At the Firm’s 33rd Annual Labor and Employment Client Briefing, Lauri Rasnick and John Fullerton spoke on the financial services industry panel about the impact of increased compliance obligations on the employment relationship and developments in the areas of applicant screening, whistleblower complaints, internal investigations, and diversity and inclusion.

Here are a few takeaways from that session:

  • Eleven states have enacted legislation prohibiting the use of consumer credit reports in making employment decisions.  There has been a dramatic increase in state and local “ban the box” legislation prohibiting inquiry into criminal history on employment applications, as 13 states and over 70 cities and counties now have “ban the box” laws.  Most of these statutes, however, provide important exceptions for certain types of financial services industry employers, and / or recognize that financial services employers may have certain criminal background screening obligations imposed by federal law or FINRA
  • The pace of monetary awards by SEC under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) whistleblower program has increased in 2014; the most recent of which, and the largest to date, was an award of over $30 million to a single whistleblower.  As this incentive program receives increasing attention and publicity, it creates tremendous tension for employers seeking to encourage employees to report any alleged compliance issues or violations internally before reporting them to the SEC, without impeding employees from reporting to the SEC if they so choose.
  • In light of the diversity and inclusion assessment standards proposed in October 2013 by the Federal Reserve Board, CFPB, FDIC, NCUA, OCC, and SEC, pursuant to Section 342 of Dodd-Frank, it is important that financial services industry employers promote diversity and inclusion in the workplace.  There is increasing pressure on employers who do not otherwise have an obligation to do so (as the result, for example, of being a federal contractor) to create concrete diversity and inclusion policies, use metrics to track diversity in their workforces, and incorporate diversity considerations into strategic plans for hiring, retention, and promotion.
  • Complaints from employees or third parties have the potential to lead to costly, protracted litigation.  Accordingly, it is critical that internal investigations are handled properly.  Employers conducting internal investigations should: appropriately define the objectives of the investigation at the outset; select the right investigator (considering the investigator’s relationship to the complainant, relationship to decision-makers, ability to assert privilege against disclosure of information obtained, etc.); control communications among witnesses that could taint the investigation or give rise to more complaints; keep an accurate and complete factual record; and prepare a comprehensive investigative report that takes into account the applicable legal considerations.