Warren Seeks Labor Department Probe Over Wells Fargo Tactics
(Bloomberg) -- Democratic lawmakers want to add the U.S. Labor Department to the list of regulators scrutinizing Wells Fargo & Co. over its fake-account scandal.
A group of senators led by Elizabeth Warren asked the agency in a letter dated Sept. 22 to investigate whether the bank violated labor laws by denying fair compensation to employees who were under pressure to meet aggressive sales quotas. The lawmakers want regulators to look into whether the bank failed to pay overtime to workers and said that the probe should take place ahead of a December deadline for new overtime rules.
“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,’” wrote the lawmakers, including Sherrod Brown of Ohio, the top Democrat on the Senate Banking Committee, and Bernie Sanders of Vermont.
Wells Fargo spokeswoman Jennifer Dunn said in a statement, “we pride ourselves on creating a positive environment for our team members, including market competitive compensation, career-development opportunities, a broad array of benefits and a strong offering of work-life programs.” She didn’t specifically address the lawmakers’ letter.
At least three lawsuits filed by former employees against the bank cited the Fair Labor Standards Act and aggressive sales quotas that forced them to work overtime without getting paid for it. Two cases were dismissed and the claims were determined to be unfounded by judges, while the other was settled without any judgment on the claims.
Pressure from lawmakers on both sides of the aisle is intensifying on Wells Fargo after the bank agreed to pay $185 million in fines to the U.S. regulators and the Los Angeles city attorney’s office to resolve claims that employees opened more than two million bogus accounts. Chairman and Chief Executive Officer John Stumpf took a beating Tuesday at a Senate hearing where Democrats and Republicans grilled him over the bank’s actions.
Warren has called for Stumpf to resign and said he should face criminal investigation. Senator Jeff Merkley, an Oregon Democrat, has asked the Securities and Exchange Commission to investigate whether Wells Fargo violated internal controls provisions of the Sarbanes-Oxley Act by not recognizing and stopping the misconduct. Republican David Vitter, chairman of the Senate Small Business Committee, has asked the Small Business Administration for more information about enforcement actions it has taken against the bank as part of his own investigation.
Senator Angus King, a Maine independent, was among a group of senators who urged the Federal Reserve Bank of San Francisco not to reappoint Stumpf as the representative for its district on the Fed’s Federal Advisory Committee.
The House Financial Services Committee plans to hold its own hearing on Wells Fargo next week, and has asked Stumpf to testify.