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Entries in Employment (7)


New England Council Releases Report on New England's Financial Services Sector

In January of 2017, the New England Council released its 38-page report entitled "The New England Financial Services Sector:  Around the Corner, and Around the World."  The report, which is based on 2015 data, can be found here.

The report focuses on the importance of the financial sector to New England's economy, including the banking sector, the insurance sector, and the asset management sector.  The report specifically notes that, even though New England represents 4.2% of the nation's population, the region's financial services sector represents 6.2% of the nation's employment in this sector and 8.3% of the nation's total wages in this sector.  The report credited the region's "ecosystem" as key to spurring growth in this sector, particularly the region's colleges and universities.

Within the region, the financial services sector is the 7th largest sector for jobs.  Total employment in the sector is 375,460 jobs with an average wage of $157,674.  This compares to average regional wages of $64,996 per job.

In the region's banking sector, there were 3,951 bank branches, 1,200 credit union branches, and $643 billion in assets.  With respect to savings banks in particular, three states in New England ranked in the Top 10 nationally in terms of deposits:  Massachusetts (1), Connecticut (2), and Maine (7).

With respect to the region's Fin Tech industry, the Report indicated that nearly $750 million had been invested in Fin Tech start-ups through early 2016.  The Report also included a detailed "spotlight" on the impact of Fin Tech on the region's banking industry.

Overall, the Report makes a clear case that New England's financial sector plays a critical role in the region's economy, and the sector plays an out-sized role in the country.


New Forms Required by FCRA for Background Checks on Current and Potential Employees

As of January 1, 2013, employers who obtain background checks on employees and job applicants from consumer reporting agencies were required to utilize revised notices and disclosures under the Fair Credit Reporting Act.  For more information and links to the revised documents, refer to a Client Alert written by Tawny Alvarez, an attorney in our Labor and Employment Law Group, which was recently posted to the Group’s blog.


U.S. District Court Upholds DOL Position that MLOs are not Exempt from Overtime Pay

The United States District Court for the District of Columbia recently issued a judgment in favor of the U.S. Department of Labor (“DOL”) in the case of Mortgage Bankers Association v. Solis regarding whether mortgage loan officers (“MLOs”) are exempt from overtime pay under the Fair Labor Standards Act (“FLSA”). The judgment upholds an Administrator’s Interpretation issued by the DOL on March 24th, 2010 (the “2010 AI”), interpreting the FLSA to require that MLOs who work more than 40 hours per week receive overtime pay.

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Proposed Rule issued for Incentive-Based Compensation

The federal banking regulators have issued a proposed rule (the “Proposed Rule”) to implement Section 959 of the Dodd-Frank Act, governing incentive-based compensation for executive officers, employees, directors, and principal shareholders (“covered persons”).  Incentive-based compensation is defined broadly to include any direct or indirect payment or other benefit intended as an incentive for performance.  The Proposed Rule will apply to financial institutions (including banks, bank holding companies, and subsidiaries) with consolidated assets of one billion dollars or more.  The rule, however, may eventually become a “best practice” for smaller banks. 

The Proposed Rule essentially supplements existing rules and guidance on compensation, which apply to all banking institutions, including 12 CFR Parts 208 and 364, and the Guidance on Sound Incentive Policies issued in June of 2010.  Covered institutions are prohibited from providing excessive incentive-based compensation to a covered person that would encourage that person to expose the institution to inappropriate risks.  The determination of whether incentive-based compensation is excessive will be based on the following factors, found in the standards for safety and soundness with respect to compensation in 12 CFR Parts 208 and 364:

  1. The combined value of all cash and non-cash benefits to the covered person;
  2. The compensation history of the covered person and other individuals with comparable experience at the institution;
  3. The financial condition of the institution;
  4. Compensation practices at comparable institutions;
  5. The projected costs and benefits of any post-employment compensation;
  6. Any connection between the covered person and instance of fraud, breaches of trust or fiduciary duty, or insider abuse at the institution; and
  7. Any other factors the applicable federal regulator deems relevant.

The Proposed Rule also prohibits an institution from using incentive-based compensation practices that could lead to a material financial loss by the institution.  A determination of this requirement is based on the three principles for incentive-based compensation found in the Guidance on Sound Incentive Policies.  Under these principles, incentive-based compensation should be the following:

  1. Appropriately balanced in terms of risk and financial reward (such as by deferring payments and adjusting them for risk, extending the performance period for rewards, and reducing reward sensitivity to short-term performance);
  2. Compatible with effective controls and risk-management processes; and
  3. Subject to strong corporate governance and oversight.

Covered institutions (institutions larger than one billion dollars) are required to file annual reports regarding their incentive-based compensation practices and adopt written policies and procedures.  Covered institutions with assets greater than fifty billion dollars are subject to further requirements applicable to the institution’s executive management and board of directors (including a required deferral of at least three years for a minimum of 50% of incentive-based payments for certain executives).  Comments on the proposed rule will be accepted for 45 days after publication in the Federal Register. 


Amendments to Regulation Z regarding Loan Originator Compensation Fast Approaching

April 1 is the effective date for certain amendments made by the Federal Reserve Board to Regulation Z, which implements the Truth in Lending Act.  See 12 CFR 226.36.  The new rules will limit the ways in which banks, bank affiliates, mortgage companies, and other mortgage lenders may compensate mortgage loan originators (including mortgage loan officers employed by banks).  In essence, the new rules prohibits a mortgage loan originator from being compensated based on the terms or conditions of the transaction (for example, the interest rate), other than the amount of credit extended to the consumer.  Additionally, a loan originator that receives compensation directly from a consumer in connection with a mortgage loan cannot receive additional compensation from any other person.  Mortgage loan originators are also prohibited from “steering” (advising, counseling, or otherwise influencing) consumers to consummate a mortgage with less favorable terms for the purpose of increasing the loan originator’s compensation, unless the mortgage is in the consumer’s interest. 

Mortgage loan originators have been provided a limited safe-harbor to facilitate compliance with the new rule regarding “steering,” which will require that the consumer be presented with loan options for each type of loan (fixed and adjustable rate) in which the consumer expresses interest.  For each type of loan, the loan originators must obtain loan options from a “significant” number of creditors with which the loan originator does business, and for each type of loan, the consumer is presented (i) the loan with the lowest interest rate, (ii) the loan with the lowest interest rate without certain unfavorable features such as a balloon payment, interest-only payments, prepayment penalties, etc., and (iii) the loan with the lowest total cost for origination points, fees, and discount points.  The loan originator must have a good faith belief that the consumer is likely to qualify for each of the presented loan options.

Loan applications received by a lender on or after April 1, 2011 are subject to the new rules.  The new rules can be found here: