Wells Fargo & Co. has reached a settlement with a former branch manager who claimed she was fired for blowing the whistle on employees who had been opening accounts without permission, the sales-pressure conduct at issue in a scandal that erupted in 2016.
The settlement, finalized on Jan. 12, brought an end to Wells Fargo’s appeal of a U.S. Department of Labor order compelling the bank to reinstate the fired branch manager, Claudia Ponce de Leon, and pay her $577,500 in back wages, damages and legal fees. That decision came almost a year after Wells Fargo reached a $185 million settlement with federal regulators and the Los Angeles City Attorney’s Office resolving allegations over the widespread misconduct at the bank.
An in-house judge at the Labor Department has ordered Wells Fargo and Ponce de Leon to submit a copy of the settlement agreement by Feb. 9. Ponce de Leon’s lawyer, Yosef Peretz, declined to comment, citing a confidentiality agreement. “All I can [say] at this point is the parties have decided to resolve the dispute,” Peretz said Friday.
A Wells Fargo spokeswoman said in a statement: “The matter has been resolved by mutual agreement of the parties.” An outside lawyer for Wells Fargo at Gibson, Dunn & Crutcher, Karl Nelson, did not immediately respond to requests for comment Friday. Nelson is a labor and employment partner in the firm’s Dallas office.
Wells Fargo has fought Ponce de Leon’s claims for years. In July, the Labor Department ordered the bank to reinstate Ponce de Leon and pay back wages. Wells Fargo promptly appealed the decision last year to an administrative law judge.
In a prepared statement in December, the bank, responding to an inquiry from The National Law Journal, said Ponce de Leon was fired “because other team members repeatedly raised concerns about how she was treating them.” Wells Fargo said labor regulators did not interview several witnesses who could have attested to the conduct cited by the bank.
“We owe it to the team members who raised those concerns to allow for a full hearing so that their side of the story regarding Ms. Ponce de Leon’s conduct can be heard before any final determination is made on reinstating a manager who failed to comply with our vision and values,” Wells Fargo said. “At the end of a full and fair process, whichever way it comes out, we will comply with the outcome.”
Wells Fargo had contested Ponce de Leon’s retaliation claim since 2012, when it turned to Seyfarth Shaw partner Eric Steinert. Steinert, in communications with the Occupational Safety and Health Administration, said Wells Fargo gave Ponce de Leon repeated opportunities to address concerns about her conduct.
Peretz, in an interview last year, said Wells Fargo followed a familiar tack fighting Ponce de Leon’s claims.
“That’s the way big corporations fend off claims—arguing that she was a bad employee, in essence. The problem is, she has a very good track record,” Peretz said in the interview. “It’s a classic story of someone who’s trying to do the right thing and the system goes against her.”
The Ponce de Leon matter may be behind the bank. But Wells Fargo has a wider whistleblower problem on its hands. In a regulatory filing last year, Wells Fargo said it is facing “multiple single plaintiff Sarbanes-Oxley Act complaints and state law whistleblower actions filed with the Department of Labor or in various state courts alleging adverse employment actions for raising sales practice misconduct issues.”