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An investigation by The Cincinnati Enquirer found Kroger has faced more than 20 lawsuits across its banners since 2020 -- for promoting workers to managers to avoid overtime pay -- in an alleged broader practice a lawyer told the newspaper is "retail's dirty little secret."
The article noted that Walmart, Costco, Target, Giant Eagle, Food Lion, and Staples have also been sued for allegedly improperly classifying managers to avoid overtime pay.
The Enquirer found Kroger recently settled a lawsuit with 2,500 current and former assistant store managers over charges of “thousands of hours” of uncovered overtime pay, is finalizing related settlements in two other lawsuits, and has other similar litigation pending.
The Enquirer talked to Thomas Schell, a former assistant store manager in an Ohio Kroger banner. Schell was promoted to assistant manager after three years at an annual salary of $49,000, worked an average of 50 to 60 hours weekly, and found himself regularly filling store shortages rather than handling typical manager duties such as hiring, firing, budgeting, or training.
Schell, who quit in December 2020, told the Enquirer, “It was basically ‘What department is on fire today?’”
Kroger told the Enquirer it can’t discuss settlements or pending litigation, but added, “Kroger has not been found to have misclassified anyone or engaged in any form of wrongdoing and has denied any unlawful or wrongful treatment."
Abuse of Retail Managers (via Empty Promotion) May Be Widespread, Critics Claim
Researchers from Harvard University and the University of Texas-Dallas, in a 2023 study, concluded many retailers are increasingly giving workers promotions with “fabricated” managerial titles but no wage upgrade. These entities are doing so to avoid paying overtime, in what the study authors saw as an exploitation a loophole in the Fair Labor Standards Act, which was first established in 1938 as a result of the Great Depression.
The act established a national minimum wage, a standard 40-hour work week, and time-and-a-half pay for weekly work past 40 hours -- although managerial roles are often exempt from overtime pay.
Covering the study at the time, the New York Times said critics see workers’ promotions to managers exempt from overtime pay as “part of a broader strategy to drive down labor costs in recent decades by staffing stores with as few workers as possible.” Those promoted help stores manage in-store labor shortages while avoiding overtime expense.
However, the Times also reported that “many employers say managers who earn relatively modest salaries have genuine responsibility and opportunities to advance.” Other university studies and statements from government agencies and law firms around alleged overtime violations also downplay the benefits of manager promotions -- which may include higher pay, stronger benefits, more employee discounts, bonuses and stock options, and educational assistance.