mandates a specific two-step notification process.
First, the employer must provide the applicant or employee with a “pre-adverse action notice.” This notice must include a copy of the background check report and a document titled “A Summary of Your Rights Under the Fair Credit Reporting Act.” This step gives the individual an opportunity to review the information and dispute any inaccuracies.
After a reasonable period, often at least five business days, the employer can take the final adverse action. They must then provide a “final adverse action notice.” This second notice must inform the individual of the action taken, provide the contact information for the background check company, state that the company did not make the hiring decision, and notify the person of their right to dispute the report’s accuracy and request an additional free report.
What to Do If You Experience Unlawful Adverse Action
If you believe you have been subjected to an adverse action for an unlawful reason, such as discrimination or retaliation, there are practical steps you can take. The first action is to document everything. Keep a detailed, private log of all relevant incidents, including dates, times, locations, and the names of any witnesses. Preserve copies of emails, performance reviews, and any other communications related to the adverse action.
Next, consult your employee handbook or company intranet for information on internal grievance or complaint procedures. Following these procedures can sometimes lead to a resolution. It also demonstrates that you made a good-faith effort to address the issue within the company’s framework.
You may also consider reporting the issue to your manager or the human resources department. This formalizes your complaint within the company and creates an official record. HR is typically responsible for investigating such claims.
If internal channels are not viable or do not resolve the issue, you can file a formal complaint with a government agency. The U.S. Equal Employment Opportunity Commission (EEOC) is the federal agency responsible for enforcing these laws. Many states also have their own fair employment agencies, and it is important to be aware of the strict filing deadlines.