Wells Fargo: Together We’ll Go Far… Into The Abyss of Audit Hell

Randi Klein Hyatt
Randi Klein Hyatt
09/28/2016

Unless you are a contestant who just returned from participating in the 33rd season of Survivor: Millenials v. Gen X (yes, I still watch this show — Every. Single. Episode.), you have undoubtedly heard about the Wells Fargo credit card scandal.  Nearly 5300 employees were fired after it was uncovered that millions and millions of credit card accounts were fraudulently opened without customer permission because of intense corporate pressure to meet high sales targets.  The aftermath of #creditcardgate (is that a thing yet?) continues to unfold.  Employees were fired.  The CEO is under investigation and will be forfeiting much of his 2016 salary, including a bonus and $41 million in stock awards.  Carrie Tolstedt, the head of the division that created the fake accounts, already left Wells ahead of her end of year retirement date, and allegedly without a bonus or severance, and forfeiture of her $19 million in stock awards.

And now, the Department of Labor is going to pile on.  Secretary Perez announced earlier this week that the DOL will be conducting a wide-ranging “top to bottom” review of all of Wells Fargo’s labor and employment practices.  As reported in the L.A. Times:  “A working group that includes officials from five Labor Department enforcement divisions has been established to conduct a ‘thorough and expedient review’ of complaints against Wells Fargo in recent years alleging failure to pay overtime and other possible infractions, Labor Secretary Tom Perez said.”  The DOL has set up a special website for current and former Wells Fargo employees to instruct them how to file complaints about labor law violations.

While I know nothing about the manner in which Wells Fargo conducts itself from an employment law perspective, I think it is safe to say that when the DOL makes it is mission to scour the inside walls of a business just discovered to engage in one of the largest acts of fraud upon consumers, I cannot imagine how it will not find a few rusty spots as well.

Wells is not just facing a wage and hour audit.  Secretary Perez has called upon other DOL enforcement agencies – the Employee Benefits Security Administration (EBSA), the Occupational Safety and Health Administration (OSHA), and the Office of Federal Contract Compliance Programs (OFCCP) — to sharpen their pencils and get in on the action.  If your company has ever been through any kind of audit, even with solid employment practices in place, it can be long, tedious, burdensome, costly and damaging to morale, among other things.

Wells is about to fall into the abyss of audit hell.  Audits cannot be avoided by settlement.  They may be resolved by settlement, but not avoided.

The moral of the story?  While there are many, for purposes of today, I will offer that employers should be very mindful about the expectations placed on employees to perform.  While an admittedly gross over-generalization, did the beginning of the end of Wells Fargo start because its brass pushed for unreasonable sales and employee performance?  There are better, safer, more effective, and more productive ways to go about getting workplace results.

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