Updated Aug. 30
A federal appeals court Wednesday upheld a Wells Fargo employment policy that allows the bank to fire employees, or not consider job applicants, based on criminal records, despite concerns from advocates that such practices discriminate against minorities.
The panel on the U.S. Court of Appeals for the Eighth Circuit ruled against 10 African-American and Latino workers who alleged discriminatory employment practices. The appeals court upheld a decision from federal court in Iowa.
The Wells Fargo policy at issue summarily terminates or withdraws employment offers to any individual with a disqualification in their criminal background check. Minorities were fired or no longer considered at a higher rate than white workers, according to the lawsuit, which was filed on behalf of a putative class of terminated bank employees and prospective hires.
The central issue focused on a federal provision, known as Section 19, that bars “any person who has been convicted of a criminal offense involving dishonesty or a breach of trust” from working at or continuing to work at a financial institution insured by the Federal Deposit Insurance Corp. The statute does not consider the age of the convictions when applying the employment bar. Violations of Section 19 can result in fines up to $1 million a day. Wells Fargo is an FDIC-insured bank.
“Here, African-American and Latino employees were terminated (or potential employees were not hired) at rates at least twice those of non-minorities,” Judge Lavenski Smith wrote for the appeals panel. “But even assuming that the disparate impact was caused by Wells Fargo’s policy of uniformly applying Section 19, the district court correctly recognized that the bank’s ‘sound business decision was to terminate regardless of race or age or ethnicity.’”
The plaintiffs were represented by teams from Newkirk & Zwagerman and Goldstein, Borgen, Dardarian & Ho. The attorneys did not respond to request for comment.