March 20
A former Wells Fargo Advisors trainee has filed a lawsuit alleging that the firm’s attempts to recoup training costs from those who leave the program constitute a violation of labor laws.
The suit, which was filed today on behalf of Erika Williams, claimed that the firm unlawfully sought to reclaim more than $50,000 in training costs after she was reportedly “constructively discharged” from the firm last June. She alleged that the practice not only violates the Fair Labor Standards Act, but also presents an undue hardship on minority trainees, who have high failure rates.
Williams’ case, which seeks class certification, is one of the first to raise questions about a common practice at many large firms with training programs, including Bank of America Corp., Merrill Lynch and Edward Jones Investments.
Most training agreements require trainees to stay at a firm for the duration of the program, which usually range from around 30 to 40 months and then a year or two after. Wells Fargo’s trainee agreement is a five-year contract that values the training at $55,000, according to the complaint.
Williams, who moved to J.P. Morgan Securities last July, according to Finra records, alleges that Wells Fargo not only seeks to recover more than the trainee’s salary, but also pursues claims when the trainee is let go for failing to meet standards.
A letter sent by a law firm valued Williams’ debt at $50,875, higher than her annual salary of $45,000, according to the lawsuit.
The practice also places an unfair burden on minority advisers who fail at a higher rate because they receive less support from the firm, according to Williams, who is African-American and is part of another class discrimination claim against Wells Fargo filed by the same law firm, Stowell & Friedman.
Source: Investment News