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Verified Credentials Dec 23, 2024 3:04:00 PM
On July 30, 2024, the Federal Deposit Insurance Corporation (FDIC) approved the Final Rule to Revise FDIC Regulations Concerning Section 19 of the Federal Deposit Insurance Act. This rule stems from the "James M. Inhofe National Defense Authorization Act for Fiscal Year 2023," signed by President Biden on December 23, 2022. This act effectively amended Section 19 of the Federal Deposit Insurance Act, 12 U.S.C. Section 1829 (FDIA), also known as the “Fair Hiring in Banking Act.”
The new FDIC revision went into effect on October 1, 2024. It updates regulations to align with the Fair Hiring in Banking Act’s amendments, creating fairer hiring practices in the financial industry.
Below are some of the key changes of the amendments to the Fair Hiring Banking Act and resulting FDIC Final Rule Regulation Updates:
The amendment excludes several new categories of offenses from the FDIA, lowering the barrier of criminal history charges that are considered acceptable for rejecting a candidate or terminating an employee in the financial industry without a Section 19 Application. These include:
Relevant crimes that are more likely to directly endanger FDIC-insured institutions still require a Section 19 Application for approval to work at an insured depository, calling attention to convictions related to:
Financial institutions are now required to document their inquiries on employee criminal history. This can be done through:
For more detailed information, refer to the Final Rule to Revise FDIC Regulations Concerning Section 19 of the Federal Deposit Insurance Act.
Although employers must comply with additional steps when in hiring in the financial industry, the amendment and final rule reflect an overall positive industry change for advocates of fair chance hiring. The FDIC’s final rule in Section 19 emphasizes the importance of striking a clearer and more ethical balance between fair hiring practices and maintaining the integrity of the financial industry. It also explicitly requires financial institutions to document inquiries. However, specific details of the process for documenting these inquiries are currently left to the discretion of individual institutions. The process and regulations required by employers in the financial industry may potentially change over time. HR professionals in the financial industry or working with financial industry employees should monitor the situation and consult their legal counsel to see how this applies to them.
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