News Reports about Bank Firing Employee for 40 Year Old Shoplifting Charge Do Not Tell Entire Story

Recent news reports about how an employee of Wells Fargo in Milwaukee, Wisconsin was fired after a background check uncovered two 40-year-old shoplifting arrests from 1972 when she was 18 do not tell the entire story, according to one safe hiring expert, since there are two avenues that allow applicants and employees with minor offenses to work at banks. A Wells Fargo spokesman said the 58-year-old woman, who worked in customer service in the Home Mortgage department for five years and received numerous recognition awards, was terminated because Federal Deposit Insurance Corporation (FDIC) law prohibits the bank “from hiring or continuing the employment of any person who we know has a criminal record involving dishonesty or breach of trust.”

“The news reports have sensationalized this story about a woman who unfortunately lost her job at a bank because of a federal law while giving the false impression that there are no avenues for recourse by not mentioning the de minimis exclusion or the waiver process,” says Attorney and safe hiring expert Lester Rosen, the founder and CEO of background check firm Employment Screening Resources (ESR).

In a report from the Milwaukee Journal Sentinel, ‘Will your employer dig up your arrest 40 years ago?’, the woman admitted she stole clothing from a Milwaukee department store twice. She was fined $50 for the first incident and placed on one year of probation for the second, according to the report. When the woman first applied for the Wells Fargo job, she recalled being asked only if she had any felonies in her past. Her termination letter stated the background check results meant she was no longer eligible to work for Wells Fargo.

“Due to legal requirements and changes in the regulatory environment, Wells Fargo Home Mortgage has been performing a thorough background check on all mortgage team members that includes a fingerprint check with the Federal Bureau of Investigation since 2010 on new employees, and on existing employees since last year,” a Wells Fargo spokesman told the newspaper. “Because Wells Fargo is an insured depository institution, we are bound by federal law that generally prohibits us from hiring or continuing the employment of any person who we know has a criminal record involving dishonesty or breach of trust.”

According to the ‘FDIC STATEMENT OF POLICY FOR SECTION 19 OF THE FEDERAL DEPOSIT INSURANCE (FDI) ACT’:

Section 19 of the Federal Deposit Insurance Act (12 U.S.C. 1829) prohibits, without the prior written consent of the Federal Deposit Insurance Corporation (FDIC), a person convicted of any criminal offense involving dishonesty or breach of trust or money laundering (covered offenses), or who has agreed to enter into a pretrial diversion or similar program in connection with a prosecution for such offense, from becoming or continuing as an institution-affiliated party, owning or controlling, directly or indirectly an insured depository institution (insured institution), or otherwise participating, directly or indirectly, in the conduct of the affairs of the insured institution. In addition, the law forbids an insured institution from permitting such a person to engage in any conduct or to continue any relationship prohibited by section 19. It imposes a ten-year ban against the FDIC’s consent for persons convicted of certain crimes enumerated in Title 18 of the United States Code, absent a motion by the FDIC and court approval.

According to Rosen, the author of ‘The Safe Hiring Manual,’ the first comprehensive guide to employment screening, under Section 19 d of the Federal Deposit Insurance (FDI) Act there is a de minimis exclusion and the ability to apply for a waiver.  On the FDIC STATEMENT OF POLICY FOR SECTION 19 OF THE FDI ACT, the de mimimis exclusion is explained:

De minimis Offenses. Approval is automatically granted and an application will not be required where the covered offense is considered de minimis, because it meets all of the following criteria:

  • There is only one conviction or program entry of record for a covered offense;
  • The offense was punishable by imprisonment for a term of one year or less and/or a fine of $1,000 or less, and the individual did not serve time in jail;
  • The conviction or program was entered at least five years prior to the date an application would otherwise be required; and
  • The offense did not involve an insured depository institution or insured credit union.

A conviction or program entry of record based on the writing of a “bad” or insufficient funds check(s) shall be considered a de minimis offense under this provision even if it involved an insured depository institution or insured credit union if the following applies:

  • All other requirements of the de minimis offense provisions are met;
  • The aggregate total face value of the bad or insufficient funds check(s) cited in the conviction was $1000 or less; and
  • No insured depository institution or insured credit union was a payee on any of the bad or insufficient funds checks that were the basis of the conviction.

Any person who meets the foregoing criteria shall be covered by a fidelity bond to the same extent as others in similar positions, and shall disclose the presence of the conviction or program entry to all insured institutions in the affairs of which he or she intends to participate.

Rosen also notes that Section 19 d of the FDI Act also includes an opportunity to apply for a waiver:

SEC. 19.  PENALTY FOR UNAUTHORIZED PARTICIPATION BY CONVICTED INDIVIDUAL.

(d)  BANK HOLDING COMPANIES.–

(1)  IN GENERAL.–Subsections (a) and (b) shall apply to any company (other than a foreign bank) that is a bank holding company and any organization organized and operated under section 25A of the Federal Reserve Act or operating under section 25 of the Federal Reserve Act, as if such bank holding company or organization were an insured depository institution, except that such subsections shall be applied for purposes of this subsection by substituting “Board of Governors of the Federal Reserve System” for “Corporation” each place that term appears in such subsections.

(2)  AUTHORITY OF BOARD.–The Board of Governors of the Federal Reserve System may provide exemptions, by regulation or order, from the application of paragraph (1) if the exemption is consistent with the purposes of this subsection.

D.  Adults and All Minors Convicted of Crimes

1.  The Conviction of any adult or minor by a court of competent jurisdiction for any criminal offense involving dishonesty or breach of trust as defined in paragraph B above will require an application for consent prior to a bank’s employment of that person.

II.  THE CORPORATION’S POLICY WITH RESPECT TO APPLICATIONS MADE UNDER SECTION 19

A.  In considering any application made by an insured bank to employ a person who has been convicted of a criminal offense involving dishonesty or breach of trust, the factors to be considered will include but will not be limited to the following:

  1. The specific nature of the offense involved and the circumstances surrounding it.
  2. The evidence of rehabilitation of the person since the date of his conviction. (Parole, suspension of sentence, and reputation of the person since conviction will be given consideration. Participation by the person in programs on the national or state levels to hire and retrain the hardcore unemployed also will be given consideration.)
  3. The age of the person at the time of his conviction.
  4. The position to be held by the person in the bank.
  5. The fidelity bond coverage applicable to the person.

As yet, there has been no indication that the woman who was fired from the bank or Wells Fargo have considered the de minimis exclusion or the ability to apply for a waiver under Section 19 d of the Federal Deposit Insurance (FDI) Act. 

However, according to Rosen, the problem is that this is a complicated area of law and regulations, and emotion-based stories that leave false impressions do not help the general public understand these issues. 

‘SEC. 19.  PENALTY FOR UNAUTHORIZED PARTICIPATION BY CONVICTED INDIVIDUAL’ of the Federal Deposit Insurance Act is available at: http://www.fdic.gov/regulations/laws/rules/1000-2100.html#fdic1000sec19a.

The ‘FDIC STATEMENT OF POLICY FOR SECTION 19 OF THE FDI ACT’ is available at http://www.fdic.gov/regulations/laws/rules/5000-1300.html.

For more information about background checks, visit Employment Screening Resources (ESR) – ‘The Background Check Authority’ and nationwide background screening firm accredited by the National Association of Professional Background Screeners (NAPBS) – at http://www.esrcheck.com or call 415.898.0044.

Sources:
http://www.jsonline.com/news/milwaukee/will-your-employer-dig-up-your-arrest-40-years-ago-0059578-150316185.html
http://www.fdic.gov/regulations/laws/rules/5000-1300.html
http://www.fdic.gov/regulations/laws/rules/1000-2100.html#fdic1000sec19a

About Employment Screening Resources (ESR):

Employment Screening Resources (ESR) – ‘The Background Check AuthoritySM’– provides accurate and actionable information, empowering employers to make informed safe hiring decisions for the benefit for our clients, their employees, and the public. ESR literally wrote the book on background screening with “The Safe Hiring Manual” by Founder and CEO Lester Rosen. ESR is accredited by The National Association of Professional Background Screeners (NAPBS), a distinction held by a small percentage of screening firms. By choosing an accredited screening firm like ESR, employers know they have selected an agency that meets the highest industry standards. For more information about Employment Screening Resources (ESR), visit http://www.esrcheck.com/ or call 415.898.0044 or 888.999.4474.

About ESR News:

The Employment Screening Resources (ESR) News blog – ESR News – provides employment screening information for employers, recruiters, and jobseekers on a variety of topics including credit reports, criminal records, data privacy, discrimination, E-Verify, jobs reports, legal updates, negligent hiring, workplace violence, and use of search engines and social network sites for background checks. For more information about ESR News or to send comments or questions, please email ESR News Editor Thomas Ahearn at tahearn@esrcheck.com.