United States: Should You Sharpen Your Diversity Policies & Practices Under Dodd-Frank Mandates?

Last Updated: April 21 2015
Article by Keith S. Anderson

The much-publicized Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 became effective on August 12, 2011. Section 342 of the Dodd-Frank Act, requiring the implementation of diversity practices for both government agencies and regulated financial entities, has received less attention and has been somewhat overlooked, but that will change in the near future. Regulated companies need to review and update their diversity policies in preparation for the scrutiny that is on the horizon from their government regulators.

Who It Affects

Section 342 of the Dodd-Frank Act addresses diversity practices and applies to:

  • Federal financial agencies
  • Entities that contract with federal financial agencies
  • Private financial entities that are regulated by any of several federal financial agencies (the 12 regional Federal Reserve Banks, Federal Reserve Board of Governors, Departmental Offices of the Department of Treasury, Federal Deposit Insurance Corporation, Federal Housing Finance Agency, National Credit Union Administration, Office of the Comptroller of the Currency, Securities and Exchange Commission, and Consumer Financial Protection Bureau)

Practically speaking, this umbrella will include any bank or financial institution regulated by the federal government.

What It Accomplishes

Section 342 requires federal financial agencies to create an Office of Minority and Women Inclusion (OMWI) to be "responsible for all agency matters relating to diversity in management, employment and business activities." First, each of the government entities were and are to take steps to promote diversity within its workforce. Specific steps for the agencies to take include: (1) recruiting at historically black colleges and universities along with other colleges that serve minority populations, (2) sponsoring and recruiting at urban job fairs, (3) placing employment ads in periodicals oriented toward minorities and women, (4) partnering with organizations that focus on developing opportunities for minorities and women, and (5) and partnering with inner-city high schools to establish financial literacy programs and provide mentoring.

Second, the Act requires government entities to develop standards to ensure the fair inclusion of minorities, women, and minority-owned businesses in the agency's contracts. The procedures used by the covered agencies in evaluating potential contracts or contractors will now include consideration of the diversity of the applying contractor as a criterion. The Act also requires the government agency to create standards to assess whether the agency contractor or subcontractor has made a "good faith effort" to include minorities or women in their workforces. The penalties for failing to prove such a good faith effort can include termination of the contract. Section 342 also expands the definition of "federal contract" to include almost any financial service entity and law firms that do business with one of the affected federal agencies.

Third, and perhaps most significantly, the Act gives the OMWI the authority to assess the diversity policies of regulated private entities. Section 342, however, provides no specific guidance as to the criteria that the OMWI will be using to assess such programs. The OMWI offices have yet to promulgate final regulations but OMWI directors from six of the financial agencies proposed joint standards that should serve as a possible guide. The four broad categories that should be included in a company's diversity policy, according to the proposed joint standards, are:

  1. Organizational commitment to diversity and inclusion,
  2. Workforce profile and employment practices,
  3. Procurement and business practices – supplier diversity, and
  4. Practices to promote transparency of organizational diversity and inclusion.

The proposed standards did recognize that one size does not fit all and that a financial entity's "size and other characteristics (for example, total assets, number of employees, governance structure, revenues, number of members and/or customers, contract volume, geographic location, and community characteristics)" should be taken into account.

Additionally, most believe that the OMWI will require regulated entities to submit annual reports on their policies, statistics, and outreach programs. As a possible guide, the Housing and Economic Recovery Act (HERA) has created such a reporting obligation, and the Federal Housing Finance Agency has implemented regulations that covered entities must submit reports "describing efforts to promote diversity and ensure the inclusion and utilization of minorities, women, individuals with disabilities, and minority, women, and disabled-owned business at all levels, in management and employment, in all business and activities, and in all contracts for services and the results of such efforts." Such reports are to include the number of equal opportunity complaints that were filed, the number and result of any claims of discrimination, and the amount paid by the regulated entity for settlement or judgments on discrimination claims. Affected entities should bear these reporting requirements in mind when evaluating strategy on EEOC complaints that they handle as the information will become much more transparent.

Practical Tips

Although final regulations and enforcement mechanisms will be determined by the OMWI in the days ahead, regulated financial entities should review and enhance their diversity policies and prepare for the examination of such policies by their regulators. With scrutiny from regulators on the horizon there is no better time to take a closer look at current policies and update areas as needed. Most financial employers already have well-established diversity programs that comply with these proposed joint standards and eventually the OMWI's requirements. Every company should have Equal Opportunity policies that affirm their commitment to workplace equality that is free from discrimination, harassment, and retaliation, and that provide procedures for reporting discrimination or harassment.

Additionally, financial employers should statistically assess their demographics. Most companies probably already have this information handy and will have previously reported such statistics on an EEO-1 Employer Information Report. Regulated entities should develop outreach programs, if possible, such as partnering with organizations promoting minorities or recruiting in minority and female-based schools.

Aside from the regulatory requirements, employers should seek to embrace these diversity initiatives as part of a culture they want to promote and one which will enhance their reputation in their industry.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.