A diverter conveyor includes a frame supporting an upper conveyor that has an upstream end and a downstream end and that is configured to carry sheets in a first, downstream, direction. A plurality of nip rollers are mounted on the frame upstream of the upstream end of the upper conveyor and are spaced from the upstream end of the upper conveyor by a gap. The nip rollers feed the sheets along a main path to the upstream end of the upper conveyor. A rejection conveyor is supported by the frame and has a portion beneath the gap and extends away from the upper conveyor at an acute angle. A plurality of paddles are mounted at the first gap, and an actuator is operably connected to the paddles and configured to shift the paddles from a first position out of the main path to a second position in the main path.