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Banking

‘I’m furious’: Wells Fargo slashes spending as hundreds of contractors get a pay cut

November 15, 2017 02:45 PM

Hundreds of Wells Fargo contractors took a pay cut this week as the bank slashed spending with a large technology outsourcing firm, according to communications obtained by the Observer.

TEKsystems said more than 750 contractors are having their hourly rate reduced by 3 percent in a change that took effect Monday, a TEKsystems memo sent Thursday to staff shows. The cut stemmed from a rate reduction imposed by Wells Fargo, according to the memo from a TEKsystems manager in Charlotte.

One Charlotte contractor said he was given until last Friday to agree to the lower rate or lose his job. He said the move was upsetting because the rate was not what he had negotiated when he initially signed his 18-month contract with TEKsystems. The contractor asked to remain anonymous because he was not authorized to speak to the media.

“I’m furious,” he said. “A contract is supposed to be something that is signed in good faith.”

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In a statement, San Francisco-based Wells Fargo said that it had asked TEKsystems to give it additional discounts that took effect last month. Wells also asked for such credits from other contractor suppliers after the bank conducted routine reviews of staffing programs, the statement said.

Wells Fargo said that only two of the suppliers decided to pass the cuts on to contractors, which Wells said was never the bank’s intent.

“When we implemented this change, we talked with each supplier, including TEKsystems, and asked that they not pass on the cost to contractors,” the statement said. “We continue to have discussions with those two suppliers, including TEKsystems, asking them to reconsider their decision.”

TEKsystems did not respond to requests for comment. The Hanover, Md., firm has offices in uptown Charlotte in the 200 S. College St. tower.

It’s not unheard of for a bank to trim its spending with an outsourcing firm, which must then decide to absorb the cut or pass it along to its contractors.

For Wells Fargo, the funding cut comes as it’s trying to recover from a major fake-accounts scandal that erupted last year and has cost it business.

In 2016 Wells Fargo agreed to pay $185 million in penalties to settle allegations that its employees created more than 2 million unauthorized customer accounts to meet aggressive sales goals. Soon after, the Observer and other media outlets report

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This year, Wells unveiled an initiative to lower expenses by $4 billion through the end of 2019. The company has said cost-cutting efforts would involve a variety of steps, from consolidating duplicate processes to outsourcing certain functions.

It’s also not unusual for banks to outsource technology projects to firms that employ contractors to perform the work. Charlotte-based Bank of America is among banks that have taken part in the practice.

The Charlotte contractor for TEKsystems said the work his firm has performed for Wells Fargo ranges from creating new software and applications to installing and maintaining servers for the bank.

Wells Fargo, the third-largest U.S. bank by assets, employs about 24,000 in Charlotte, its largest employment hub.

Deon Roberts: 704-358-5248, @DeonERoberts