In December 2022, President Biden signed into law the National Defense Authorization Act, which included the Fair Hiring in Banking Act (the Act). Before the Act, FDIC-insured banks and credit unions were prohibited from hiring persons convicted of certain criminal offenses involving dishonesty, money laundering, or breach of trust unless the FDIC first provided a waiver. The Act creates exceptions to these prohibitions such that a waiver from the FDIC is no longer required. Davenport Evans lawyer Reece Almond explains.
Under the Act, there are now four situations for which a waiver from the FDIC is no longer needed.
- A waiver is not needed if it has been seven years or more since the criminal offense occurred.
- A waiver is not needed if the individual was incarcerated with respect to the offense and it has been five years or more since the individual was released from incarceration.
- The need for a waiver also does not apply to conduct committed before age 21 and if it has been at least 30 months since the sentencing.
- Individuals with a criminal record that has been expunged, sealed, or pardoned are also exempt from waiver requirements.
Additionally, the Act allows the FDIC to utilize its rule-making authority to exempt other “de minimis offenses” as long as the offense was punishable by a term of imprisonment of three years or less. Such de minimis offenses may include writing $2,000 or less of bad checks, using fake IDs, shoplifting, fare evasion, trespass, and driving with an expired license.
With today’s challenges of locating employees to fill vacancies, this change in the law expanding the job-applicant pool may provide some relief to FDIC-insured banks and credit unions. These banks and credit unions should review their policies, practices, and forms to ensure they are both taking advantage of this change in the law while still excluding those candidates that must be legally excluded. We at Davenport Evans are happy to help you navigate this recent change in the law.