Takeaways

• Financial services employers have a legitimate interest in protecting integrity and maintaining public confidence in their institutions when evaluating employees’ off-duty conduct.
• Employers should focus on whether off-duty conduct relates to a legitimate business concern.
• A consistent, well-documented process can help manage employers’ reputational concerns and legal risk.

Article

In an era of instant public scrutiny, employers are increasingly responding to employees’ off-duty conduct that threatens their reputation, particularly in the financial services industry, where public trust and confidence are critical.

In general, when evaluating employees’ off-duty conduct for corrective action, employers should focus on the conduct’s demonstrable connection to the job duties, impact on workplace operations or regulatory obligations, or effect on other legitimate business necessity. By grounding their employment decisions in legitimate business concerns rather than vague “reputational risk,” employers can reduce legal exposure while protecting the public trust on which their businesses depend.

Because of the heightened public expectation that financial service providers employ trustworthy people to handle their money, Section 19 of the Federal Deposit Insurance Act (12 U.S.C. § 1829) sets a high bar by prohibiting, for a specified period, a person from participating in the conduct of the affairs of an FDIC-insured bank if they have been convicted of certain...

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