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.

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