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Wednesday, December 24, 2008

Learning from Retail's Wage & Hour Day of Reckoning

In every burst of an economic bubble you find where legitimate profits were made, where smoke and mirrors substituted for profits as in the Bernard Madoff scandal, and where profits were made by short-cutting laws and cheating honest people. To quote Warren Buffett, "Its only when the tide goes out that you see who's swimming naked."

The naked truth behind double-digit retail profit growth was unmasked this week for two major retailers. A huge wage and hour settlement at Wal-Mart (estimated at $350 - $620m) and the upholding of a $35m judgement against Family Dollar indicates that both companies engaged in wage and hour fraud and cheated low-wage employees out of earned wages.

I'm a pro-business guy and these companies are customers of ours, but this is justice long overdue. In the Wal-Mart case lawsuits had erupted in multiple states claiming the same offense; hourly workers forced to work without breaks and lunches and compelled to clock out at the end of their shifts and go back to work. Other than blatant safety violations, this is about as low as a management team can go in the business world.

Remember, those making the decision to force workers to engage in this activity are much more highly paid and are in essence stealing earned wages from low-wage, often minimum-wage workers and giving that money to a multi-billion dollar company. The fact that Wal-Mart faced not just multiple lawsuits, but multiple class-action lawsuits in multiple states suggests how widespread the practice was for the nation's largest retailer. Company spokesmen denied the allegations right up until they settled, now stating that Wal-Mart is "no longer the company we once were."

The Family Dollar case is similar. This retailer operates small Dollar General type stores in small communities. In this case the Store Managers were actually found to be misclassified hourly employees. Their duties were 80 - 90% stocking shelves, running the cash register, and cleaning the store. They had no authority to hire employees; they didn't even have the authority to recommend employees to be hired. True authority rested with the District Managers. Working 60+ hours per week, the $35m settlement is for unpaid overtime, lunches, and punitive damages.

Both of these companies have HR departments, and both have Legal departments. Unless both departments in both companies are intimated and ineffective, the presence of such wide-spread wage and hour violations suggests a conscious decision somewhere in the upper levels of management to cheat low-wage employees. Of the four "sins that cry to heaven" this represents two: Injustice to the Poor (Exodus 2:32) and Defrauding a Workman of His Wages (James 5:4). It will be interesting to watch both companies' profits and behavior going forward to see if they will turn from these practices (and if so, can they maintain their earnings) or continue to attempt to skirt the law. If the latter, watch for increased union organizing activities as the pro-labor Obama Administration takes over next month.

For other companies and their management these cases should serve as a warning. If these two companies with well-financed legal resources can't get away with this, you can't either. Clock-in/Clock-0ut discipline, hourly classification guidelines, and meal/rest-break regulations are old-school, unsexy, and fundamental to operating within the law. Trying to get around them is only successful for so long, and not worth the risk.

Tuesday, December 23, 2008

Nashville For All Of Us

I have been putting off commenting on the regrettable "English Only" initiative currently on the ballot for Nashville voters. This is an important if not critical decision for this community and I wanted to wait until I had time to get the facts right and make a compelling case. Well, a coalition of religious and business groups has formed under the name Nashville For All Of Us and they have put together a great white paper on all the reasons this initiative is wrong for the community. You can get the facts at this link:

I try to shy away from politics in this blog because my mission is a harmonious and successful workplace and political conversations work against harmony. Unfortunately, this referendum is so bad for the culture and business climate in our community that we can't sit back in our business cocoon and let bigotry kill what is one of the strongest local and regional economies in the nation. Passage of this bill, and the subsequent national and international negative press that will come with it, will insure that there will be no more Nissans relocating to our community or Volkswagen's relocating to our region.

I hope you are or soon will be taking some time off for the holidays. While off, take a few moments and read why groups as diverse as Catholic Charities, the Metro Council, and the United Steelworkers all agree that this is a terrible initiative for Nashville. Early voting starts January 2nd and I urge you to vote "No" on both questions.

Sunday, December 14, 2008

Rumor Patrol: Thursday Outplacement Meetings

The week of the staff reductions, which were implemented on that Tuesday, we conducted outplacement meetings on Thursday. We held two sessions, both conducted by members of the HR staff including me. There were no current employees present other than the HR staff. I stepped out for literally 20 seconds to check a voice mail message, during which time a presenter was speaking, so I can accurately say that I didn't miss any discussions during either meeting.

Those two meetings are now being cited with some authority by a person or persons in our current workforce as the basis for two pretty ridiculous rumors. The first is that there were comments made that indicate a third round of staff cuts coming in February. The second is that one of our departing sales reps got up and made an angry rant against the company. Here are the facts.

1. There was no discussion of additional staffing cuts. None. Zero. There was no question asked to that regard, none answered, no speculation made either on the part of the presenters or the attendees who were there to ask questions. This is a rumor at the Lakeview Place building (surprised?) and nobody who works in that building was in attendance. Whoever tells you this either made it up or heard it from somebody who heard it from somebody who made it up.

2. One of our departing Ministry Sales reps asked to speak, and from the back of the room told the group how generous the company was being with their severance. He cited neighbors on his streets who had been let go that week with no severance or benefits, and thanked the HR staff for their care and service during this difficult time. There was nothing angry in his tone or comments and it was a touching moment for those of us who had been working on this project for so many weeks.

That's all until the next rumor. As always, feel free to comment publicly on this blog or contact me privately at

Wednesday, December 10, 2008

Rumor Patrol: PTO and Staff Reductions

Its been a week since our last round of staff reductions; long enough hopefully for a little dust to settle. I want to address two rumors that went around last week in the emotions of the moment and make sure that the air is cleared and facts are known as to the role that our Paid Time Off (PTO) program played in these terminations.

For those of you reading from outside the company, about three weeks prior to these terminations we made an intentional move away from paying for unused PTO; converting instead to a "use-it-or-lose-it" policy. This move will save us hundreds of thousands of dollars next year, or the equivalent of about 40 jobs. We announced this change both in writing and at informational meetings, most of which I conducted, a few days prior to our staff reductions.

The two rumors or comments that I've heard about this policy change are (1) that we said we'd do this instead of cutting jobs but then cut jobs anyway, and (2) we did this to avoid having to pay terminated people their PTO. Here are the facts:

1. We said this move "saves 40 jobs", and it did. We never discussed staff reductions in the PTO meetings or communications, nor did we play cute with our language in order to infer that we wouldn't cut staff. This policy change did reduce the body count from last week, and I continue to believe it was the right move.

2. Every employee who was terminated last week will receive full payout for their accrued but unused PTO on the December 12 pay date. The changes in the PTO policy came mid-year with a forfeit date of December 31st, 2008 for all unused PTO hours. As such, we believe this time is considered wages earned under Tennessee Wage and Hour law. The policy change did not cost any of these 54 terminated employees one dime.

I hope this sets the record straight. If you have any questions or comments that you want to say to everyone, please comment below. If you want to communicate directly with me, please use my company email address:

Friday, December 05, 2008

Good People One and All

As most of you know we lost over 50 really good people this week due to a reduction in force. This event was strictly driven by the economy and the nosedive in book sales we've seen in September and October (I haven't seen November numbers yet). I am gratified that six companies have contacted us looking for great talent, and we have established an email distribution list in order that we may send all job opportunities to those separated this week. The job titles and length of service for all of them are listed below.

I have not listed names as I have not had an opportunity to ask each individual for their permission to do so. However, if you are interested in some of the best talent in our industry and in the Nashville market please contact me at I will put you in touch with the candidate of your choice.

Yrs Service

Sr. Acquisitions Editor
Director, Marketing
Senior Publicist
Admin Assistant
VP, Publishing (Bibles)
Admin Assistant
Financial Assistant
Associate Editor
Marketing Specialist
VP, Marketing (Trade Book)
Director, Marketing
Brand Manager
VP & Publisher (Gift Books)
Associate Publisher
Director, Sales
Assistant Editor
Marketing Coordinator
Packaging Mngr, III
Web Designer II
Graphic Designer I
Imaging Clerk
Asst Director, Facilities
Database/App Admin
Sr. Programer Analyst
Warehouse Assoc IV
Warehouse Assoc III
Warehouse Assoc II
Warehouse Assoc II
Warehouse Assoc II
Warehouse Assoc II
Royalty Coordinator
Reconciliations Specialist
Manager, Production
Mngr, Key Accts
Product Tech Support
Product Tech Support
Admin Assistant
Sales Rep III
Telesales Rep II
Sales Assistant
Telesales Rep III
Mngr, Key Acct Sales
Mngr, Key Acct Sales
Admin Assistant
Mngr, Key Acct Sales
Dir, Sales Support
Sales Manager
Mngr, Key Acct Sales
HR Coordinator
Permissions Specialist