Topic: Human Resources
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We are registering an employee as a mortgage loan originator (MLO) with the NMLS. He has worked for the bank for several years as a teller and is just now starting MLO duties. For purposes of filling out his employment history, should we use the first date of employment with the bank, or the first date of his MLO duties?
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We recommend entering the employee’s first day as a teller for purposes of the employment history on the employee’s NMLS profile. The NMLS Guidebook states that a “full employment history” must be provided and that “no gaps should be present,” particularly for background check purposes. Consequently, we believe that the start date of employment should…
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Does the IBA know of any requirements or recommendations for how many full-time employees are required for a trust department that manages $250 million in assets?
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We are not aware of specific guidelines concerning the number of employees that a bank’s trust department should employ. The FDIC’s Trust Examination Manual requires banks to “employ a sufficient number of qualified employees” but does not provide guidance as to what number might satisfy this directive, other than to say “the staff should be…
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We have several closed employee loan files. What is the record retention period for these? Is it the same as for other loan files, or is the retention period longer for employee loan files?
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Loans to employees are not subject to longer record retention periods than loans to other customers, although Regulation O imposes certain additional recordkeeping requirements for loans to employees who are considered “insiders” of your financial institution. The statute of limitations for written contracts in Illinois is ten years. Consequently, the most conservative practice would be…
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Our sales incentive program includes a confidentiality agreement that prohibits employees from discussing the program with anyone, including other employees at the bank. However, we are concerned that our confidentiality agreement may be in conflict with the pay transparency requirements we are subject to as a federal contractor. Can you provide any guidance on this?
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The Department of Labor has long defined financial institutions as “government contractors” by virtue of their access to deposit insurance. Consequently, we believe financial institutions are bound by the pay transparency requirements first introduced by executive order and later implemented through federal regulation. The pay transparency rule prohibits government contractors from requiring their employees to…
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Under Illinois’s new Freedom to Work Act, can we prohibit our current low-wage employees from maintaining a second job at a competing bank while they still are employed at our bank? We have some employees who hold second jobs, mostly in retail or food service, but we ask them to inform us of this so that we can determine if the other job violates our conflict of interest policy. On the surface, this law would seem to override our policy, at least for our employees under this wage cap, but that doesn’t make sense.
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It is unclear whether the new law prohibits employers from using covenants not to compete with low-wage employees when they are limited to the period of employment and do not apply to post-employment periods. We agree that the plain language of the law does not differentiate between employment and post-employment periods. On the other hand,…
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We have a salaried non-exempt employee who listed 43.35 hours on her time card one week. She actually worked 35.35 hours, and the other 8 hours were a holiday. Under the Fair Labor Standards Act (FLSA), do we have to pay her time and a half for the 3.35 hours over 40 hours, or do we have to pay her only for the hours that she worked?
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The FLSA does not require overtime compensation for time not actually worked, such as holidays. In this case, the employee worked only 35.35 hours and is not entitled to overtime pay for the holiday, unless you have entered into an employment agreement to that effect. For resources related to our guidance, please see: 29 CFR…
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What are we required to do as far as employee background checks? If an employee already has license through NMLS, do we need to do a background check? We are merging with our mortgage bank subsidiary, resulting in those mortgage loan originators (MLOs) becoming bank employees.
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Both federal and Illinois law require banks to screen for criminal convictions before hiring or serving as an employee, officer, director, or controlling stockholder. For employees that already are registered with the NMLS, you must review their criminal background reports in any event. The SAFE Act regulations require financial institutions to review criminal background reports…
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What are best practices when a key executive officer or member of management resigns? Are there conflict of interest issues or security options?
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Your primary federal regulator, the FDIC, has released helpful guidance on succession planning and filling vacancies for both management and directors, and we link to those resources below. In addition, the OCC has issued guidance on succession planning, and the FFIEC’s IT examination handbook includes an appendix on business continuity and succession planning. If the…
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An examiner recently told us that we should not pay more than a 10% bonus to an employee who holds a NMLS license. Does that apply to our bonuses? We set aside a pool at the beginning of the year for all employee bonuses, and the amount of the bonus pool is not based on the bank’s profits.
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If your bank’s bonus pool is not based in any way on the bank’s profitability, then bonuses paid out of that pool may qualify for an exemption from the 10% limitation on loan originator bonuses. Regulation Z does limit bonuses paid to individuals who qualify as “loan originators” when the bonuses are “based in whole…
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What areas of compliance training are required for new hires? Is there a time frame that the training must be completed?
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Illinois law requires that new employees at financial institutions receive training regarding the financial exploitation of older adults within six months of their hire date and every three years after that. This requirement applies only to employees who have direct customer contact. In addition, there are several federal regulations and guidances that require compliance training…