May 2020 OBA Legal Briefs

• Work “after” the coronavirus
• Information on Oklahoma campaign accounts
• Are savings transfer limits dead?

Work “after” the coronavirus

By Andy Zavoina

Whether you call it the new normal or the abnormal, as bankers we are really in new territory. Sometimes it is akin to walking into a dark room and feeling your way around and then learning someone is still arranging the furniture. On the deposit side of the bank rules are changing and it impacts your IRS reporting and required minimum distributions. And on the loan side borrowers want their Paycheck Protection Program loans, they want them now or you will be sued, and the Small Business Administration has your hands tied so you cannot get the applications submitted. And if you are a smaller bank, your submission times are 4 p.m. to midnight – welcome to “banker’s hours” in the COVID-19 pandemic.

We on the OBA compliance team are repeatedly asked if you can screen employees and take their temperature before allowing them to work? If they have COVID-19, are they protected under the Americans with Disabilities Act (ADA)? COVID stands for the Coronavirus Disease, so Yes, they could be. As you will read below the ADA protects all employees.

Employees want to work and may try to work even if they feel ill, but do not believe they actually have COVID-19. But their co-workers are nervous because this employee has a cough and one or more others may call in sick to protect themselves from the potentially ill employee. These are real issues today and they need to be addressed both as we work through the pandemic and as we begin bringing employees back to work. This article may also prompt changes to your pandemic policy as you prepare for the next one.

Much of the ADA is far from regulatory compliance, but just like our team, your compliance team is getting these questions, too. So, we will attempt to address some of these issues as they apply to your employees working today and getting back to work as the pandemic begins to subside. Banks and others will take a long time to get back to where they were in January, if they ever get back to that point.

First, let’s talk about health issues as they apply both to today, and as employees come back to work. The Equal Employment Opportunity Commission (EEOC) oversees anti-discrimination issues in the workplace and this includes accommodations for the disabled, which includes those suffering from a disease. In fact, to be clearer, the ADA regulates what the bank can ask about a disability and medical exams for all employees and job applicants, whether they have a disability or not. The ADA prohibits the bank from excluding individuals with disabilities from the workplace for health or safety reasons unless they pose a “direct threat,” which means a significant risk of substantial harm even with reasonable accommodations. The ADA still requires reasonable accommodations for individuals with disabilities during a pandemic.

Reasonable accommodations would include things like social distancing, splash shields, sanitizers or wipes, masks, etc. Whether or not someone poses a direct threat should be based on factual and objective information and not subjective perceptions or irrational fears.

The EEOC uses four factors to identify whether an employee poses a direct threat: (1) the duration of the risk; (2) the nature and severity of the potential harm; (3) the likelihood that potential harm will occur; and (4) the imminence of the potential harm.

The EEOC has reminded employers such as your bank that Equal Employment Opportunity (EEO) laws, including the ADA, apply during a pandemic but they should not interfere with, or prevent a bank from following guidance issued by the Centers for Disease Control and Prevention (CDC) or state and local health authorities. The guidance will often change. We’ve seen the COVID-19 pandemic evolves both positively and negatively and guidance has followed its trajectory up and down.
The EEOC has a guidance online. “Pandemic Preparedness in the Workplace and the Americans With Disabilities Act” [https://www.eeoc.gov/facts/pandemic_flu.html] provides information bankers want, especially in four key areas:

1. How much information can the bank request from staff if they call in sick? Management wants to protect other employees and feels information is warranted.

2. When can the bank require the employee’s temperature be taken?

3. Can the bank require employees to stay home if they have COVID-19 symptoms?

4. When employees return to work, can the bank require doctors’ notes clearing them?

The guidance document has been in existence for several years and was updated this year for the COVID-19 pandemic. Consider incorporating these guides with personnel policies and/or your pandemic policy. In today’s COVID-19 environment, the World Health Organization (WHO) is the body that officially declares a pandemic and has done so pertaining to COVID-19. So, as that criterion is required for parts of the EEOC guidance, it has been met.

Continuing with the above discussion on a “direct threat,” during a pandemic if the CDC or state or local public health authorities determine that the illness is like seasonal influenza or the 2009 H1N1 influenza, it would not pose a direct threat and would not justify disability-related inquiries or medical exams. When the CDC or other health authorities determine that pandemic influenza is significantly more severe, it could pose a direct threat. The assessment by the CDC or other health authority would provide the necessary evidence justifying disability-related inquiries and medical exams.

In March 2020, the CDC guidance stated that the COVID-19 pandemic did qualify as a direct threat. This, then, allows many of the medical inquiries bankers ask about. The precautions issued by various government authorities including closure requirements for some businesses such as restaurants, sports venues and schools and the urging of social distancing all support the fact that there is a significant risk of substantial harm posed by having someone with COVID-19, or its symptoms, present in the bank, lobby, offices, etc.

During a non-pandemic period, the bank may want to know about a person’s limitations, such as asking if they have a compromised immune system or a chronic condition that could make them more susceptible to a flu like COVID-19. This may be for preparedness, but it is not allowed. The ADA prevents it because the answer could expose a disability without cause and there is no direct threat to anyone before a pandemic actually occurs.

Shift to a pandemic period and now the direct threat has been established and substantiated.

Q1. During a pandemic, how much information can the bank request from employees who report feeling ill at work or who call in sick?

A1. The bank is free to inquire with staff if they are experiencing influenza-like symptoms, such as a fever, cough, loss of taste, etc. These are COVID-19 symptoms. The bank must keep all the information about an employee’s illness confidential.

If the pandemic flu is like a seasonal influenza these inquiries are not considered disability related. If pandemic flu becomes severe, the inquiries are justified by a reasonable belief based on objective evidence that this poses a direct threat.

Applying this principle to current CDC guidance on COVID-19, the bank may ask employees who report feeling ill at work, or who call in sick, questions about their symptoms to determine if they have or may have COVID-19.

A common follow-up question is whether the bank has to pay the employee, provide them time off, or require they work from home? The CDC and pandemic guidance from the EEOC do not address this question. The bank will determine how these issues will be addressed based on its own circumstances. Sick time, personal time, paid time off, unpaid time off or work from home offers should be addressed internally and applied uniformly based on bank policy. This may depend on time available, accrued, and duties.

Q2. Can the bank require its employees have their temperature taken to determine if they a fever and/or ask screening questions?

A2. This answer is Yes, during a pandemic period. Taking an employee’s temperature is considered a medical exam which would normally not be allowed but, in these questions, we are talking about during a pandemic and the risk of a direct threat. Because the CDC and state and other health authorities have acknowledged the spread of COVID-19 and issued precautions as of March 2020, the bank may measure employees’ body temperature.

As to screening, this is permissible when those questions are medically specific to the pandemic flu being experienced. You are best advised to focus on the questions the CDC or other health authorities ask. As noted above, the results would be considered confidential information.

This is EEOC guidance, so it addresses the bank and employee relationship. What is not covered is the relationship the bank has with its customers. Counsel or the bank’s insurer may be the ones to ask if these rules can be imposed on customers. We believe that if they are noninvasive, and pose the same direct threat, the bank has an obligation to protect its staff from customers as well as from other employees.

Q3. Can the bank send an employee home because they have symptoms of the current flu?

A3. The answer is Yes. The CDC states that employees who become ill with symptoms of influenza-like illness at work during a pandemic should leave the workplace. Advising your employees to go home is not a disability-related action if the illness is akin to current influenza such as COVID-19 today, or whatever causes the next pandemic. Additionally, the action would be permitted under the ADA if the illness were serious enough to pose a direct threat.

Q4. When an employee has been absent because of pandemic flu symptoms, can the bank require a doctor’s note clearing them to return to work?

A4. Yes. These requirements are permitted under the ADA either because they would not be disability-related or, if the pandemic was severe, the bank would be justified under the ADA standards for disability-related inquiries of employees. Recognize that medical staff may be too busy to see patients for the purposes of providing notes allowing them to return to work, so this may not be practical. The bank may choose to rely on a note or standard form from health clinics, a stamp on a bank form, or an e-mail to certify that a person does not have COVID-19 or another pandemic flu. Because of HIPPA, some medical professionals may be hesitant to disclose too much or do so with email. The bank may want to provide latitude in these requests.

Another question we were asked when the pandemic was in its infancy in the U.S. was if an employee was traveling, especially in a “hot zone” in another location, could the bank ask screening questions or must it wait to see if the employee developed symptoms? The bank would not have to wait because these are not related to any disability. The CDC or other health officials recommend that people who visit specified locations remain at home for several days until it is clear they do not have pandemic flu-like symptoms. The bank may ask whether employees are returning from these locations, even if the travel was personal.

Does the current pandemic mean the bank can ask employees who do not have flu-like symptoms to disclose whether they have a medical condition that the CDC says could make them more vulnerable? The answer is, No. If the pandemic flu (again COVID-19 in early 2020) being experienced is like a seasonal flu, making disability-related inquiries or requiring medical exams of employees without symptoms is prohibited by the ADA.

Could this inhibit the banks plans on getting employees back to work? It could when you cannot require disclosures such as this. But If an employee voluntarily discloses that they have a specific medical condition or disability that puts them at risk of contracting the pandemic flu, it is permissible. The bank still has an obligation to keep this information confidential. The bank may ask them to describe the type of assistance they believe will be needed such as working from home, additional time for medical appointments or the like.

Now, let’s turn our attention to getting back to work. As we have heard so many times, these are new experiences for all of us. There is no standard that will be applicable to all banks, in all circumstances. You may get ideas from these thoughts and questions which are applicable to your bank, however.

Consider which employees will be needed in the bank’s offices initially. Ask yourself if this implementation should be all at once or if it may be phased in, in stages based on your workforce, the offices/branch facility itself, and duties of the staff. This would differ perhaps for the large bank in a high rise (think elevators with push-buttons and social distancing challenges) versus a small community bank housed in one small branch. Can the bank identify its high-risk employees based on CDC guidance? This may include elder employees, especially those with known underlying health issues such as respiratory or heart ailments, diabetes, obesity, etc. What stage will they be in, or will they be encouraged to work from home for the foreseeable future? Is it best to rotate staff from an office environment to work-from-home, and back again periodically? Remember, those employees at high risk may be more comfortable working from home rather than exposing themselves on a daily basis. Consider both the bank’s needs as well as your employees’.

Consider how staff will be notified when and where they will office or carry out their duties. It may still be necessary to alter staffing requirements based on the facilities themselves and the customers anticipated to be served. Will this notification be by email, telephone, letter or a mixture of these? Is an acknowledgment from the employee required? Is this perhaps a single parent who requires day care for their children, and if so, are the day-care facilities open yet? They may not be, so should that employee be required to return to work yet?

How will staff make their commute? If they are dependent on public transportation, is this advisable yet? When they arrive at the bank or office, if elevators are being used what will the allowed occupancy be? Will there be attendants to push the elevator call buttons or wipes at each set of buttons, and the same for the buttons inside the elevator to reach a designated floor. If staff uses the stairs more, those handrails will need to be sanitized regularly.

The same questions should be asked about doors used to enter the building, offices, restrooms, breakrooms, backrooms, etc. All high-touch areas are high-risk areas whether this is a 50-story building in Oklahoma City or a one-story brick and mortar branch in McAlester.

Will all employees report for work entering a specific door where they will retain a six-foot distance from others and answer confidential screening questions? Will someone take their temperature? If yes to this last item, have thermometers (preferably non-touch) been ordered yet (with spare batteries)? Will staff be screened at the beginning of their shift, or more frequently such as every time they clock in/out or enter the building?

Once in place, will personal protective equipment be required and provided, such as masks for everyone, gloves for those handling cash, shields put up between teller windows or will tellers, new accounts desks and lenders be spaced a safe distance apart? Will another canister of those wipes be available at each phone – you must consider every touch point possible as requiring decontamination, including input devices like keyboards? Back to the cash, will it be rotated so that incoming bills are set aside for a few days to allow any possible coronavirus organisms to die? Will the breakroom have signage reminding staff to stay apart, and not loiter at the coffee pot – if the bank will even keep one? Is anything allowed in the refrigerator? Has the janitorial staff been asked to clean the lobby, with disinfectants, one or more times a day? The more they are seen especially in the lobby and high traffic areas the better everyone will feel.

Let’s now consider other issues. Where do customers enter from and will they be subjected to similar screening procedures as staff? Will the bank, based on its own guidance or that from a governmental authority, limit the number of people in the bank? These same issues may apply to vendors as the bank has HVAC, IT, vending machine servicers and the like in the bank daily. If so, signage and communication with your customers is advised. Many retailers now have markers on the floors as to paths to follow, and to indicate social distancing. If physical barriers are used, will these be a new high touch area requiring more cleaning? This may include access to the safe deposit areas, gates, doors and the boxes themselves.

If some staff will continue to work from home, are enhancements needed to the laptops they have, or to their own devices being used? Will the better devices be redeployed once some staff returns?

With all these precautions in place, develop steps to react to issues. When the bank is notified a customer has now tested positive, what process can be used to determine who that customer came in contact with, be it a teller, CSR, lender or the person working the safe deposit area? Will bank staff self-report if they test positive and were working in the bank last week, but rotated to work from home this week? The bank should have a notification process in place to advise staff that a person they are known or suspected to have had contact with has now tested positive and what steps they need to take. That first step may be simply contacting their medical professional to ask if they need to be or even can be tested, or if they need to seek their own care at home and self-quarantine, watching for any other developing symptoms.

Lastly, consider enforcement of all these new rules. Someone needs to be responsible to pause and politely offer a mask to an employee or customer who does not have one, or is wearing it improperly, following too closely, or doing any other “unsafe act” that could harm them, an employee, customer, and you. Staff can be encouraged to assist each other and customers, but the things that get done, are the things that get checked.

There is a lot of antiseptic checking in our futures before we are done with this.

Info on Oklahoma campaign accounts

By Pauli D. Loeffler

It’s an election year, and we are getting a lot of questions regarding setting up campaign accounts. There are several OBA Legal Briefs available online that will help answer your questions. The May 2016 Legal Briefs covers campaign committees, PACs and political party accounts for state, county, and municipal elections. That article provides information for federal elections as well. You will also want to review the July and August 2018 OBA Legal Briefs.

If you haven’t done so already, accessing the Legal Briefs archives will require that you register your email address at your bank on the OBA.com website. Once that’s accomplished, you will need to complete a routine login before clicking on the Legal Briefs link on OBA’s front page.

The Oklahoma Ethics Commission website contains useful information on ethics laws and rules for state, county, and municipal elections. It can be accessed at https://www.ok.gov/ethics/Resources/Laws/index.html. It alson has useful guides for those customers opening accounts who ask the bank questions. The guides can be found at https://www.ok.gov/ethics/Resources/Guides/index.html. As bankers, you can show these customers where to look for the answers, but you should not provide them with any legal advice on what to do with the information they find there.

Are savings transfer limits dead?

By John Burnett

Tucked in behind all the frantic news about COVID-19, stimulus payments, the Payroll Protection Program, the Federal Reserve Board’s herculean efforts to limit the economic damage caused by the pandemic and emergency business shutdown orders, and regulatory pronouncements with guidance on adjusted expectations in the pandemic environment, the Federal Reserve also issued an interim final rule effective on April 24 that removed the transfer and withdrawal limits included in the definition of “savings deposit” in Federal Reserve Board Regulation D, and announced that depository institutions (I’ll use “banks” in the rest of this article) can “suspend” enforcement of the six-transfer limit.

That news has provoked more than a few questions from bankers, and the Federal Reserve provided answers, but not all the answers. What does the Fed mean by “suspend”? Can we stop and not re-start? Can we suspend our fees for excessive transfers/withdrawals, or leave them in place? What do we do with our Form FR 2900 reports? What will this do to Call Reports and other reports that include savings deposit and transactions account numbers or balances? How long can we get away with not monitoring and controlling our customers’ savings and MMDA transfers? If and when we get back to it, do we have to have the same complicated “rules” that were in the old regulation?

Interim final rule

First, don’t be concerned that this is an “interim” final rule in the sense of “temporary and reversible.” “Interim” isn’t used here to indicate that the rule is only temporary and things will go back to the way they were. “Interim” is used in the sense of “temporary” only to get around the normal Administrative Procedures Act (“APA”) requirement for a series of steps before a final rule is issued. The norm is to start with a proposed rule, followed by a comment period of between 30 and 60 days, analysis of the comments, and a final rule. If it were not for the current medical and economic emergency, the Fed might have taken that normal route. But, as the Fed explained in the “Recent Developments” portion of the Discussion in the text that accompanied the rule in its April 28 publication (85 FR 23445), the Fed felt that, after it had eliminated reserve requirements on transaction accounts in March, “the retention of a regulatory distinction in Regulation D between reservable ‘transaction accounts’ and non-reservable ‘savings deposits’ is no longer necessary,” suggesting that the Fed planned to eliminate the distinction and would have done so using the normal APA process, but “financial disruptions arising in connection with novel coronavirus situation have caused many depositors to have a more urgent need for access to their funds by remote means, particularly in light of the closure of many [bank] branches and other in-person facilities.” The urgency factor caused the Board to act quickly by issuing an interim final rule on April 24. Under the APA, an interim final rule can become effective immediately, provide an “after the fact” comment period and be followed by a final rule at a future date (sometimes many months or even years later).

Therefore, there is no reason to believe that this interim final rule will be “undone.”

Suspending enforcement

The word “suspend” is used 13 times in the Discussion accompanying the rule at publication. Not once is the word “suspend” explained or defined. That means we have to look to a dictionary definition, and we find “to render temporarily ineffective,” “to stop for a period of time,” “to cause to stop temporarily (suspend bus service),” or “to set aside or make temporarily inoperative (suspend the rules).” The Fed didn’t use “end,” or “stop” or “discontinue.” It did, however, in one of the Board’s Savings Deposits Frequently Asked Questions [https://www.federalreserve.gov/supervisionreg/savings-deposits-frequently-asked-questions.htm], answer “Yes” in response to “May [banks] suspend enforcement of the six transfer limit on a temporary basis, such as for six months?”

That leaves us with a fairly strong impression that the Fed expects that banks will make their “suspension” of the limits temporary, and revert to some form of limitations at some as yet undefined time. But, in the spirit of full disclosure in this article, there is nothing in the interim final rule that speaks directly to the idea of returning to a limits regime (other than that one-word answer to the question in the preceding paragraph). That response would have been more revealing if it had been “Yes, and that is the path the Board expects will be taken.”

Definition of ‘transaction account’

In addition to removing the limits in the savings deposit definition, the Fed also modified the definition of “transaction account” in § 204.2(e), especially in paragraph (e)(4), where it now says that a transaction account includes “[d]eposits or accounts on which the depository institution has reserved the right to require at least seven days’ written notice prior to withdrawal or transfer of any funds in the account and … the depositor is permitted or authorized to make withdrawals for the purposes of transferring funds to another account of the depositor at the same institution (including transaction account) or for making payment to a third party, regardless of the number of such transfers and withdrawals and regardless of the manner in which such transfers and withdrawals are made. {Emphasis added]

Regardless of assurances in the Savings Deposits FAQs that banks can report savings accounts as transaction accounts or savings accounts (as if it doesn’t matter to the Fed), the “transaction account” definition suggests strongly that it will make a difference (else why bother with paragraph 204.2(e)(4)?). That’s another factor weighing in favor of making any suspension temporary.

Regulation CC

The other significant question raised by bankers (and not addressed by the Fed) concerns the connection between the new definitions of “savings deposit” and “transaction account” and the definition of “account” in Regulation CC § 229.2(a) (as explained in comment B. 229.2(a)-1):

The [Regulation CC definition of “account”] applies to accounts with general third party payment powers but does not cover time deposits or savings deposits, including money market deposit accounts, even though they may have limited third party payment powers. The Board believes that it is appropriate to exclude these accounts because of the reference to demand deposits in the EFA Act, which suggests that the EFA Act is intended to apply only to accounts that permit unlimited third party transfers.” [Emphasis added]

It appears that if a bank drops its savings account transaction limits permanently, it leaves itself open to litigation alleging that the bank can’t continue excluding its savings accounts from the coverage of Regulation CC, even if the Fed doesn’t adjust the Regulation CC definition of “account.” Of course, if the Fed re-draws that definition, non-limited savings accounts may clearly be subject to Regulation CC coverage.

For that reason, I recommend that banks that suspend their enforcement of the transfer limits plan to establish some form of transfer limits again, perhaps six to twelve months in the future.

There will be more on the Fed’s redefinition of savings accounts in a future Legal Briefs installment.