Dive Brief:
- Nine former Whole Foods store managers have filed a class action lawsuit claiming wrongful termination and character defamation after they were whistleblowers on a questionable corporate practice, The Washington Post reported.
- The former store managers said this practice denied employees bonuses they earned under Whole Foods’ “Gainsharing” program. Each plaintiff, who Whole Foods announced were fired last month, is demanding $25 million in damages.
- The company is also facing another class action lawsuit from one current and one former employee of a D.C.-based Whole Foods store who have accused the retailer of cheating them out of those bonuses.
Dive Insight:
Whole Foods launched the Gainsharing program to incentivize departments to operate under budget by offering employees a portion of the budget surplus as a bonus. However, plaintiffs argue that the common corporate practice of shifting labor costs from underperforming to over-performing departments allowed them to avoid paying these bonuses.
Whole Foods fired the managers in question after they blew the whistle on the practice and would not say that the practice was limited to a few stores. That in turn prompted their wrongful termination and defamation lawsuit.
This situation could now potentially cost the company potentially much more than those bonuses might have been worth, not to mention the public scrutiny of the lawsuits. It calls into question whether such profit-sharing programs are viable, as well as whether issue is isolated to Whole Foods.
Profit-sharing programs disguised as bonus opportunities can be problematic and ineffective, according to experts. Employees don't always know how they helped generate profits, which makes them a complicated and cloudy motivation tool. Employees may also come to depend on the money, and without knowing how they contribute, won't necessarily know how to make the changes needed to received those bonuses again. This can erode morale and ultimately demotivate employees.