Restrictions on Hiring Employees With Criminal Records in Insurance Companies | JD Supra

Over the past few years, federal and state governments have forced employers to rehire criminals, such as tax incentives and training subsidies. Although people are interested in these programs, insurance companies should be careful and consider the specifics, which are always being implemented by laws that regulate or restrict the employment of people with certain criminal records.

Insurers are required to review their post-offer screening procedures for prospective employees and agents to ensure that employment or participation is contingent upon determining eligibility under 18 USC § 1033 (Section 1033). Section 1033 was issued as part of Violent Crime Control and Law Enforcement Act of 1994. The Act prohibits persons convicted of dishonesty or breach of trust, or of a crime under Section 1033 (which includes, among other things, fraud and theft), from engaging in the “business of insurance” without the written consent of the insurer. 18 USC § 1033(e). Section 1033 also prohibits those engaged in the business of insurance from permitting persons in the above categories to engage in the “business of insurance.” Id. Violations can result in various consequences including civil penalties of up to $50,000 per incident. 18 USC § 1034.

Section 1033 defines “insurance business” broadly as “writing insurance,” or “rewriting risks, and reinsurance,” including “all activities necessary or incidental to the writing or rewriting.” 18 USC § 1033(f)(1).

Therefore, in order to comply with Section 1033, the insurer must determine whether the employee’s or agent’s work will affect the “business of the insured” and if so, whether the person has been convicted of dishonesty, breach of trust or a violation of Section 1033. Cases related to dishonesty it often involves other acts of deception or falsehood, such as lying, fraud, theft, embezzlement or bribery. Lawsuits involving breach of fiduciary duty often center on wrongdoing that violates a financial relationship – for example, a real estate agent who misappropriates real estate funds. By extension, a sentence may include certain deferred sentences and may, or may not, be subject to expungement rules.

As a matter of fact, an insurer may hire or engage a person with a Section 1033 disqualification claim if written approval is obtained from the insurance regulatory authorities. In order to receive a license, called by some a Section 1033 waiver, the individual must complete and submit an application required by any state insurance commission or regulatory agency. The Guidelines of the National Association of Insurance Commissioners explain that the employee must apply in the state where the applicant will perform the most extensive work (if applicable) or where the insurance company is located. Individuals applying for a license as a producer or other licensed insurance professional must register with the state issuing the license.

Although a person must apply for a waiver on their own, an insurance agent may be required to assist. For example, Pennsylvania removal service requires an affidavit from the insurer’s president or designated executive officer, as well as details of the intended employment or business relationship with the insurer.

Because of the concerns surrounding the use of criminal history records, background check and consumer credit monitoring laws, and employment discrimination laws that prohibit if not prohibit the use of arrest and conviction records as discrimination, the combination of these issues makes Section 1033 compliant. very difficult. For example, a The US Equal Employment Opportunity Commission has explained that although Title VII (the Federal Anti-Discrimination Law) does not prohibit state-imposed restrictions on the employment of persons of particular beliefs, policies that create exclusions beyond those restrictions may be subject to Title VII.

Therefore, each insurer must regularly review its recruitment, screening, hiring and promotion practices for compliance with human resource practices, compliance with employment discrimination laws and to avoid violations of Section 1033. person and work process. Insurers must also be prepared to explain and defend the methods used to evaluate applicants in case they are challenged under anti-discrimination laws or other considerations.