Wells Fargo has faced its share of scandals in recent years. They’ve been accused of fraudulent behavior, such as creating millions of fake accounts in customers’ names, as well as discriminatory conduct such as disproportionately denying mortgage refinancing to black homeowners. In past years the financial institution has paid millions in settlements alleging hiring discrimination. In response, the company implemented CYA policies in order to curb potential liability. Among other things, Wells Fargo has an informal policy of encouraging supervisors to interview “diverse” candidates, meaning women or persons of color. While such a policy should be laudable, recent allegations tell a different story: Wells Fargo has allegedly been conducting sham diversity interviews for positions that are already filled.

According to the New York Times, a number of current and former Wells Fargo employees have come forward alleging that the financial institution’s diversity policy is not what it claims to be. A former executive from the company’s wealth management division claims that he noticed a disturbing pattern: He would be encouraged to interview so-called diverse candidates for open positions only to discover that the company had already decided to hire someone else. After he complained to his bosses about the practice (labeling these “fake interviews” as “inappropriate, morally wrong, ethically wrong”), he was sacked. Wells Fargo claims he was fired for retaliating against a fellow employee, while he claims he was fired in retaliation for bringing up the sham diversity interviews.

At least seven current and former Wells Fargo team members have supported these allegations, claiming they were told by their immediate supervisors or human resources managers to interview diverse candidates for positions already filled. Another five employees were either aware of the policy or helped execute the policy. The diversity interview policy appears to be more about creating a paper trail of Wells Fargo’s efforts to ensure hiring diversity rather than an actual effort to promote diversity across the company.

For its part, Wells Fargo claims that such fake interviews are against the bank’s hiring policies and guidelines. A spokesperson for the bank stated: “To the extent that individual employees are engaging in the behavior as described by The New York Times, we do not tolerate it.” She also admitted awareness of the general directive to interview more diverse candidates but claimed that such directives were a vestige of former Wells Fargo management. Much of the bank’s top brass was removed or resigned in 2020 after the bank paid more than $4.5 billion in fines in connection with allegations that Wells Fargo created millions of fraudulent accounts and, in essence, stole from customers.

The practice of conducting fake interviews raises several interesting legal questions. While the company has been accused of discriminatory hiring practices in the past, the actual policy of encouraging or requiring employers to interview diverse candidates was not imposed by the government or court order. It was a voluntary effort to address workplace diversity concerns and avoid future liability. If the interviews were only for show, do they constitute acts of discrimination? While they may be “morally” or “ethically” wrong, are they illegal?

California employment law attorney Richard Koss points out that even if the company’s conduct was not actually illegal, firing an employee for complaining about it would be. “To raise a retaliation claim under FEHA (California’s anti-discrimination statute) or Title VII, actual discrimination does not need to be proved,” says Koss. “Just the act of complaining about discrimination is the protected activity necessary for the claim.” Koss goes on to point out that an employee in California would also be protected by California’s whistleblowing statute, found in the state’s Labor Code section 1102.5(b), where the employee only needs to hold a good faith belief that the complained-of activity is illegal.

It remains to be seen what comes of these allegations. Certainly, any employee terminated for raising such concerns has a potential wrongful termination claim on their hands. Whether the practice itself will give rise to liability, or merely result in yet another black eye for the much-maligned financial institution, remains to be seen.

The Wells Fargo story rings familiar bells for attorney Koss, who is reminded of the National Football League’s Rooney Rule that requires NFL teams to conduct outside interviews with at least one minority or female candidate for vacant quarterback coach positions. Koss says a lawsuit is in fact currently underway by a Black NFL coach who is accusing the New York Giants of already hiring a white coach before even interviewing him. Closer to home, Koss also points to a recent California court decision that struck down a law requiring public corporations headquartered in California to have at least one minority board member. It appears that on either side of the coin, issues of diversity and discrimination in employment continue to pose vexing legal issues for employers, employees, and the courts.