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Financial services companies have long been attractive targets for discrimination lawsuits and wage and hour class and collective actions. But recent developments in financial regulatory law and compliance, whistleblower law, and government enforcement actions, among others, have made it all the more critical for banks, insurance companies, mutual funds, private equity firms, hedge funds, trust companies, credit unions, and all manner of financial services entities to stay on top of employment law developments.
Financial services companies reside in a special regulatory world, and have unique obligations imposed on them by federal and state laws, regulators, and self-regulatory organizations (SROs). At Littler, we understand the numerous laws and regulations overseeing banks and their compliance personnel, including anti-bribery and corruption (ABC), anti-money laundering (AML), the Bank Secrecy Act (BSA), the USA PATRIOT Act, the SAFE Act, Reg. Z, the Federal Deposit Insurance Act, Nationwide Multi-State Licensing System & Registry (NMLS) compliance, Office of Foreign Assets Control (OFAC) sanctions, and Department of the Treasury Financial Crimes Enforcement Network (FINCEN).
Principally as a result of the financial crisis of 2007-08 and the new laws and regulations that this spawned, financial services companies are uniquely challenged in employment related practices. We are advising on numerous related issues, including:
Upsurge in Claims by Compliance Employees
In this highly regulated industry, we see a significant increase in disputes, lawsuits, and administrative charges filed by compliance officers. Discrimination claims are now often coupled with whistleblower claims, where reputational stakes can be higher, and the exposure equally significant.
Internal Investigation Protocols, Codes of Conduct, Ethics Policies and Whistleblower Complaint Procedures
Regulators want to be sure that financial services companies have in place compliant codes of conduct, ethical standards, reporting and anti-retaliation policies, and internal investigation protocols. We work closely with our financial services clients in drafting and implementing these and related policies.
Whistleblower Laws Focus on Financial Services
Numerous laws unique to the financial services industry provide whistleblowers with special and unique remedies. These include the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd Frank), the Sarbanes-Oxley Act of 2002 (SOX), the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), and the Bank Secrecy Act. Our financial services team is fully familiar with the full gamut of whistleblower laws, and we work closely with our whistleblower practice group in both avoiding and defending these claims.
New Executive Compensation Restrictions
A variety of executive agencies, as well as SOX, Dodd Frank, and recent and developing rules emanating from the European Union, impose new restrictions, including deferral and claw-backs, on executive compensation and incentive compensation.
OCC “Heightened Standards” and Similar New Rules and Regulations
In September 2014, the U.S. Office of the Comptroller of the Currency issued new guidelines on hiring, retention and compensation, denominated as “talent management processes” and “compensation and performance management,” that directly impact human resources issues. The guidelines apply to any bank (i.e., any insured national bank, insured Federal savings association, or insured Federal branch of a foreign bank) with average total consolidated assets equal to or greater than $50 billion, or to any bank with less than $50 billion if its parent company controls at least one covered bank.
“Ban the Box Legislation” and Conflicting Financial Services Rules
Another key area surrounds the conflicting obligations banks face in conducting background checks—some laws particular to financial services companies require or at least permit a measure of background checking, while new state laws purport to limit these rights.
Sorting through these conflicting rules can be challenging and we anticipate that financial services companies will continue to be uniquely challenged in these areas.
We are the largest employment law firm in the United States, with over 50 offices and more than 1200 lawyers in the United States and overseas. We represent many financial institutions, large and small, domestic and international, from some of the largest banks in the world to hedge funds, private equity firms, and local branches of foreign banks We are considered a firm of first choice by financial services companies when they are the target of lawsuits or employment related arbitration, and for advice-and-counsel and training.
Our attorneys closely monitor developments affecting the financial services industry, and share their informed analysis through frequent publications and speaking engagements. Additionally, many Littler attorneys belong to or have leading roles in key organizations and conferences, including the American Bar Association, International Bar Association, and state bar association banking committees; the American Bankers Association; and the Institute of International Bankers.
We have a core group of attorneys who focus on the needs of financial services companies and frequently hold client briefings and webinars concerning key issues for financial services clients, including whistleblower risk, internal investigations, criminal background and credit checks, and special FLSA issues such as exemptions commonly relied upon in the banking industry. We also work closely with our corporate compliance practice group, our whistleblower defense practice group, and our international practice group on initiatives that affect their clients.
Many of Littler’s financial services clients are international, and most countries are increasingly regulating their activities, particularly in the area of ethical standards and whistleblower investigations. We also represent many foreign-based financial services companies who need assistance navigating U.S. employment laws, bank regulatory laws, and the intersection between these disciplines.