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Kroger facing four class-action lawsuits over payroll mistakes

'This is wage theft, plain and simple'
Kroger new checkout lanes
Posted at 12:56 PM, Jan 25, 2023
and last updated 2023-01-25 13:01:06-05

CINCINNATI — The Kroger Co. experienced “systemic and widespread errors” when it installed a new payroll system in Washington state last fall, according to a new court filing from a human resources manager for the company.

“Thousands of employees have been affected by these payroll issues,” wrote Tricia Halpin, a division assistant HR leader for Kroger’s Fred Meyer Stores subsidiary, in the Jan. 9 document. “To this date, Fred Meyer continues to receive new reports and complaints from Washington employees regarding their pay on an almost daily basis.”

It’s the latest development in an expanding controversy over payroll mistakes by the Cincinnati-based grocery giant. And it comes as Kroger is trying to convince federal antitrust regulators to approve its $24 billion acquisition of its rival grocery chain, Albertson's.

Kroger is facing four class action lawsuits by employees in five states, along with union grievances across the country. In Cincinnati, the United Food and Commercial Workers Union Local 75 is getting about 40 complaints a week from a Dec. 22 blog post inviting union members to report problems with Kroger’s new “MyTime” system.

“It started with an issue in Toledo,” said Karen Brown, executive vice president with the union representing about 30,000 in Ohio, Kentucky and Indiana. “There was something wrong with holiday pay and that started this flurry of things.”

Brown said the union filed a grievance over holiday pay but declined to provide details. Union reps are handling most complaints without filing a grievance, she added. Instead, they approach store managers to identify the mistake and fix them.

“We turn it over to payroll or go through HR,” Brown said. “Our reps follow up with them to make sure things are getting corrected. As far as we can tell, that is happening.”

Kroger declined to answer questions about the MyTime controversy.

In its public statements so far, the company hasn't explained what caused the problem or how many employees were impacted.

“While the majority of issues have been resolved, we understand these issues have caused undue difficulty for the impacted associates," said the statement. "Teams are working around the clock to resolve payroll issues for the remaining small percentage of associates affected by these processing errors. We are taking multiple steps to pay our associates as quickly as possible, including overnighting checks to impacted associates.”

But union officials and store employees say the problems are not resolved.

“We continue to hear from our local unions that thousands of members did not receive their most recent paycheck,” UFCW International President Marc Perrone said in a Dec. 22 news release. “This is simply unacceptable.”

A Dayton area Kroger employee, who asked not to be identified because he fears retaliation, said he is one of “many individuals” who “have not gotten compensation for vacations they took last year. In the four area stores that I know of there’s probably 60-70 people that are behind on utility bills as a result. One employee was on medical leave and wasn’t paid for that.”

And then there are the lawsuits.

Brandon Wilder, a warehouse worker and delivery driver in Union, Ky., alleges he was not paid for two weeks in October and November and his pay was delayed for a third week. He’s seeking class-action status on behalf of all Kroger employees in Kentucky who had similar problems after Sept. 1, according to his complaint, filed in U.S. District Court, Southern Ohio.

Sharon Simpson, a Kroger cheese shop clerk in Charleston, West Virginia, alleges she worked five weeks without being paid. She’s one of four plaintiffs seeking more than $5 million in damages on behalf of Kroger employees in Virginia and West Virginia.

“This is wage theft, plain and simple,” said UFCW Local 400 President Mark Federici, in a Jan. 19 press release announcing the lawsuit.

In Oregon, five employees in Portland, Salem and Medford are trying to form a class of more than 10,000 Fred Meyer employees who had pay problems after August 2022. The alleged problems include missing or late paychecks and mistakes in hours worked, wages paid and statements of deductions and withholdings.

Kroger has responded to those federal cases with arguments that it acted in good faith to identify and correct payroll mistakes and employees failed to pursue grievance, arbitration and other remedies before suing. The company also objects to the use of a class-action process to settle the controversy.

But in Washington, the company took a different approach when Vancouver employee Amelia Sapphire filed a class-action complaint in state court. Fred Meyer attorneys removed the case to federal court, arguing the amount in controversy exceeds the $5 million threshold for federal jurisdiction. Sapphire’s attorneys challenged that removal. The company responded with a detailed explanation of the problem by Halpin, who analyzed the company’s payroll data for her four-page declaration.

Halpin said Fred Meyer stores received 1,658 payroll complaints out of 17,155 people employed in 61 Washington stores in the last four months of 2022. She estimated that Fred Meyer paid at least $1.1 million to correct pay errors so far and she expected that number to rise in the future.

“In addition to complaints from employees, Fred Meyer itself has proactively identified thousands of payroll issues affecting its Washington employees and continues to do so,” Halpin wrote. “Given the widespread and systemic nature of the payroll discrepancies at issue in this case, it is possible that every employee who received a paycheck under the new payroll system has been affected to some degree.”

That admission “seems pretty incriminating” to Tom Geiger, spokesman for UFCW 3000, which represents 53,000 grocery and pharmacy workers in Washington. The union has been working to resolve payroll discrepancies for hundreds of Fred Meyer employees. Geiger thinks Kroger has downplayed the problem in its public statements to date, to the detriment of its employees.

“If you’re struggling to make ends meet and you miss a paycheck, you’re just swimming upstream for the rest of the month,” Geiger said. “You might have missed a payment then gotten dinged by a bank fee. You might have borrowed money from a payday lender. So, this is real people that work for a living that are going paycheck to paycheck at best. There’s serious harm.”

This article was written by Dan Monk for WCPO.