Federal law requires individuals who have been convicted of crimes of dishonesty and similar offenses to submit an application to the FDIC for approval before becoming employed by a financial institution. The FDIC has recently issued a new rule that eases restrictions on the employment of individuals convicted of minor offenses. Davenport Evans Lawyers Jean Bender and Mike Srstka explain in the August Employment Law e-Newsletter.

The new rule, which is codified as a regulation, takes effect in late August of 2020. The new rule incorporates the FDIC’s existing Statement on Policy and provides some updates to the FDIC’s procedures. Under the new regulation, an individual seeking employment with a financial institution does not need to send an application to the FDIC if his or her prior offenses have been expunged. The new rule also updates the manner in which de minimis offenses are treated by the FDIC.

Under the new regulation, a person does not need to apply for FDIC approval for employment with a financial institution if he or she has been convicted of no more than two “de minimis” offenses, and the required waiting period has elapsed since conviction. De minimis offenses generally consist of convictions for thefts of small amounts or other minor offenses for which the person served no more than three days of jail time and received a fine of no more than $2,500. No offense committed against a bank or credit union can qualify as a de minimis offense. The length of the waiting period depends on the age of the person at the time of conviction, with a three year period for individuals over the age of 21 when convicted, and an 18 month period for those aged 21 and younger at the time of conviction. The new rule removes the waiting period for persons convicted of a single de minimis offense. Additionally, the new rule now considers as a de minimis offense the use of fake identification by a person age 21 or younger in order to purchase alcohol or circumvent certain age-based restrictions.

While the new FDIC rule reduces restrictions on the employment of individuals previously convicted of certain minor offenses, some individuals may still be required to submit an application to the FDIC before working for a financial institution. Some may have questions as to whether a conviction meets the definition of “de minimis.” Employers or potential employees who are concerned with these issues should seek the advice of an attorney in order to ensure compliance with all FDIC rules and regulations. Davenport Evans lawyers can be reached at 605-336-2880 or [email protected].

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Davenport, Evans, Hurwitz & Smith, LLP, located in Sioux Falls, South Dakota, is one of the State’s largest law firms. The firm’s attorneys provide business and litigation counsel to individuals and corporate clients in a variety of practice areas. For more information about Davenport Evans, visit www.dehs.com.