Wells Fargo's diversity initiative to hire more Black leaders probed by Labor Department
Companies across the country have been speaking out against racism, but less than 2% of top executives at 50 largest companies are Black. USA TODAY
Wells Fargo, which pledged to double its ranks of Black managers and executives over the next five years, has received an inquiry from the Labor Department questioning whether its diversity initiative violates federal laws barring discrimination based on race.
The bank says its believes its initiative, one of many launched by corporations to diversify mostly white leadership ranks amid national protests over the killing of George Floyd, a Black man, who died under the knee of a white policeman in Minneapolis, complies with federal employment laws.
Microsoft also received a letter about its pledge from the Office of Federal Contract Compliance Programs, the agency overseeing federal contractors for the Labor Department.
In the letters, dated Sept. 29, Craig Leen, director of the Office of Federal Contract Compliance Programs, said the initiatives appear “to imply that employment action is being taken on the basis of race.”
Potentially at stake are federal contracts awarded by the federal government.
Trump and diversity: Trump executive order barring diversity training roils corporate America
“Wells Fargo is committed to and taking action to become a more diverse and inclusive company,” the bank said in a statement. “Numerous efforts are underway to implement changes at all levels of the company, and we are confident that they comply with U.S. employment laws.”
In August, Wells Fargo reached an agreement with the Labor Department’s Office of Federal Contract Compliance Programs to pay $7.8 million in back wages and interest to resolve hiring discrimination allegations against women and Black workers at the bank’s locations across the country.
Last month, Wells Fargo’s chief executive officer Charlie Scharf apologized for blaming the lack of Black employees at the bank on a “limited” talent pool.
The Labor Department inquiries follow an executive order from the Trump administration prohibiting government contractors like Microsoft and Wells Fargo from offering certain types of racial sensitivity and other kinds of diversity training.
Dozens of civil rights groups including the NAACP Legal Defense and Educational Fund and the Lawyers’ Committee for Civil Rights Under Law condemned the executive order as another sign of Trump's "support for white supremacists while demonstrating deep hostility to civil rights and racial justice."
"It looks like the administration is beginning a concerted strategy to tamp down on organizational (diversity, equity and inclusion) efforts," Joelle Emerson, founder and chief executive officer of diversity and inclusion strategy firm Paradigm, told USA TODAY.
"Such strategies don't encourage discrimination, they do the exact opposite. A wealth of research shows that in the absence of clear efforts to advance diversity, the outcome is bias against applicants and employees from underrepresented backgrounds," she said.
Known for patterns of exclusion and discrimination that have blocked the career paths of women and people of color, Wall Street has for years pledged to increase the diversity of its workforce and leadership, but progress has been elusive.
Corporate America as a whole has struggled. A USA TODAY investigation found that more than 55 years after the Civil Rights Act, less than 2% of the top executives at the nation’s largest companies are Black. According to Wells Fargo’s most recent proxy statement, all of its senior leaders – known as named executive officers – are white.