Whole Foods Market (WFM) is currently facing two class action lawsuits as a result of alleged improprieties in the retailer’s “gainsharing” bonus program. Under the program, Whole Foods employees can earn bonuses if the department to which they are assigned comes in under budget. Under the program, any budget surplus is to be divided among the department’s employees as a bonus.
On December 15, Whole Foods announced that it had fired store managers at nine locations in Maryland, Virginia and the District of Columbia for manipulating the gainsharing program and said that the practice had been employed at only a small number of its 457 nationwide stores. Whole Foods said at the time that it would investigate how much money was involved and would make sure that employees who were affected would receive proper compensation.
Within a week, one current and one former Whole Foods employee at the chain’s P Street store in Washington, D.C. filed a class action lawsuit in U.S. District Court against the Austin, TX based retailer, alleging that they were cheated out of earned bonuses. The lawsuit contends that Whole Foods avoided paying gainsharing bonuses by shifting labor costs to other departments. Additionally, the suit says, the grocer created “fast teams” of employees that “float from one department to another,” shifting labor costs without accounting for the changes. The suit also alleges that, with the knowledge of company executives, the retailer employs these practices chain-wide “…to strip hard-working employees of earned bonuses in order to maximize their own profit.” The plaintiffs, Michael Molock and Randal Kuczor, are seeking $200 million in punitive damages and triple unpaid wages. Kuczor estimated that at least 20,000 WFM associates could be eligible for compensation.
“Rather than pay plaintiffs (and other associates similarly affected) the bonuses they earned through the gainsharing program, Whole Foods retained the surplus for its own benefit and to increase profit margin,” the suit alleges.
The five-count lawsuit also charges breach of contract, unjust enrichment, failure to maintain accurate employment records and two counts of failure to pay wages.