Lawsuit claims Whole Foods managers fired for whistleblowing


Nine managers who were fired by Whole Foods Market and accused of manipulating a bonus program have filed a class-action lawsuit against the Austin-based grocery chain.

The managers allege that they were fired for blowing the whistle on a company-wide practice of not paying bonuses earned by employees, according to the lawsuit filed in Washington D.C. Superior Court.

In the complaint, the former managers say Whole Foods engaged in “systemic wage theft” at its stores nationwide and that the managers were punished for it after a “sham internal investigation.”

The lawsuit also accuses Whole Foods of defamation for telling media outlets that the managers were stealing bonuses from their workers at stores in the Mid-Atlantic region. Each of the plaintiffs is seeking $25 million in damages.

Whole Foods is one of Austin’s highest-profile companies, with 87,000 workers in 466 stores worldwide and about 2,500 employees in Central Texas.

“These allegations are not consistent with the findings to date of our internal investigations and we will respond appropriately,” Whole Foods spokeswoman Betsy Harden said in a written statement.

Another Whole Foods spokeswoman, Brooke Buchanan, previously said that the nine managers had been dismissed in recent weeks after a company-wide investigation.

The managers worked at stores in the District of Columbia, Maryland and Virginia. According to the company, they wrongly benefited from a profit-sharing program at the expense of store employees. The lawsuit, however, claims that it was company policy to use money from the bonus program to make up the difference when store departments went over budget.

Buchanan said when announcing the firings that Whole Foods was still investigating how much money is involved and planned to ensure that employees at the affected stores are compensated properly.

The past year has been an eventful one for Whole Foods. After tougher competition cut into its earnings, the organic foods retailer began 2016 with a plan to lower prices, trim its workforce, cut $300 million in expenses, boost its digital reach with consumers and better manage its growth.

In November, Whole Foods announced that it was doing away with its tradition of co-CEOs. After sharing CEO duties for six years with Walter Robb, Whole Foods co-founder John Mackey will become the company’s solo CEO. Robb will transition to a new role on the company’s board of directors, among other responsibilities, the company said.

Also in November, various media outlets reported that a major Whole Foods shareholder met with potential activist investors to discuss making changes to the company, including replacing management and exploring a sale of the company. The shareholder, among the company’s 10 biggest, raised concerns in recent meetings with activist investment funds after losing patience with the company’s direction, Bloomberg News reported. Whole Foods has declined to address the reports.

In early December, the Nasdaq stock exchange said it is dropping Whole Foods from its Nasdaq-100 index — a reminder of the organic food giant’s continued battle against growing competition. The Nasdaq-100 index, which was created in 1985, is composed of the 100 largest non financial companies listed on the Nasdaq based on market capitalization, or the value of the company’s shares, according to the Nasdaq. Whole Foods’ market cap has declined from more than $22 billion in 2013 to about $9.9 billion currently, according to data from Yahoo Finance.

This report includes material from the Associated Press.



Reader Comments ...


Next Up in Business

Paige founder: ‘Austin feels like our home away from home’
Paige founder: ‘Austin feels like our home away from home’

A year after its debut, Domain Northside continues to land new-to-Austin – and new-to-Texas – retailers. The list is a long one and grows with each passing week. One of those recent additions is Los Angeles-based Paige, 11700 Domain Blvd., which sells premium men’s and women’s denim. Founder Paige Adams-Geller, a former model...
The Justice Department is suing AT&T to block its $85 billion bid for Time Warner
The Justice Department is suing AT&T to block its $85 billion bid for Time Warner

The Department of Justice is suing to block AT&T's $85 billion bid for entertainment conglomerate Time Warner, setting the stage for one of the biggest antitrust cases to hit Washington in decades. The suit is fraught with legal and political risks for both sides. Several Democrats have expressed concern that antitrust officials could be seeking to...
Building that houses Yeti flagship store listed for sale
Building that houses Yeti flagship store listed for sale

The building that houses Yeti’s Austin flagship store is for sale. HFF has been retained to market the property at 220 S. Congress Ave., calling the offering “a rare mixed-use investment opportunity.” The building, at the foot of the Ann W. Richards Congress Avenue Bridge and just south of Lady Bird Lake, was originally constructed...
Up the Ladder

General contracting Jordan Foster Construction has named Leland Rocchio president of the company’s commercial group. Fitness industry United PF Partners has named Shelli Taylor chief operating officer. Medical Hanger Inc. has named Christopher Begley chairman of its board of directors. It also named Thomas Freyman and John Fox as directors. State...
Top Local Business Stories of the Week
Top Local Business Stories of the Week

HOUSING MARKET Austin-area housing market stays on pace for record year: In a year that’s shaping up to be another record-breaker, Central Texas home sales increased more than 2 percent in October and the median sales price climbed more than 4 percent, the latest figures show. Year to date, sales across the region are up 1.7 percent, putting...
More Stories