Wells Fargo Scandal Delays Severance for Laid-Off Workers
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UPDATED: Jul 16, 2021
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As the New York Times reported in September, many Wells Fargo bank employees tried to meet challenging sales goals by creating sham bank accounts and issuing unwanted credit cards rather than signing up real customers.
In all, bank employees opened 1.5 million phony accounts and made fake applications for 565,000 credit cards. Bank employees allegedly forged customer signatures to open the accounts.
Targeting the Weak
Former bank employees said that they targeted the “weakest” customers. According to the Times, this included:
Mexican immigrants who speak little English. Older adults with memory problems. College students opening their first bank accounts. Small-business owners with several lines of credit.
Many of the bank employees weren’t happy about what they were being pressured to do. One said she took to drinking hand sanitizer (which contains alcohol) to deal with the stress.
Some customers realized that the accounts had been opened and the applications made in their names because they received credit or debit cards they hadn’t requested, or were contacted by debt collectors about unpaid fees for accounts they didn’t recognize.
One customer in Northern California had seven accounts he didn’t agree to open. When he called the bank to ask what to do about debit cards he hadn’t authorized, he was told to dispose of them. He said his credit score suffered because of unpaid fees for accounts that he hadn’t opened.
5,300 Wells Fargo employees lost their jobs because of the scandal, and the bank entered into an $185 million civil settlement, including a $100 million penalty from the Consumer Financial Protection Bureau.
Wells Fargo also agreed to refund about 2.6 million in improper charges to consumers based on the fake accounts.
Now, as the Times reports, 400 laid-off Wells Fargo employees aren’t getting the severance payments they say the bank owes them.
Although severance pay is not required by law for most employees in the US, it may be provided as part of an employee’s contract, or it may be given as a matter of company policy.
The WARN Act applies to most employers with 100 or more employees, not counting part-timers and those who have worked less than six of the past 12 months.
Wells Fargo normally provides severance pay equivalent to salary for six weeks to 16 months, depending on how long the employee has been with the bank.
The Office of the Comptroller of the Currency, which regulates banks like Wells Fargo, imposed restrictions last November aimed at curbing “golden parachute” severance packages.
The rules limit what the bank can pay terminated employees without getting specific approval from the Comptroller’s Office.
The bank sought this approval but (as of the end of January) had not yet received it.
Wells Fargo told the laid-off workers that their severance was “indefinitely” delayed.