We previously reported that on June 9, 2015, six federal agencies (“Agencies”) subject to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Act”) issued much-anticipated joint final standards (“Final Standards”) in accordance with Section 342 of the Act for assessing the diversity policies and practices of the entities that they regulate (“Covered Entities”). See our earlier client advisory for an overview of the Final Standards which are divided into five general categories: (i) organizational commitment to diversity and inclusion, (ii) workforce profile and employment practices, (iii) procurement and business practices (or supplier diversity), (iv) practices to promote transparency of organizational diversity and inclusion, and (v) entities’ self-assessment.
The Final Standards were published in the Federal Register and became effective on June 10, 2015. It has now been over a year since the issuance and publication of the joint final standards with little further guidance provided to employers.
Just last month, however, a Frequently Asked Questions (“FAQs”) on the Final Standards was issued by the Board of Governors Reserve System, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency. In the FAQs, the agencies set forth several key points:
- Assessments of regulated entities should be self-assessments.
- It is recommended that self-assessments cover the standards set forth in the Final Standards but can include additional issues as well.
- Self-assessments should be conducted on an annual basis.
- Information concerning a regulated entity’s self-assessment should be voluntarily provided to the Director of the Office of Women and Minority Inclusion of the entity’s primary federal regulator within 90 days of the close of the calendar year.
- Information concerning a regulated entity’s diversity and inclusion efforts should be published on its website or otherwise communicated.
- In terms of defining “diversity”, there is no preclusion in an entity defining it more broadly than including women and minorities.
- Regulated entities’ self-assessments of their diversity policies and practices, and the provision of such assessments to their respective regulators, are voluntary.
The agencies further clarify that an entity’s diversity policies and practices will not be assessed by its primary federal regulator and examinations by regulators will not consider compliance with the Final Standards. Rather, the agencies are relying on the regulated entities to engage in self-assessment. In addition, the agencies state that they will be using the information provided through self-assessments to monitor progress and trends, identify best practices and possibly highlight certain practices or successes anonymously.
While compliance with the Final Standards is not mandatory, many firms are interested in improving their diversity and inclusion efforts and can look to the Final Standards for ways to engage in self-analysis and development. In this vein, employers should consider in what ways they are currently implementing actions envisioned by the Final Standards and what other actions may be taken. Even this exercise can be beneficial. Many employers that go through this analysis identify shortcomings and develop goals and plans for improvement, all of which can go a long way to ultimately increasing diversity.