Two former workers of Wells Fargo have filed a $2.6 billion lawsuit on behalf of employees who suffered because they chose not to engage in unethical practices. Meanwhile, the Wells Fargo board has hired Shearman & Sterling to advise them on clawbacks on executives’ salaries.
Employees from Wells Fargo & Company are striking back. Two former employees are seeking $2.6 billion in a class-action lawsuit for workers who attempted to meet unrealistic sales quotas without engaging in fraud and were subsequently forced to resign or were fired, according to Reuters.
The lawsuit represents the workers who were penalized for following rules rather than choosing to engage in alleged fraudulent behavior as many employees did in the face of pressure from higher-ups to meet sales targets. A spokesperson for Wells Fargo did not comment on the lawsuit on Saturday (Sept. 24), which lists wrongful termination, unlawful business practices and nonpayment of wages, overtime and penalties as abuses under California law.
The lawsuit filed on Thursday (Sept. 22) with the California Superior Court in Los Angeles County stated: “Wells Fargo fired or demoted employees who failed to meet unrealistic quotas, while, at the same time, providing promotions to employees who met these quotas by opening fraudulent accounts.”
The firm had already fired 5,300 employees over the past decade, implying that the firm was already aware of employees’ practices in acquiring unauthorized customer bank and credit card accounts. Two million accounts have been reportedly opened without the authorization of accountholders.
A settlement was reached on Sept. 8 between federal regulators and a Los Angeles prosecutor and Wells Fargo.
Alexander Polonsky and Brian Zaghi, the two employees who have filed the lawsuit against Wells Fargo, describe the culture at the bank as one where managers pressured workers to meet quotas of 10 accounts per day, asked for updates on new accounts repeatedly during the day and required progress reports several times daily, admonishing those who failed to meet the targets.
Polonsky and Zaghi resisted pressures to cross-sell and opened only the accounts that customers had requested; they were first demoted and later fired, according to the lawsuit.
Moreover, employees were often required to work overtime to meet the quotas delivered by executives who stood to benefit from the unauthorized accounts. The workers who chose not to engage in fraud suffered lost wages and benefits and suffered anxiety and embarrassment, the lawsuit also stated. The suit claims that Wells Fargo was aware of the ongoing fraudulent activity and that many accounts were opened without authorization and carried no balance.
According to the lawsuit: “Wells Fargo knew that their unreasonable quotas were driving these unethical behaviors that were used to fraudulently increase their stock price and benefit the CEO at the expense of the low-level employees.”
Meanwhile, the Wells Fargo board has hired Shearman & Sterling to advise on whether it should attempt to claw back executive compensation from CEO John Stumpf, COO Tim Sloan and former retail banking chief Carrie Tolstedt, according to The Wall Street Journal.
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