Employment Training, Practices and Procedures

We published an article with Thomson Reuters Practical Law summarizing key employment issues for financial services employers, highlighting those rules applicable to registered representatives regulated by Financial Industry Regulatory Authority (FINRA). With Thomson Reuters Practical Law’s permission, we have attached it here.

On March 13, 2018, Washington Governor Jay Inslee signed bill HB 1298, the Washington Fair Chance Act (“Act”), which prohibits employers from asking job applicants about arrests or convictions until after the employer has determined that the applicant is “otherwise qualified” for the job. The Act goes into effect on June 7, 2018.

The new law rounds out “ban-the-box” legislation on the West Coast and makes Washington the eleventh state nationwide to enact a “ban-the-box” law that covers both public and private sector employers. Under the Act, “employer” is defined broadly to include “public agencies, private individuals, businesses and corporations, contractors, temporary staffing agencies, training and apprenticeship programs, and job placement, referral, and employment agencies.”

Specifically, the Act makes it unlawful for employers to seek information from individuals about their criminal record, orally or in writing, prior to determining that the applicant is otherwise qualified for the position. An individual is “otherwise qualified” if he or she meets the “basic criteria for the position as set out in the advertisement or job description without consideration of a criminal record.” Once an employer determines that the applicant is otherwise qualified for the position, it may inquire into or obtain information about the candidate’s criminal record.

Additionally, the Act prohibits employers from doing any of the following prior to determining an individual’s qualifications:

  • Including questions on employment applications inquiring into an applicant’s criminal record (arrests or convictions).
  • Obtaining information through a criminal history background check.
  • Advertising employment openings in a manner that excludes people with criminal records from applying (e.g., ads stating “no felons” or “no criminal records”).
  • Implementing policies that automatically or categorically exclude individuals with a criminal record from consideration for employment.

The Act contains exemptions for employers:

  • Hiring individuals who would have unsupervised access to children under the age of 18 or vulnerable persons.
  • That are expressly permitted or required to consider an applicant’s criminal record under federal or state law.
  • Hiring nonemployee volunteers.
  • That are required to comply with the rules or regulations of a self-regulatory organization, as defined in section 3(a)(26) of the Securities and Exchange Act of 1934.

Notably, the Act does not require employers to “provide accommodations or job modifications in order to facilitate the employment or continued employment of an applicant or employee with a criminal record or who is facing pending criminal charges.”

Further, the Act permits cities and other localities to enact “ban-the-box” laws that provide “additional protections to applicants or employees with criminal records.” Thus, for example, Seattle’s more restrictive “ban-the-box” law will remain in effect. Unlike the Act, Seattle’s law requires an employer to give an applicant the opportunity to explain his or her criminal record before taking any adverse action against the applicant based on that record. Accordingly, employers are advised to review and, if necessary, conform their current policies to both the Act and any applicable local law.

Alyssa Muñoz, a Law Clerk – Admission Pending (not admitted to the practice of law) in the firm’s New York office, contributed significantly to the preparation of this post.

Featured as our top story on Employment Law This Week: Me too At Work – Sexual misconduct in the C-Suite leads to shareholder lawsuits.

Last month on Employment Law This Week, you heard that sexual misconduct allegations would start impacting shareholder value and reputation. Well, now we’ve got a case study in Wynn Resorts. After the Wall Street Journal uncovered multiple sexual misconduct allegations against Casino mogul Steve Wynn, the company’s stock fell nearly 20%. Wynn resigned a week later, but the company’s troubles were far from over. The company’s  stock has lost $3 billion in value. The first shareholder lawsuit was filed the day Wynn resigned, and to date three suits by shareholders claim that Wynn and the Board breached their fiduciary duties to the company and its shareholders. Bill Milani, from Epstein Becker Green, has more.

Watch the segment below and read our recent post.

The United States Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) recently sent 1,000 Corporate Scheduling Announcement Letters (“CSALs”) to 515 federal government contractors. The CSALs provide advance notice that contractor establishments may be audited by the OFCCP during the scheduling cycle, which ends September 30, 2018, to ensure compliance with the contractors’ non-discrimination/affirmative action obligations.

The CSALs were sent on February 1, 2018, to the attention of the Director of Human Resources of the contractor establishments appearing on the FY2018 Scheduling List. Scheduling Letters will be sent to contractor establishments, beginning March 19, 2018, to commence the compliance review process.

According to the OFCCP, the purpose of the CSAL is fourfold:

  • To provide personnel at each establishment with at least 45 days’ advance notice to obtain management support for compliance and self-audit efforts;
  • To encourage contractors to take advantage of compliance assistance offerings;
  • To encourage contractors to focus on self-audit efforts that, if problems are identified and addressed, will save the OFCCP time and resources when doing its review; and
  • To help contractors manage/budget the amount of time required for the review. Contractors receiving CSALs should take advantage of the advance notice to ensure their affirmative action programs are in compliance and that any potential issues have been addressed in advance of the audit.

Contractors subject to a compliance review need to be vigilant in responding to the audit. It appears that the OFCCP continues to take a “deep dive” approach, which includes in-depth, time-consuming reviews of contractors’ hiring, compensation, and other employment data for statistical indicators of possible discrimination.  In recent years, the number of audits conducted by the OFCCP has dropped, while the enforcement approach has expanded.

According to a report by Bloomberg Law, through the third quarter of FY2017, the number of audits closed by the OFCCP was 915, down from 1,700 the prior year; yet the OFCCP collected $23.1 million in settlements in FY2017 – more than double the prior year when it collected $10.5 million. This should certainly get the attention of all federal government contractors.  While the number of audits by the OFCCP has decreased, the costs associated with defending an audit, and the settlement payouts, for contractors have increased.

What Employers Should Do Now

Contractors need to apprise appropriate personnel at each of their facilities to monitor incoming mail for receipt of the CSAL and Scheduling Letter, with forwarding instructions if received.

Contractors that receive a CSAL should take advantage of the advance notice by conducting a self-audit to ensure that their affirmative action programs are in compliance and that any potential issues have been addressed in advance of the audit. Once a Scheduling Letter has been issued, contractors will only have 30 days within which to respond, and the OFCCP has made clear that extensions of time of no more than 15 days will not be given lightly.

Contractors subject to a compliance review need to pay particular attention to their hiring practices and compensation systems. An impact ratio analysis should be performed, examining applicants and hires to determine if there are statistical results pointing to adverse impact and, if so, what the explanation is for the hiring decisions.  A compensation analysis should also be conducted, with explanations provided if significant pay disparities exist.

The list of establishments that receive CSALs is generated by the OFCCP’s neutral-based Federal Contractor Selection System. If contractors have concerns about whether or not they received a CSAL at any of their facilities, they may make inquiry about whether an establishment was mailed a CSAL by e-mailing a written request on company letterhead to the Division of Program Operations at OFCCP-DPO-Scheduling@dol.gov.

Our colleague  at Epstein Becker Green has a post on the Health Employment and Labor blog that will be of interest to our readers in the financial services industry: “New York City Council Passes Bills Establishing Procedures on Flexible Work Schedules and Reasonable Accommodation Requests.”

Following is an excerpt:

The New York City Council recently passed two bills affecting New York City employers and their employees. The first bill, Int. No. 1399, passed by the Council on December 6, 2017, amends Chapter 12 of title 20 of the City’s administrative code (colloquially known as the “Fair Workweek Law”) to include a new subchapter 6 to protect employees who seek temporary changes to work schedules for personal events.  Int. No. 1399 entitles New York City employees to request temporary schedule changes twice per calendar year, without retaliation, in certain situations, e.g., caregiver emergency, attendance at a legal proceeding involving subsistence benefits, or safe or sick time under the New York City administrative code.  The bill establishes procedures for employees to request temporary work schedule changes and employer responses.  Exempt from the bill are employees: (i) who are covered by a collective bargaining agreement; (ii) who have been employed for fewer than 120 days; (iii) who work less than 80 hours in the city in a calendar year; and (iv) who work in the theater, film, or television industries. …

Read the full post here.

Our colleagues at Epstein Becker Green have released a Take 5 newsletter focused on the financial services industry.  Following are the introduction and links to the stories:

For this edition of the Take 5 for financial services, we focus on a number of very well-publicized issues. The tidal wave of sexual harassment allegations that followed the Harvey Weinstein revelations has drawn the attention of companies, their human resources departments, and employment lawyers. The rule on chief executive officer (“CEO”) pay ratio disclosure, which goes into effect in 2018, is a required focal point that garners significant interest in an industry that is all about money. The hyper-charged political climate has brought social activism and heated political discussions into the workplace with increasing frequency—and with potential employment law implications. A heightened legislative focus on eliminating at least one recognized source of the gender pay gap has resulted in new rules that prohibit very common inquiries about past compensation during the interview process. Finally, data leaks are a mounting threat and cybersecurity is a growing concern throughout an industry that is saturated with the highly sensitive, and sometimes personal, financial information of its clients.

We address these important issues and what financial services employers should know about them:

  1. The Weinstein Effect: #MeToo Allegations in the Financial Services Industry
  2. CEO Pay Ratio: It’s Not Too Late to Calculate!
  3. Managing Employees’ Political and Social Activism in the Workplace
  4. Equal Pay Update: The New York City and California Salary History Inquiry Bans
  5. Insider Threats to Critical Financial Services Technologies and Trade Secrets Are Best Addressed Through a Formalized Vulnerability and Risk Assessment Process

Read the full Take 5 newsletter here and download the PDF.

Our colleague , a Member of the Firm at Epstein Becker Green, has a post on the Technology Employment Law blog that will be of interest to many of our readers in the financial services industry: “Get Ready to Respond to IRS Letter 226J: Employer Shared Responsibility Payment Assessments.”

Following is an excerpt:

In a recent update to the IRS’ Questions and Answers on Employer Shared Responsibility Provisions under the Affordable Care Act, the IRS has advised that it plans to issue Letter 226J informing applicable large employers (ALEs) of their potential liability for an employer shared responsibility payment for the 2015 calendar year, if any, sometime in late 2017.  The IRS plans to issue Letter 226J to an ALE if it determines that, for at least one month in the year, one or more of the ALE’s full-time employees was enrolled in a qualified health plan for which a premium tax credit (PTC) was allowed (and the ALE did not qualify for an affordability safe harbor or other relief for the employee). The IRS will determine whether an employer may be liable for an employer shared responsibility payment, and the amount of the potential payment, based on information reported to the IRS on Forms 1094-C and 1095-C and information about the ALEs full-time employees that were allowed the premium tax credit. …

Read the full post here.

Our colleagues , at Epstein Becker Green, have a post on the Retail Labor and Employment Law blog that will be of interest to many of our readers in the financial services industry: “New York Paid Family Leave Regulations Finalized: How Do They Compare to Prior Versions?

Following is an excerpt:

On July 19, 2017, the New York State Workers’ Compensation Board (“WCB” or the “Board”) issued its final regulations (“Final Regulations”) for the New York State Paid Family Leave Benefits Law (“PFLBL” or the “Law”). The WCB first published regulations to the PFLBL in February 2017, and then updated those regulations in May (collectively, the “Prior Regulations”).

While the Final Regulations did clarify some outstanding questions, many questions remain, particularly pertaining to the practical logistics of implementing the Law, such as the tax treatment of deductions and benefits, paystub requirements, certain differences between requirements that pertain to self-funding employers and those employers intending to obtain an insurance policy, and what forms and procedures will apply. …

Read the full post here.

On June 14, 2017, Delaware Governor John Carney signed into law a bill that amends Delaware’s Code relating to unlawful employment practices to prohibit employers from (i) engaging in salary-based screening of prospective employees where prior compensation must satisfy certain minimum or maximum criteria or (ii) seeking the compensation history of a prospective employee from the prospective employee or a current or former employer (the “Law”). Under the Law, “compensation” is defined broadly to include wages, benefits, or other compensation.

Similar to the New York City salary history ban, employers are not prohibited from discussing and negotiating salary expectations, so long as employers avoid asking for a prospective employee’s compensation history. Additionally, after an employment offer has been made and accepted, and compensation terms have been extended and accepted, the Law allows for the confirmation of a prospective employee’s compensation history. Any such compensation confirmation must be authorized by the employee in writing.

The Law adds to a growing wave of bans on compensation history inquiries. Similar restrictions have been enacted in Massachusetts (eff. July 1, 2018), Oregon (eff. October 9, 2017) and Puerto Rico (eff. March 8, 2018), as well as in New York City (eff. October 31, 2017), Philadelphia, and most recently, San Francisco (eff. July 1, 2018). Philadelphia’s pay history ban was supposed to take effect May 23, 2017, but the City delayed its enforcement in light of a legal challenge by the Chamber of Commerce for Greater Philadelphia. The law is not yet being enforced by the City.

Amid challenges regarding Philadelphia’s upcoming law prohibiting employers from requesting an applicant’s salary history, the City has agreed not to enforce the upcoming law until after the court has finally resolved the injunction request.

The law, which was set to become effective May 23, 2017, has been challenged by the Chamber of Commerce for Greater Philadelphia (the “Chamber”). The Chamber’s lawsuit alleges that the pending law violates the First Amendment by restricting an employer’s speech because, among other reasons, “it is highly speculative whether the [law] will actually ameliorate wage disparities caused by gender discrimination.” It is also alleged that the law violates the Commerce Clause of the U.S. Constitution, the Due Process Clause of the Fourteenth Amendment, and Pennsylvania’s Constitution as well as its “First Class City Home Rule Act” by allegedly attempting to restrict the rights of employers outside of Philadelphia.

On April 19, a judge for the Eastern District of Pennsylvania stayed the effective date of the law, pending the resolution of the Chamber’s motion for a preliminary injunction. Prior to resolving the injunction, the parties will first brief the court on the Chamber’s standing to bring the lawsuit. This issue, regarding whether the Chamber is an appropriate party to bring this lawsuit, will be fully briefed by May 12, 2017, before the law is set to become effective. However, there are several other issues to be resolved as part of the lawsuit. The City’s decision to stay enforcement of the pending law until all issues are resolved is intended to help employers and employees avoid confusion during the pendency of the lawsuit.

Although the City of Philadelphia will not enforce this law in the interim, employers with any operations in Philadelphia should review their interviewing and hiring practices in case the lawsuit is decided in favor of the City. Further, employers in Massachusetts and New York City will also be subject to similar restrictions on inquiring about an applicant’s salary history when those laws go into effect. Massachusetts’ law is scheduled to become effective in July 2018, and New York City’s law will become effective 180 days after Mayor de Blasio signs the law, which may occur as soon as this week.