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Regulation and Compliance > Federal Regulation

Wells Fargo to Pay $7.8M in Back Wages Over Hiring Discrimination

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(Photo: Bloomberg)

Wells Fargo agreed Tuesday to pay the Labor Department $7.8 million in back wages and interest to resolve allegations of hiring discrimination.

Labor’s Office of Federal Contract Compliance Programs (OFCCP) entered into a conciliation agreement with Wells Fargo Bank over Wells Fargo’s alleged discrimination against 34,193 African American applicants for banking, customer sales and service, and administrative support positions at U.S. locations nationwide, as well as against 308 female applicants for administrative support positions, in violation of Executive Order 11246.

The Executive Order prohibits federal contractors from discriminating in employment based on race, color, religion, sex, national origin, sexual orientation or gender identity.

In addition to paying the back wages and interest, Wells Fargo agreed to provide 580 affected applicants with job opportunities as tellers, personal bankers, customer sales and service representatives and administrative support positions, Labor said.

Wells Fargo said in a Tuesday statement shared with ThinkAdvisor that the agreement with the OFCCP “relates to its routine review of hiring data from six to 10 years ago in a small number of U.S. geographies. ”

The OFCCP review, Wells Fargo said, “ found lower selection rates for African Americans for some teller, customer service and personal and phone banker positions, while Hispanics were generally the group with the highest selection rate, reflecting the need for Spanish-language skills for certain customer-facing roles.”

Added Wells Fargo: “There were no findings that Wells Fargo hiring managers intentionally discriminated against job candidates.”

Since this time period, Wells Fargo has “made significant changes, including centralizing recruiting, establishing a recruiting team focused on diverse talent, increasing partnerships with diverse organizations (including historically black colleges and universities), and improving record keeping,” the bank said.

The news comes just as Wells Fargo is moving ahead with job cuts, which could affect tens of thousands of workers, according to a recent Bloomberg report, and nearly four years after it began making headlines for its fake-accounts scandal.

“Starting in early August, we resumed regular job displacement activity,” Beth Richek, a spokesperson for the bank, said in a statement provided to the news service.

The bank lost $2.4 billion in the second quarter, or $0.66 per share, vs. profits of $6.2 billion, or $1.30 per share, a year ago and $653 million, or $0.01 per share, in the first quarter.

It set aside nearly $9.6 billion in Q2’20 for potential loan losses. In the period, total revenues were $17.8 billion, up slightly from $17.7 billion in Q1, but down from $21.6 billion in the year-ago quarter.

OFCCP’s Views

“The Office of Federal Contract Compliance Programs is satisfied that Wells Fargo has pursued an early resolution conciliation agreement, and addressed the issues found in our review,” said Craig Leen, the Office of Federal Contract Compliance Programs’ director, in a statement.

“OFCCP’s Early Resolution Procedures program helps ensure prompter and broader relief for America’s workforce by allowing contractors facing a potential violation to proactively correct such violations and ensure future companywide compliance,” Leen explained.

Wells Fargo will also take steps to ensure its personnel practices comply with federal requirements.

While not admitting liability in the investigation, Wells Fargo volunteered to enter into the conciliation agreement and to enhance future compliance proactively.

The bank did not return a request for comment as of press time.

In mid-July, the bank’s executives said they were set to begin trimming costs in the second half of 2020 and plan to cut at least $10 billion of expenses, including those tied to management and noncore activities

Well Fargo’s advisor headcount dropped to 13,298 on June 30 from 13,450 as of March 31 and from 13,723 a year ago. The wealth unit’s net income plunged 70% from a year ago to $180 million in Q2.


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