Mitigate Risk. Lead with Clarity.

CIVIL RIGHTS  

HUD Launches Investigation Into Wells Fargo's Black Homeownership Programs

• Wells Fargo Faces Regulator Probe Over Efforts to Boost Black Homeownership

• Trump Administration Investigates Wells Fargo for Race-Based Lending 

On October 7, 2026, the U.S. Department of Housing and Urban Development (HUD) launched an investigation into Wells Fargo to determine whether its initiatives to increase Black homeownership violated the Fair Housing Act. In a letter to CEO Charles Scharf, HUD alleged that the bank's programs may have offered different mortgage products or terms based on race.

The investigation focuses on initiatives dating back to 2017, when Wells Fargo committed $60 billion in mortgage lending to help create at least 250,000 Black homeowners by 2027. In 2022, the bank announced additional investments, including a $150 million special purpose credit program intended to reduce mortgage rates and refinancing costs for eligible borrowers.

HUD Secretary Scott Turner criticized the initiatives, stating that even if Wells Fargo had not violated the law, its approach was “immoral, unethical and un-American.” HUD also indicated that it is reviewing similar programs at other financial institutions. Wells Fargo declined to comment.

The investigation represents scrutiny of longstanding corporate initiatives intended to address racial disparities in homeownership. 

See also: Wells Fargo Settles Discriminatory Hiring and Lending Claims (Issue 66); CFPB Moves to Eliminate Disparate Impact Standards From Fair Lending Enforcement (Issue 64); Fair Housing Coalition Sues CFPB to Block Fair Lending Rollback (Issue 67); PayPal Settles DOJ DEI Probe for $30M (Issue 64)

COURTS & LITIGATION

Supreme Court Again Declines to Revisit McDonnell Douglas Framework 

• Order List (10/05/2026)

OVERVIEW

On October 5, 2026, the U.S. Supreme Court declined to hear two employment discrimination cases, Shelton v. Cuyahoga Metropolitan Housing Authority and Laughlin v. Miami-Dade County, challenging the longstanding McDonnell Douglas burden-shifting framework. The Court provided no explanation for the denials.

Established in 1973, the framework is used to evaluate employment discrimination claims based on circumstantial evidence. It requires employees to establish an initial case of discrimination, employers to provide a legitimate, nondiscriminatory reason for their decision, and employees to demonstrate that the stated reason was a pretext for discrimination.

In Shelton, a Black police officer alleged race discrimination and retaliation after being terminated over publicly posted rap videos that his employer said violated conduct policies. The Sixth Circuit upheld summary judgment for the employer. Shelton asked the Supreme Court to overturn McDonnell Douglas or clarify that employees need not disprove an employer's stated reason when discrimination may be one of multiple motivating factors.

In Laughlin, a county employee alleged disability discrimination after being terminated while receiving treatment for serious medical conditions. During a recorded meeting, a supervisor said she could not “give 100% right now” and should focus on her health. The Eleventh Circuit upheld summary judgment for the employer, finding insufficient evidence of pretext. Laughlin challenged whether employees must prove pretext to survive summary judgment.

The denials leave the existing framework unchanged, following similar Supreme Court decisions declining review earlier in 2026.

LEGAL INTERPRETATION

The Supreme Court's decision to deny certiorari (a request for the Court to review a lower court's ruling) leaves McDonnell Douglas in place as the longstanding framework for evaluating employment discrimination claims based on circumstantial evidence. A denial of review is not a ruling on the merits and does not constitute an endorsement of the framework. Employers and employees remain subject to the existing legal standards.

The petitions raised a central question about the burden employees face when challenging an employer's stated reason for an adverse employment decision. Under McDonnell Douglas, demonstrating pretext is generally required to establish discrimination through its burden-shifting analysis. However, the framework is not the exclusive means of proving discrimination, and courts may consider other evidence sufficient to support a claim. Title VII also recognizes that discrimination can be one of multiple motivating factors in an employment decision.

The two cases illustrate how courts apply these standards to different factual circumstances. In Shelton, the Sixth Circuit upheld the employer's stated reason for termination, while also finding that Shelton had forfeited his broader challenge to McDonnell Douglas by not raising it in the district court. In Laughlin, the Eleventh Circuit concluded that the evidence, including statements concerning the employee's health, did not establish the pretext necessary under the analysis it applied. Neither Supreme Court denial changes the evidentiary requirements governing employment discrimination claims.

BRIDGE POV

The burden of proving discrimination remains with the employee. But that does not diminish an employer's responsibility to ensure its decisions are fair, consistent and grounded in legitimate business considerations.

The distinction between these two cases is important. One involved allegations of racial discrimination and retaliation. The other involved disability discrimination and statements that raised questions about whether an employee's medical condition influenced her termination. Both underscore the importance of examining not only the reasons employers provide for their decisions, but how those decisions are actually made.

A defensible employment decision should also be a fair employment decision. Legal standards establish how discrimination claims are evaluated in court. They should not become the standard by which organizations determine whether their own practices are equitable, credible or consistent with their values.

ACTIONABLE STRATEGIES

1. Strengthen documentation and accountability. Ensure employment decisions are supported by clear, contemporaneous documentation and legitimate business considerations. Review whether stated performance or conduct concerns are applied consistently across employees.
   
   
2. Examine how decisions are made, not just how they are defended. Establish appropriate review processes for terminations, disciplinary actions and other consequential employment decisions, particularly when employees have raised discrimination complaints, requested accommodations or disclosed medical conditions.
   
   
3. Equip managers to recognize and prevent discrimination. Reinforce training on retaliation, disability accommodations and the role of bias in employment decisions. Ensure managers understand that their statements, actions and treatment of employees can become evidence in discrimination claims.