Adverse Action Law and Legal Definition

An adverse action is an official personnel action, usually taken for disciplinary reasons, which adversely affects an employee and may include such punishments as a suspension for a defined period, reduction in grade or status, or removal. For most federal employees, statutes provide for an appeal system and the employee may choose to use the statutory procedure or, if coverage under the contract permits, the negotiated procedure, but not both.

Adverse action is used in other contexts, such as in notice of adverse actions against consumer credit reporting required under the federal Fair Credit Reporting Act (FCRA). The FCRA applies to "consumers." The act requires the creditor to give a notice to "any consumer" with respect to whom adverse action is taken. Every consumer whose report is used has specific FCRA rights. One of those rights is to be notified if information in that report was used to deny the application.