When the Dodd-Frank Act was passed in 2010, the sweeping financial industry regulations got attention from the scores of entities under its reach and the law firms that represented those institutions. But five years later, a sometimes-overlooked section of the law now has employment lawyers busy and some clients behind the compliance eight ball.

The issue is Section 342, which regulates diversity and inclusion in the financial industry. The section called on the nine agencies that enforce Dodd-Frank Act provisions to create an Office of Minority and Women Inclusion, staff it with a director, and develop standards for assessing the diversity policies and practices of the entities they regulate. Those entities don’t just include investment banks, but any publicly traded company, mortgage companies and others that do business with some of those entities.

Six of those nine agencies — the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corp., the National Credit Union Administration, the Consumer Financial Protection Bureau and the Securities and Exchange Commission — issued in October 2013 proposed joint standards those agencies would use in assessing diversity and inclusion.

The other three entities — the Treasury Department, the Federal Reserve banks themselves and the
Federal Housing Finance Agency — have not yet issued proposed rules. All nine agencies, however, have offices of minority and women inclusion.

Ballard Spahr employment lawyer Brian Pedrow said the final rules from the six agencies proposing joint rules is expected in the first quarter.

“I think many companies do not realize these standards are in development and about to be issued in final form and I think it will be a surprise to a number of companies,” Mr. Pedrow said.

He said he is seeing an increase in calls from those who are aware and want to be sure they are prepared for the final rules. And Mr. Pedrow is doing his own outreach to clients to see if they have plans in place. One of the many unknowns is whether the final rules will allow for lead-in time to get in compliance or if the agencies will start enforcing right away.

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