Much More Than A Day's Work For Just A Day's Pay?

Francis D. Carpenter routinely put in 60- to 70-hour weeks during his seven years as an employee at a Food Lion grocery store in Southern Pines, N. C. But he claims he never saw a penny of overtime pay. What's more, he charges, the supervisors encouraged him to work off the clock to meet strict productivity goals set at the chain's Salisbury (N. C.) headquarters. "It got to the point where I just couldn't take it anymore," says Carpenter, who left in February for another supermarket.

Carpenter isn't alone. On Sept. 11, with the help of the United Food & Commercial Workers (UFCW), he and 182 other current and former Food Lion Inc. employees filed a complaint with the Labor Dept. It accuses the chain of violating federal labor laws governing wages and hours. The union wants the feds to file a class action on behalf of all Food Lion employees, seeking $388 million in back pay and damages. None of Food Lion's workers, however, are UFCW members.

GRAVY TRAIN. Food Lion says it has an explicit policy against working off the clock and described the complaint as "simply one more example of the union's attempt to coerce Food Lion management into recognizing the union." But the company is in for a tough fight. The UFCW has forced suits against several other employers, most notably one alleging off-the-clock violations now pending against Nordstrom Inc. in Seattle. The effort backfired: Employees at five of its stores this summer voted out the UFCW.

The 800-store Food Lion surely makes a lucrative target. The chain has steadily growing earnings (chart), and return on equity was a fat 25.8% last year. But much of its success stems from low labor costs, which, at 7% or so of sales, are roughly half the industry average, reckons Ed Comeau, an analyst at Oppenheimer & Co. The UFCW alleges that Food Lion employees perform $64 million worth of off-the-clock work a year. If the company had to pay that in extra wages, it would have cut its $284 million operating profit last year by 20%. Food Lion also might have had to hire more workers, cutting profits further.

The union complaint is that Food Lion willfully avoided overtime pay to thousands of hourly employees. It claims that the grocer covered this up by falsifying time records. The union also alleges that Food Lion has retaliated against employees who attempt to collect overtime pay or who refuse to work the extra hours.

The complaint concludes that Food Lion's 37,000 hourly employees often work up to 13 off-the-clock hours a week. It pins the blame primarily on the company's "effective scheduling" system. Every week, Food Lion headquarters sends each store a schedule mandating the work each department should do in 40 hours. Some workers say the demands are impossible to meet. For example, Betty Deck, a former store manager in Hudson, N. C., alleges that she had to run the register, stock the beauty-aids section, and reshelve the dessert section all in one day. Management has "got to know that it's impossible to do everything you're supposed to," says Deck.

'DON'T GET CAUGHT.' Other employees claim that they feared they would be disciplined if they didn't work the extra hours. "My supervisor would always say: `Do what you have to do to get the job done, but don't let me catch you working off the clock,' " says Carpenter. "I took that to mean: `Work off the clock, but don't get caught.' "

Food Lion says that effective scheduling was set up by outside consultants and is based on what the average person can do. Says Food Lion spokesman Mike Mozingo: "If an employee works off the clock or asks others to work off the clock, the reprimand could be separation from the company." Still, the company already has lost another case alleging off-the-clock violations. Earlier this year, a U. S. district court judge in North Carolina ordered the company to pay two former employees a total of $53,000 in overtime wages and damages. The company is appealing.

The battle at Food Lion is over more than just money. In part, union officials say they see a lawsuit as a potential organizing tool. Its primary goal, however, is to check Food Lion's rapid expansion. Union officials say that Food Lion uses an illegal labor cost advantage to take market share--and its members' jobs--from unionized supermarkets. That makes the battle a high-stakes proposition for both sides.