Arrest and Conviction Reports for Employment

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Arrest and Conviction Reports for Employment
Last Reviewed: March, 2017

The Equal Employment Opportunity Commission (“EEOC”) has issued an Enforcement Guideline (“Guideline”) on the use of arrest and conviction records in employment decisions under Title VII of the Civil Rights Act (“Title VII”). Title VII prohibits an employer from making employment decisions based upon race, national origin, religion or sex. It does not address arrest, convictions or incarcerations. Despite the lack of reference to arrests or convictions in Title VII, an employer is prohibited from implementing a policy with disparate impact upon individuals in protected categories. Arguably, excluding individuals with criminal records from employment has a disparate impact on individuals based upon race and national origin. To prevent discrimination, the Guidelines forbid reliance upon convictions absent business necessity.

Notably, the EEOC specifically recognizes financial institutions as exempt from reliance on the Guidelines. Credit unions may exclude individuals convicted of financial crimes within previous ten years and in compliance with §205(d) (page 34) of the Federal Credit Union Act (“FCUA”)
Specifically, §205(d) prohibits a federal credit union or federally insured credit union from employing a person who has been convicted of a “crime of dishonesty” absent NCUA approval. A “crime of dishonesty” is “a crime to cheat, defraud or wrongfully take another’s property” and includes but is not limited to convictions for the following:

  • receiving or claiming gifts for procuring loans;
  • theft, embezzlement or misappropriation of money, funds or securities;
  • falsifying bookkeeping entries for loans, in exchange for compensation;
  • submitting false, forged or counterfeit statements or documents to NCUA;
  • falsifying statements on loan/credit applications to overvalue land or property to federal agencies;
  • knowingly concealing assets from NCUA liquidating agent;
  • fraud;
  • obstructing exam of financial institution by federal agency;
  • money laundering; and/or
  • monetary transactions in property derived from specified unlawful activity.

Based upon §205(d), a credit union may rely upon a conviction of a crime of dishonesty to exclude an employee or applicant from employment. Compliance with the procedural requirements of §205(d) FCUA is considered compliance with the Guidelines.