Compliance Update with Amy K
by Amy Kleinschmit
Chief Compliance Officer

New DOL rule on FFCRA

The Department of Labor issued a new regulation relating to the Families First Coronavirus Response Act (FFCRA) to clarify paid leave requirements. The press release and rule can be found here.

The revisions in this rule provide the following clarifications:

  • Reaffirm and provide additional explanation for the requirement that employees may take FFCRA leave only if work would otherwise be available to them.
  • Reaffirm and provide additional explanation for the requirement that an employee have employer approval to take FFCRA leave intermittently.
  • Revise the definition of “healthcare provider” to include only employees who meet the definition of that term under the Family and Medical Leave Act regulations or who are employed to provide diagnostic services, preventative services, treatment services or other services that are integrated with and necessary to the provision of patient care which, if not provided, would adversely impact patient care.
  • Clarify that employees must provide required documentation supporting their need for FFCRA leave to their employers as soon as practicable.
  • Correct an inconsistency regarding when employees may be required to provide notice of a need to take expanded family and medical leave to their employers.

As you will recall the FFCRA was signed into law March 18, 2020. The paid sick leave and expanded family and medical leave requirements will expire on December 31, 2020.

Briefly, the FFCRA included the “The Emergency Paid Sick Leave Act” (EPSLA), which entitles certain employees of covered employers to take up to two weeks of paid sick leave if the employee is unable to work for specific qualifying reasons related to COVID-19. The FFCRA also included the “The Emergency Family and Medical Leave Expansion Act” (EFMLEA), which amends Title I of the Family and Medical Leave Act, 29 U.S.C. 2601 et seq. This provision permits certain employees of covered employers to take up to 12 weeks of expanded family and medical leave, ten of which are paid, if the employee is unable to work due to a need to care for his or her son or daughter whose school, place of care, or child care provider is closed or unavailable due to COVID-19 related reasons.

Additional resources for the FFCRA provisions can be found here, which includes FAQs, fact sheets, online tool to determine FFCRA eligibility, the required poster.

CFPB Section 1071 Rulemaking – Business Lending Data Collection

Section 1071 of the Dodd-Frank Act requires financial institutions to collect certain data regarding applications for credit for women-owned, minority-owned, and small businesses, and to report that data to the CFPB on an annual basis. The CFPB recently issued a number of resources that describe this rulemaking which can be found here.

As discussed in the outline at the above link, the CFPB is proposing that this regulation apply to “any partnership, company, corporation, association (incorporated or unincorporated), trust, estate, cooperative organization, or other entity that engages in any financial activity.” This would include credit unions that engage in small business lending. However, the CFPB has acknowledged that it is concerned that the smallest financial institutions, or those with the lowest volume of small business lending, might reduce or cease their small business lending activity because of the fixed costs of coming into compliance with an eventual 1071 rule, which could be contrary to the community development purpose of section 1071 and could also be contrary to one of the general purposes of the Bureau, to facilitate access to credit. Therefore, the CFPB is proposing either an asset level threshold and/or a volume threshold.

Dodd-Frank requires certain data points that must be in the rule and CFPB has the power to add discretionary data points. The mandatory data points include: (1) whether the applicant is a women-owned, minority-owned, and/or small business, (2) application/loan number, (3) application date, (4) loan/credit type, (5) loan/credit purpose, (6) credit amount/limit applied for, (7) credit amount/limit approved, (8) type of action taken, (9) action taken date, (10) census tract (principal place of business), (11) gross annual revenue, and (12) race, sex, and ethnicity of the applicant’s principal owners. The CFPB is considering the following discretionary data points - pricing, time in business, North American Industry Classification System (NAICS) code, and number of employees.

NCUA Board Meeting

The National Credit Union Administration (NCUA) met yesterday for its monthly board meeting. The Board Action Bulletin can be found here, but a couple of highlights include the share insurance fund report and an update on the new MERIT Examination System.

With regard to the share insurance fund report, the NCUA announced that invoices will be sent out for the semi-annual contributed capital adjustment this month for credit unions with $50 million or more in assets. These invoices will amount to a total of $1.5 billion.

The Modern Examination and Risk Identification Tool (MERIT) will replace the NCUA’s legacy examination platform. This platform is scheduled for a phased rollout starting in 2021.

The NCUA also approved a final rule relating to Real Estate Appraisals. However, this was just a finalization of the Interim Final Rule that was previously issued in April and nothing was changed. Issued in response to the COVID-19 pandemic, the rule deferred the requirement to obtain an appraisal or written estimate of market value for up to 120 days following the closing of certain residential and commercial real estate transactions, excluding transactions for acquisition, development, and construction of real estate. This rule expires December 31, 2020.

Finally, the NCUA also approved an interagency order granting a CIP exemption for loans extended to facilitate the financing of property and casualty insurance policies. Premium financing arrangements are typically originated through insurance brokers who arrange short-term financing of property and casualty policies for all customers. Banks, credit unions and other finance companies may provide financing with the insurance broker as an intermediary. The exemption only relates to CIP requirements. All other BSA/AML regulations and requirements still must be adhered to.

As always, CUAD members may contact Amy Kleinschmit with any compliance related questions.


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