Wells Fargo Audits by DOL Typically Come Up Dry

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By Ben Penn

Sept. 27 — The Labor Department is reviewing wage-and-hour practices at Wells Fargo, but recent investigations at the bank rarely found violations that resulted in back pay recovery, a Bloomberg BNA analysis reveals.

Among 37 Wage and Hour Division investigations at Wells Fargo concluded during the Obama administration, four led to findings of Fair Labor Standards Act violations in which the company agreed to pay workers back wages for unpaid overtime, according to a review of enforcement data. In two other cases, the company agreed to pay employees for Family and Medical Leave Act violations. In the remaining 31 investigations, employees recovered nothing.

The sample size is small, but the division’s public enforcement results offer a glimpse of the relatively low return-on-investment when investigators probe the company’s locations.

Labor Secretary Thomas Perez said Sept. 26 that the WHD and several other DOL enforcement agencies will begin a “top-to-bottom review of cases, complaints, or violations concerning Wells Fargo over the last several years.”

Wells Fargo has recently been accused of pressuring employees into working off-the-clock and creating bogus accounts to meet sales quotas.

Jonathan Delshad, an attorney for the employees who filed a lawsuit Sept. 22 alleging wrongful termination and failure to pay wages by Wells Fargo, told Bloomberg BNA that the lack of findings of violations doesn’t mean the bank has been in compliance with the laws.

“Sometimes when an investigation happens, employees who are afraid of losing their job are afraid to speak frankly,” Delshad said Sept. 26.

Wells Fargo spokeswoman Jennifer Dunn declined to comment on the DOL review and the results of WHD investigations.

Small Bang for DOL’s Buck

WHD Administrator David Weil has said his agency is focused on using its limited resources to investigate workplaces where the data show violations are most likely to occur, particularly when vulnerable employees such as undocumented immigrants or low-wage workers are involved.

The division now must follow Perez’s order to review a company where the work site investigations have mostly been fruitless, at least from a standpoint of recovering back pay.

That said, the six cases in which Wells Fargo did agree to pay wages for FLSA or FMLA violations resulted in 29 workers receiving a combined $56,000. Liquidated damages aren’t tracked on the WHD’s public database.

There was also one Wells Fargo audit in which the agency found FLSA violations but didn’t recoup any payment and a dozen in which it discovered FMLA violations but didn’t recover payments.

Of the 37 cases, there were no violations found at all in 19 instances entered in the WHD database. That’s a no-violation rate of 52 percent.

By contrast, among all workplaces in fiscal year 2015, the no-violation rate was about 18 percent in complaint-driven cases and 21 percent in agency-initiated investigations, according to figures the WHD released in December.

Better Targeting Needed

A dearth of violations for overtime or minimum wage violations may offer insight for the new group of plaintiffs alleging Wells Fargo forced them to work off the clock, and for agency officials responding to the labor secretary’s new directive.

It’s possible that investigators weren’t asking the right questions, Anastasia Christman, a senior policy analyst at the National Employment Law Project, told Bloomberg BNA Sept. 26.

Christman, who wrote a report in June that highlighted poor working conditions for retail bank employees, said the types of wage violations typically occurring at Wells Fargo wouldn’t necessarily be captured in a standard WHD audit.

Compensation for meeting Wells Fargo sales quotas “is often considered an incentive or a bonus and not part of a worker’s salary,” Christman said. “So if an investigator came in and said, `Are you paid for the hours you worked?’ ” the worker might respond by only noting the scheduled hours he or she worked and was paid for, without realizing that time worked for incentive pay should count toward overtime, she said.

“It might require a bit more nuanced questioning because workers themselves often don’t understand what their rights are in these sort of cases,” Christman said.

She offered another reason that Wells Fargo investigations don’t typically yield violations.

“Enforcement of off-the-clock overtime is notoriously difficult, especially for an underfunded, understaffed agency like DOL,” Christman said.

Wells Fargo Under Careful Review

“The Wage and Hour Division is currently carefully reviewing its history of compliance actions with Wells Fargo to determine the best course of action,” a DOL spokesman told Bloomberg BNA in a written statement Sept. 27.

“FLSA investigations of employers in the banking industry are conducted no differently than such investigations in other industries,” the spokesman said. “Regardless of what initiated an investigation, or the industry involved, all investigations are conducted in accordance with the same established policies and procedures.”

The WHD data don’t reflect ongoing investigations or cases under pending DOL litigation, nor do they cover state or local audits.

The division’s public enforcement figures were last updated Sept. 13.

The trade groups American Bankers Association and Consumer Bankers Association both declined to comment.

Representatives for multiple management-side law firms with banking industry clients all declined to comment as well.

To contact the reporter on this story: Ben Penn in Washington at bpenn@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

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