Should You Hire the Ex-Con?

August 6, 2012 at 7:26 am Leave a comment

What should you do when you find out that the person applying for a customer service representative job or other position at your credit union has been convicted of a crime?  The answer is not as clear cut as you might think.  This is one of the emerging points of emphasis in the HR world and it has unique implications for credit unions. 

In April, the EEOC came out with a guidance emphasizing the legal protections given to people convicted of crimes who apply for a job.  There are two federal prohibitions to keep in mind here.  On the one hand, NCUA statute and guidance authorizes NCUA to fine credit unions up to $1 million (that’s right, $1 million) for each day in violation and/or up to 5 years in prison for hiring persons convicted within the last 10 years of crimes involving fraud or dishonesty, except where such crimes were de minimis.  You should take the time to read this guidance.  There are very specific criteria for what constitutes a de minimis crime.  The only way you can hire someone or continue someone in your employ who has been convicted of a disqualifying crime is with the authorization of the NCUA. 

You might conclude that given the potential pitfalls, it just isn’t worth it to hire someone who has been convicted of a crime.  This is where the EEOC guidance comes into play.  Simply put, a policy or practice of categorically refusing to hire someone who has been convicted of a crime may violate federal law because of the impact it has on hiring minorities (don’t shoot the messenger on this one, but that is the basic idea).  Consider the following example, taken verbatim, provided by the EEOC and its guidance:

Example 9: Exclusion Is Not Job Related and Consistent with Business Necessity. Your Bank has a rule prohibiting anyone with convictions for any type of financial or fraud-related crimes within the last twenty years from working in positions with access to customer financial information, even though the federal ban is ten years for individuals who are convicted of any criminal offense involving dishonesty, breach of trust, or money laundering from serving in such positions.

Sam, who is Latino, applies to Your Bank to work as a customer service representative. A background check reveals that Sam was convicted of a misdemeanor for misrepresenting his income on a loan application fifteen years earlier. Your Bank therefore rejects Sam, and he files a Title VII charge with the EEOC, alleging that the Bank’s policy has a disparate impact based on national origin and is not job related and consistent with business necessity. Your Bank asserts that its policy does not cause a disparate impact and that, even if it does, it is job related for the position in question because customer service representatives have regular access to financial information and depositors must have “100% confidence” that their funds are safe. However, Your Bank does not offer evidence showing that there is an elevated likelihood of committing financial crimes for someone who has been crime-free for more than ten years. After establishing that the Bank’s policy has a disparate impact based on national origin, the EEOC finds that the policy is not job related for the position in question and consistent with business necessity. The Bank’s justification for adding ten years to the federally mandated exclusion is insufficient because it is only a generalized concern about security, without proof.

 Whether you agree or disagree with the logic of the EOC’s analysis (which, in my ever-so-humble-opinion, is based on extremely shaky legal ground I don’t have time to rant about now), you should avoid policies that categorically refuse to consider employees who have been convicted of crimes, even though you know your policy is based on a desire to uphold high ethical standards for persons responsible for handling other people’s money.

Entry filed under: Compliance, Regulatory. Tags: , , , , , , .

The most important position at your credit union NCUA Provides Guidance on Guidance

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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