Could Employee Woes Result in Coal for Whole Foods?

Carol Ortenberg

While the winter holidays are usually a cheery time for retailers, a spate of publicized woes might be giving natural grocery chain Whole Foods Market the grumps.

Last week the Associated Press reported that nine managers at Whole Foods stores in Virginia, the District of Columbia and Maryland were fired for manipulating the retailer’s “gainsharing” benefit. The profit-sharing program rewards store team members based on “program parameters” such as coming in under labor budgets or achieving sales goals.

In general, gainsharing programs have their supporters and detractors. The former argue that gainsharing is a way to share profits and encourage teams to be more efficient and productive, while the latter believe it motivates managers to shave labor costs to reap higher bonuses.

However, the gainsharing issues didn’t end with the managers’ terminations. The Washington Post reported this week that a former employee and current employee of a District of Columbia Whole Foods have filed a federal class-action lawsuit against the retailer. The two allege that the retailer’s executive leadership knew about the the gainsharing issues and encouraged the practice around the country in order to save costs.

According The Post, the lawsuit states that Whole Foods “engaged in a nationwide scheme to strip hard-working employees of earned bonuses in order to maximize their own profit” and created “fast teams” to “float from one department to another.”

The lawsuit seeks $200 million in punitive damages and triple unpaid wages.

Whole Foods is facing another lawsuit from the nine recently terminated managers, who are alleging wrongful termination over gainsharing and defamation. According to another Washington Post article published today, the nine managers claim they tried to alert the company to issues with gainsharing and in retaliation, the retailer fired them.

Whole Foods issued a statement in response to the claims saying that “These allegations are not consistent with the findings to date of our internal investigations and we will respond appropriately.”

The accusations around gainsharing come at a time when the retailer is trying to minimize costs and streamline its structure.

Recently, lower volume stores have experimented on a cost-saving initiative that combines combined Seafood and Meat teams as well as combined its “Whole Body” and Grocery teams. The moves result in less management level roles as well as less team members needed to be on schedule.

However new job postings also reveal that the retailer is considering wider cuts to labor by combining its Grocery, Specialty and “Whole Body” teams at some stores. A recent job posting for a “Market Team Lead” at the Wauwatosa, Wisc. store noted that the role is “accountable for all department operations for our Grocery department including those of the sub-teams: Frozen Foods, Bulk, Ambient Grocery, Dairy, and other applicable areas, the Whole Body department including body care and supplements, and our Specialty department including beer, wine, spirits, cheese, coffee, the coffee bar, and the Tosa Tavern (20 tap bar).”

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