4000 - Advisory Opinions
Temporary Employee Working for Insured Depository Institution is Subject to Section 19 of the FDI Act
March 17, 1993
Nancy L. Alper, Counsel
In our conversation of March 16, 1993, you raised a question concerning whether temporary employees were covered by section 19 of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. 1829, ("section 19"). You stated that *** (the "Bank") has a policy of hiring temporary employees and that the term of work of a temporary employee for the Bank may last from one to two weeks up to months at one time.
As you correctly stated, section 19 has been significantly expanded by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA") and the Comprehensive Thrift and Bank Fraud Prosecution and Taxpayer Recovery Act of 1990 ("Crime Bill"). As amended, section 19 now prohibits, absent FDIC consent, a "person" convicted of a criminal offense involving dishonesty or breach of trust, or who has agreed to enter into a pretrial diversion or similar program in connection with a prosecution for such offense, from: (a) owning or controlling directly or indirectly an insured depository institution; (b) becoming or continuing as an institution-affiliated party; or (c) participating, directly or indirectly, in any manner in the conduct of the affairs of an insured depository institution.
As I stated to you in our conversation, the staff of the Legal Division has proposed a policy statement interpreting section 19. That proposed policy statement contains the following definition of "employee" as "any person who receives payment for his or her services from the insured depository institution and where the institution has the power or right to control or direct the material details of how the work is to be performed, and includes but is not limited to part-time, casual, temporary, intern or other individuals." It is the view of the undersigned that a temporary employee who is working for an insured depository institution for a period of time is an obvious example of a person who would be considered participating in the conduct of the affairs of an insured depository institution and, thus, come within the parameters of section 19.
However, as we discussed yesterday, the proposed policy statement and the conclusions contained herein are merely opinions of the staff of the Legal Division and do not represent any findings or determinations by the Board of Directors of the FDIC.
Should you wish to discuss further the present issue or if you have other issues concerning section 19, please do not hesitate to contact me at (202) 898-3720.