Wells Fargo Faces California Labor Lawsuit Alleging Failure to Pay Overtime, Wrongful Termination

Los Angeles, CAWells Fargo, currently under scrutiny for reportedly using unethical and illegal tactics to open unauthorized debit and credit card accounts, now faces a California labor lawsuit from two former employees who allege they were fired for refusing to open unauthorized accounts and/or for failing to meet unrealistic sales quotes. The lawsuit further alleges failure to pay overtime and unlawful business practices.

The lawsuit was filed by Alexander Polonsky and Brian Zaghi, according to Reuters (9/26/16). The two were reportedly fired, demoted or forced to resign after they refused to engage in fraudulent practices. Wells Fargo is under heavy scrutiny for opening around 2 million unauthorized accounts. In addition to opening the accounts, Wells Fargo allegedly collected overdraft fees when money was transferred out of legitimate accounts into unauthorized customer accounts.

USA Today (10/3/16) reports Wells Fargo agreed to pay $185 million in restitution and fines for opening the accounts. Meanwhile, the Labor Department has opened an investigation. Wells Fargo said it fired around 5,000 employees for taking part in the fraudulent activity.

But the lawsuit from Polonsky and Zaghi alleges employees were terminated or demoted if they failed to make sales quotas that were entirely unrealistic, even if those employees refused to break the law.

"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," court documents state.

The lawsuit seeks class action status on behalf of current and former Wells Fargo employees over the past 10 years. The plaintiffs allege failure to pay overtime, failure to pay wages, and wrongful termination. According to the lawsuit, employees who earned $12 an hour were forced to work off-the-clock to try to meet Wells Fargo's sales quotas.

According to CNN Money (9/30/16) workers were forced to take part in mandatory "call nights," in which the workers had to stay after work for an hour to sell accounts if they had not met their quotas. During these extra hours, the workers were allegedly not given proper compensation. When employees tried to report their overtime hours, managers allegedly altered their hours in Wells Fargo's computer system.

"We were forced to [open unauthorized accounts]—under the threat of termination," Graham Gourley told CNN Money. "The entire branch was doing it."

Senator Elizabeth Warren and other senators have asked the Department of Labor to investigate Wells Fargo's firing of the 5,000 employees and whether the company violated the Fair Labor Standards Act. The Department of Labor has agreed to launch a "top-to-bottom review" of Wells Fargo and its treatment of employees in recent years.

Despite Wells Fargo's claim that it had no idea about the illegal activity, the lawsuit alleges executives knew what was going on and were aware that the increase in unauthorized bank accounts drove up the company's stock price.

The lawsuit is Polonsky v. Wells Fargo Bank & CO. BC634475, in California Superior Court, Los Angeles County.