Wells Fargo and its CEO, John Stumpf, took plenty of lumps earlier this week when Stumpf appeared before the Senate Banking Committee to discuss the $185 million fine the bank is facing over 5,300 of the bank’s former employees opening up more than 2 million fake accounts in order to get sales bonuses.
One by one, senators from both sides of the aisle took turns scolding Stumpf for his bank’s actions, in what Sen. Jon Tester, D-Montana, called a truly rare display of bipartisan unity for the committee.
But some of the members of the Senate are far from being done with Wells Fargo.
In fact, a group of eight senators are now calling on the Department of Labor to investigate Wells Fargo for potential labor law violations stemming from the company’s “aggressive” sales culture.
In a letter sent to Tom Perez, the Secretary of Labor, Sen. Elizabeth Warren, D-Mass, who made nationwide headlines with her heated questioning of Stumpf, along with Sen. Bernie Sanders, I-Vermont; Sen. Bob Menendez, D-New Jersey; Sen. Sherrod Brown, D-Ohio; Sen. Jack Reed, D-Rhode Island; Sen. Jeff Merkley, D-Oregon; Sen. Kirsten Gillibrand, D-New York; and Sen. Mazie Hirono, D-Hawaii, state that they want further investigation into Wells Fargo.
The senators state that the investigation into Wells Fargo conducted by the city of Los Angeles, the Office of the Comptroller of the Currency, and the Consumer Financial Protection Bureau uncovered an environment where employees were subjected to “stringent sales quotas and aggressive incentives, coupled with “staggering neglect by management of the obvious consequences to consumers of those quotas and incentives.”
And that combination may have lead to violations of labor laws in addition to the other malfeasance committed by the bank’s now-former employees.
“There is no excuse for participating in fraudulent conduct, and it is entirely appropriate for those Wells Fargo employees implicated in this illegal scheme to be held accountable to the full extent of the law,” the senators write.
“But the suggestion last week by Chief Executive John Stumpf that "[t]here was no incentive to do bad things" at Wells Fargo – a company that fired 5,300 employees over five years due to improper selling but made little effort to change its policies – does not appear to be grounded in reality,” the senators continue.
“In the wake of the CFPB's announcement, dozens of former and current Wells Fargo employees have come forward to describe the lengths they went to in order to meet the bank's aggressive sales quotas,” the senators continue. “When quotas weren't met, employees faced threats of termination; mandated hours of unpaid overtime; harassment; and other forms of retaliation.”
The senators then point to the original Los Angeles Times report that first exposed the issues at Wells Fargo, stating: “For years Wells Fargo employees have described a management culture characterized by “mental abuse,’ being forced to work overtime ‘for what felt like after-school detention’ during the week and on weekends, and being ‘severely chastised and embarrassed in front of 60-plus managers.’”
The senators then suggest that the Wells Fargo employees were forced to work overtime but did not receive overtime pay.
“These complaints go back as far as 1999 and cut across many of the different business groups within Wells Fargo, including the insurance, mortgage, and retail banking groups,” the senators write.
The senators then cite seven separate examples, in the form of class action and other lawsuits, of allegations from Wells Fargo employees who claimed they were denied overtime pay despite working more than 40 hours in a week.
“In light of these allegations, recent media accounts of possible wage and hour violations by current and former employees, and the staggering findings of the CFPB investigation, we ask that you open an investigation into potential violations of the Fair Labor Standards Act by Wells Fargo,” the senators write.
“Any such investigation should include a comprehensive inquiry into whether Wells Fargo aggressively skirted overtime laws – failing to pay overtime to bank tellers and associates who stayed late or came in on weekends to meet their sales quotas, or misclassifying salaried bank associates as overtime-exempt to avoid paying the overtime guaranteed to them by the FLSA,” the senators continue.
“The emerging portrait of the company’s actual behavior suggests potential widespread exploitation of its own workforce in order to facilitate the widespread exploitation of its customer base,” the senators conclude. “Particularly when one considers that the median wage for a bank teller is about $12 an hour, it is the obligation of the Wage and Hour Division to ensure that every Wells employee that has struggled to do the right thing in the face of such exploitation has been fully paid for every hour of work.”
To read the senators’ letter in full, click here.