What “Banning the Box” Means For CU Employers

November 5, 2015 at 10:24 am Leave a comment

Yesterday President Obama called on Congress to follow a growing number of states, cities, and private companies that have decided to “ban the box” on job applications. (https://www.whitehouse.gov/the-press-office/2015/11/02/fact-sheet-president-obama-announces-new-actions-promote-rehabilitation )

This and other  criminal justice reforms  might actually happen since  a diverse coalition of libertarians, fiscal conservatives and traditional liberals are in agreement that the country is doing something wrong by incarcerating  approximately a quarter of the world’s prisoners even though it accounts for  5% of its population . In fact, there are more than 2.3 million incarcerated people, including 1.6 million  in state and federal prisons and over 700,000 in local jails and immigration detention.

If my reading of the political tea leaves is correct , the question is not  if but when legislation banning pre-employment conviction questions will impact your credit union?  What concerns me most about these proposals is the amount of complexity, liability and expense they could add to the hiring process for credit unions unless they are drafted responsibly.

For an example of what I’m concerned about I need look no further than the Big Apple which now prohibits pre-employment inquiries  related to criminal convictions until a conditional employment offer  has been extended.  If a subsequent criminal background check reveals a criminal history than the employer must perform an analysis pursuant to state guidelines to determine if this history disqualifies the applicant.  It must then provide him   with a  written explanation of the reasons why his employment is  being denied  and provide him  with an opportunity to respond to these concerns prior to formally  withdrawing the offer.  (http://legistar.council.nyc.gov/LegislationDetail.aspx?ID=1739365&GUID=EF70B69C-074A-4B8E-9D36-187C76BB1098)

The good news is that this prohibition against pre- offer criminal inquiries does not apply to  employers  required by  state, federal or local law to conduct  criminal background checks for employment purposes or who are barred from hiring employees with criminal histories.  This is a critical carve out for federally insured  credit unions  in New York City since,   “any person who has been convicted of any criminal offense involving dishonesty or a breach of trust,.., may not  become, or continue” to  be employed by  or otherwise participate, directly or indirectly, in the conduct of a credit union  without the prior consent” of the NCUA.  12 U.S.C.A. § 1785 (West)

The problem is that even with this carve out and a helpful  2008 guidance interpreting the statute (GUIDANCE REGARDING PROHIBITIONS IMPOSED BY SECTION 205(D) OF THE FEDERAL CREDIT UNION ACT, 2008)  the question of who  is and who is not subject to NCUA scrutiny is inevitably a fact-sensitive inquiry.    For example,  precisely when does an independent contractor influence or control the management or affairs of an insured credit union enough to be covered by this law?  Furthermore this prohibition does not apply to de Minimis convictions.

My point is that even if you agree with the “ban the box” movement in concept, credit unions belong to an industry that will be faced with some of the most difficult questions in implementing any bans.

In order to avoid these pitfalls we should argue that  any  ban the box prohibitions should (1) be passed by Congress;  (2)  preempt state and municipal laws ; (3) Provide a “safe harbor” for good faith implementation (4) provide a definitive list of offenses  for which a person is banned from working with a financial institution and (5) Limit damages for violations to back pay and a job offer.

Entry filed under: Compliance, HR, New York State. Tags: .

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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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