Pre-Employ Blog

Mass Firing of Minorities (2x the Rate of White Applicants) Allowed by Court

Posted by Bob Mather on August 31, 2018

In a decision that may have major ramifications in regulated fields such as Healthcare, Banking and other Financial Services, a federal appeals court Wednesday upheld a Wells Fargo employment policy that allows the bank to fire employees, or not consider job applicants, based on criminal records, despite concerns from advocates that such practices discriminate against minorities.


The original lawsuit was filed by 10 African American and Latino workers against Wells Fargo.

According to the lawsuit, the Wells Fargo policy at issue summarily terminates or withdraws employment offers to any individual with a disqualification in their criminal background check. Minorities were fired or no longer considered at a higher rate than white workers, according to the lawsuit, which was filed on behalf of a putative class of terminated bank employees and prospective hires.

At issue is a federal provision, known as Section 19, that bars “any person who has been convicted of a criminal offense involving dishonesty or a breach of trust” from working at or continuing to work at a financial institution insured by the Federal Deposit Insurance Corp (FDIC).

Many healthcare institutions also face similar requirements when it comes to employment decisions from federally mandated rules and regulations.

In Wells Fargo’s case, violations of Section 19 can result in fines up to $1 million a day.

Judge Lavenski Smith wrote for the appeals panel, “Here, African-American and Latino employees were terminated (or 8th Circuitpotential employees were not hired) at rates at least twice those of non-minorities,”¹ “But even assuming that the disparate impact was caused by Wells Fargo’s policy of uniformly applying Section 19, the district court correctly recognized that the bank’s ‘sound business decision was to terminate regardless of race or age or ethnicity.’”

The National Employment Law Project urged the appeals court, in a friend-of-the-court brief, to consider this case not in isolation but within the “stark real-world context and the public policy concerns it presents.”

Workers’ rights advocates have pushed for laws to limit employers’ use of criminal records in employment history. State and local governments have pushed laws in recent years that restrict background-check policies by removing the “box” on applications that asks would-be hires about any criminal history. Iowa does not have a “ban-the-box” law in place.

In 2012, the bank re-screened its entire home mortgage division to find whether they had convictions “involving crimes of dishonesty.”

¹According to the appeals court, between December 2011 and March 2013, Wells Fargo terminated at least 136 African-Americans, 56 Latinos and 28 white employees because of Section 19 disqualifications. Between February 2013 and November 2015, Wells Fargo withdrew at least 1,350 conditional job offers to African-Americans and Latinos and 354 non-minorities after the background check revealed these individuals had disqualifying convictions, according to the appeals court.

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Topics: Iowa, Ban the Box, Lawsuits, Discrimination