Final Diversity and Inclusion Standards Issued Jointly by Six Federal Agencies

by Ballard Spahr LLP
Contact

Pursuant to a mandate contained in Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank or Act), six federal agencies jointly issued new Diversity and Inclusion (D&I) Standards today. These Standards, which go into effect on June 10, 2015, apply to all entities regulated by any one of the federal agencies subject to Dodd-Frank. Thus, the entities affected do not just include financial institutions, but any publicly traded company, mortgage company, and any other entity regulated by one of the six agencies, including all the federal banking agencies and the CFPB. Given that the rules go into effect on June 10, 2015, entities should begin to take steps to incorporate the Standards into their daily business practices.

Dodd-Frank’s Section 342

Section 342 required the creation of the Office of Minority and Women Inclusion (OMWI) in all agencies covered by the Act and further required that each OMWI be responsible for all agency matters relating to diversity in management, employment, and business activities. Section 342 further directs each OMWI to develop standards for assessing the diversity policy and practices of entities regulated by those agencies. On October 25, 2013, the OMWI directors from the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Consumer Financial Protection Bureau (CFPB), and the Securities and Exchange Commission (SEC), working together, issued proposed standards for assessing D&I policies and practices. Through February 7, 2014, the agencies received more than 200 comments. The Final Standards address those comments the agencies found to be most significant and in need of clarification.

The Final Standards

The Final Standards generally track the proposed standards, but do provide some clarifying language in response to public comments. For example, the Final Standards adopt Dodd-Frank’s definition of “diversity,” and, thus, use the term to include minorities (African Americans, Native Americans, Hispanic Americans, and Asian Americans) and women. The Final Standards, however, do not preclude an entity from using a broader definition. Separately, the Final Standards define “inclusion” to mean “a process to create and maintain a positive work environment that values individual similarities and differences, so that all can reach their potential and maximize their contributions to an organization.”

Recognizing that one size does not fit all, the Final Standards allow each entity to tailor its approach to compliance to fit the entity, taking into account its size, total assets, number of employees, governance structure, revenues, number of members and/or customers, contract volume, geographic location, and community characteristics. The Final Standards note that, when drafted, the agencies focused primarily on institutions with more than 100 employees.

The Final Standards envision that an entity will conduct an annual “self-assessment” of its diversity policies and practices in four areas: (1) organizational commitment to D&I, (2) workforce and employment practices, (3) procurement and business practices, and (4) practices to promote the transparency of organizational D&I. The Final Standards provide for “assessment factors” for each of these areas, encouraging entities to allocate time and resources to monitor and evaluate their performance under their diversity policies and practices on an ongoing basis.

Agencies’ Use of Assessment Information

The Final Standards note that they do not create new legal obligations and that use of the Final Standards by regulated entities is voluntary. They further instruct that agencies will not use their examination or supervisory processes in connection with the Final Standards. Instead, the Standards envision that agencies will use the information submitted to them to monitor progress and trends in the financial services industry with regard to D&I in employment and contracting activities. The Standards state that agencies will identify and highlight policies and practices that have been successful, coordinate with other agencies, and potentially publish best practices based on information provided to them.

Additional Notice and Comment Period

The Final Standards envision that regulated entities will make certain information available to the public and their primary federal financial regulators. The Final Standards opine that this information collection requirement would not impose any new recordkeeping burdens on regulated entities because those entities would only publish or provide information they already maintain during the normal course of business. That being said, the agencies invite comments on topics regarding the information collection process and parameters, seeking input on how this requirement might affect regulated entities. Those interested may submit their comments to the OCC, Board of Governors of the Federal Reserve System, FDIC, NCUA, CFPB, or SEC by August 10, 2015.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ballard Spahr LLP | Attorney Advertising

Written by:

Ballard Spahr LLP
Contact
more
less

Ballard Spahr LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.