Posts tagged ‘de minimis’

Second Chance IRPS Provides Much Needed Clarity for CU Employees and Applicants

I’m beginning to think that I have done this a bit too long.

In 2008, NCUA issued a guidance providing clarity as to the procedures and policies credit unions should have in place when evaluating job applicants who have committed crimes. At the time, I thought the guidance was well-intended but too vague to be of much use, and in some ways, created more confusion than clarity. Fast-forward to 2019 and it appears that NCUA has finally gotten the message. The reality is that credit unions can face severe penalties for running afoul of this prohibition, so, the more clarity NCUA can provide, the better.

The comment period has recently ended on a proposed new IRPS, which would provide much needed guidance to job applicants, credit union employees and employers responsible for balancing legitimate safety and soundness concerns against the need not to discriminate against individuals who have paid their proverbial debt to society and are entitled to a second chance. The issue is particularly important in states like New York, where decriminalization of crimes including marijuana possession have been coupled with mechanisms for individuals to wipe their criminal records clean.

On the off chance that you may not remember this issue from 2008, here are some of the basics. Section 205(d) of the Federal Credit Union Act prohibits credit unions from employing “any person who has been convicted of any criminal offense involving dishonesty or a breach of trust, or has agreed to enter into a pretrial diversion or similar program in connection with a prosecution for such offense” without the approval of the NCUA Board. The 2008 IRPS gave credit unions greater flexibility in making these decisions. The IRPS currently pending before the NCUA would expand the category of offenses the board considers de minimis. This is important because credit unions can hire someone who has committed de minimis crimes without getting board approval. Another addition to the IRPS that is being proposed would clarify the records that credit unions should keep when making these determinations.

Another confusing trick in interpreting 205 (d) is determining when it does and does not apply to third party venders. Specifically, the prohibition applies to “institutional-affiliated parties” who knowingly engage in breaches of trust that are likely to negatively impact the credit union. I’m thinking of individuals like lawyers, accountants, and hot-shot consultants. The prohibition also applies to individuals who participate directly or indirectly in the affairs of the credit union. The IRPS would provide much needed guidance as to who is and who is not covered under this incredibly broad definition.

These are just some examples of the types of changes NCUA may be making. Given the changing political winds, these changes are being made in the nick of time and, when and if they are finalized, it should be a top priority of your HR guru to understand their implications and to update your policies and procedures.

October 3, 2019 at 9:59 am 1 comment


Authored By:

Henry Meier, Esq., Senior Vice President, 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. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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