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Entries in Human Resources (5)


Times are Changing: Verrill Dana Hosts Full-Day Conference, 2019 Annual Employment Law Update

After a year full of changes for employers paired with a new governor in Maine, Verrill Dana will reflect on recent legal developments in labor and employment law and what the new year might bring during its 2019 Annual Employment Law Update. The full-day conference will take place on Thursday, January 31 at The Westin Harborview Hotel in Portland.

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CFPB Issues Final Rules Governing MLO Compensation Restrictions and Other Requirements under Regulation Z

The Consumer Financial Protection Bureau (“CFPB”) recently issued a final rule (the “Final Rule”) implementing restrictions on mortgage loan originator (“MLO”) compensation under Regulation Z (Truth in Lending), along with additional interpretive guidance. These restrictions, which prohibit MLO compensation based on mortgage loan terms, or “proxies” for such terms, were mandated under the Dodd-Frank Act. In a number of prior blogs, we discussed the CFPB’s evolving guidance on these restrictions. One issue of particular interest was whether profit-based retirement and bonus plans would be prohibited under the rationale that profit serves as a “proxy” for certain loan terms such as interest rate (a view taken by Federal Reserve staff members when the rule was first introduced).

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FDIC Eases Standards for De Minimis Criminal Convictions Under Section 19

Section 19 of the Federal Deposit Insurance Act requires FDIC-insured institutions to obtain prior written consent from the FDIC before employing persons who have been convicted of or entered into a pre-trial diversion program for criminal offenses involving dishonesty, breach of trust, or money laundering. An exception to this requirement exists, however, for certain types of de minimis offenses, for which prior written consent is not required.

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CFPB Proposes Amendments to Regulation Z for MLO Compensation Restrictions

The Consumer Financial Protection Bureau (“CFPB”) has issued a proposed rule for public comment that would amend Regulation Z (Truth in Lending) to implement provisions of the Dodd-Frank Act.  The amendments would include, among other things, new rules governing the participation of mortgage loan originators (“MLOs”) in employer profit-sharing plans.  Under Regulation Z, MLO compensation cannot be based on mortgage loan terms and conditions, or “proxies” for such terms and conditions.  In a prior blog, we discussed the issue of whether, under Regulation Z, MLO participation in a profit-sharing compensation plan could be prohibited under the rationale that profitability is a “proxy” for mortgage loan interest rate (a loan term).

 The proposed rule provides additional guidance with examples of when factors used to determine compensation could serve as “proxies” for loan terms and conditions.  In addition, the proposed rules states that employer profit-based contributions to 401(k) plans, employee stock plans, and other “qualified” plans would be generally permissible, provided that contributions are not based on the terms of an MLO’s individual transactions.  Bonuses and contributions to non-qualified profit-sharing plans from general profits would be permitted provided that (i) contributions are not based on the terms of an MLO’s individual transactions, and (ii) in the prior tax year, not more than a certain percentage of the person’s or business unit’s revenues are generated from the person’s mortgage business.  The CFPB is seeking comment on whether the threshold should be 25% or 50%. Bonuses and contributions to non-qualified profit-sharing plans from general profits would also be permitted if an MLO closed five or fewer mortgage transactions during the 12-month period preceding the employer’s determination to make a payment.  Public comments on the proposed rule (which may be made online) are due by October 16, 2012.


Facebook Fired?

Social media is a rapidly growing tool for communicating with customers and the public.  The use of social media, however, is not without some risk.  One important risk is the employee who makes derogatory comments in social media about the employer or fellow employees.  The National Labor Relations Board (“Board”) has recently offered guidance, including case summaries, on when an employer can lawfully fire an employee for postings made on Facebook or other social media.  The key issue is typically whether an employee’s postings constitute “concerted protected activity,” for which an employee may not be fired.

Under the National Labor Relations Act, concerted protected activity is any conduct, alone or in concert with other employees, “for the purposes of collective bargaining or other mutual aid or protection.”  Union membership is not required and, importantly, individual employees can engage in protected activity if the object is to initiate or induce group action.  So how do you know if your employee’s gripes about a boss on Facebook are protected activity?  Often, this will be difficult to determine.  Recent Board guidance, however, does clarify some issues.  First, there is a good chance that a social media post will be protected if (i) the post calls for comments from, or other action by, coworkers; (ii) the post addresses issues that have been raised by employees in the workplace or deals with terms and conditions of employment; or (iii) the post relates to matters of mutual concern among employees.  Second, if your employment policies or work rules explicitly prohibit protected activity, or would reasonably “chill” an employee’s exercise of protected activity, they may be found to be unlawful.

Social media includes all forms of multimedia communication – from Facebook to Tweeting, from texting to audio and video podcasts, and everything in between.  These types of communication are rapidly increasing and there are times when even inappropriate postings will be protected.   It is important for employers to craft clear and thoughtful social media policies that are tailored to protect the company, but not so broad as to limit employees’ protected rights.  This is a rapidly evolving area of the law, and one where compliance requires clear and constant attention.