Senators urge Kroger to resolve lingering payroll system issues

U.S. Sens. Elizabeth Warren (D., Mass.), Bernie Sanders (I., Vt.) and Ron Wyden (D-Ore.) have called on The Kroger Co. to address payroll system issues that reportedly have impacted thousands of workers nationwide, with some receiving no or only some of their paychecks.

In a Feb. 15 letter to Kroger Chairman and CEO Rodney McMullen, the senators urged the Cincinnati-based grocer to explain the extent of payroll problems and how it will compensate affected employees. The lawmakers cited ongoing published reports of Kroger Co. workers experiencing systemic paycheck difficulties as well as of four class-action lawsuits claiming that the retailer engaged in “wage theft.”

“We are writing today regarding alarming new reports of Kroger’s involvement in the mistreatment of workers and consumers through widespread and unresolved wage theft. These reports indicate that ‘systemic and widespread errors’ by Kroger resulted in thousands of your employees experienced delays and missing wages in their paychecks in late 2022,” Warren, Sanders and Wyden stated in the letter. “We are writing to request a full explanation of how your workers will be compensated for any lost or delayed wages and how you will prevent future wage theft,” they said.

Reports of widespread payroll system problems mounted in the latter part of 2022 from United Food and Commercial Workers (UFCW) members working for Kroger’s Fred Meyer, QFC, Mid-Atlantic and Michigan divisions. Workers cited issues with the recently implemented “MyTime/MyInfo” system, ranging from missed or incomplete paychecks to missing contributions to health and welfare benefits. Other complaints included holidays not being paid, premiums not being paid, personal holidays and vacations not being paid, missing overtime, missing tax deductions, inability to schedule personal holidays and health insurance overcharges. Employees have since continued to report payroll-related errors in the media.

In an email to Winsight Grocery Business on Friday, Kroger reiterated that it has addressed most of the payroll software issues and regrets any difficulties experienced by workers.

“While the majority of issues have been resolved, we understand these issues have caused undue difficulty for the impacted associates,” a Kroger spokesperson said in a statement. “Teams are working around the clock to resolve payroll issues for the remaining small percentage of associates affected by these processing errors. We are taking multiple steps to pay our associates as quickly as possible, including overnighting checks to impacted associates.”

Questions from Warren, Sanders and Wyden focus on the number of missing or incorrect paychecks, the total amount of wages owed to workers not receiving pay, how much back pay Kroger has issued to date for employees with missing or incorrect pay, and whether the company is continuing to use the MyTime payroll system. They also asked in the letter if Kroger would “commit to fully redressing all workers” affected by missing or late pay before moving forward with its planned $24.6 billion acquisition of Albertsons Cos., announced in mid-October. The senators asked Kroger to respond to their letter by March 1.

“We request a full accounting of how this widespread wage theft occurred, and what steps you plan to take to compensate your workers prior to any merger with Albertsons,” they stated.

UFCW said its international organization and local unions have continued to engage with Kroger directly "on multiple levels," noting that it aims to ensure "every single one of our members receives every cent they are owed" and the issue is resolved permanently.

“Workers deserve to be paid their full and correct paychecks on time, period. Kroger has failed to adequately address the payroll issues that our members have continued to experience for months on end," UFCW International President Marc Perrone said in a statement on Friday. "It’s heartening to see Sens. Warren, Sanders and Wyden join our calls for accountability from Kroger and stand up for essential workers across the country. It sends a much-needed message that lawmakers are watching this issue closely."

Arizona AG Kris Mayes yesterday launched a probe of the proposed Kroger-Albertsons merger. / Photos: Shutterstock

More scrutiny of Kroger-Albertsons merger—now from Arizona AG

In their letter, Warren, Sanders and Wyden also expressed their concerns about Kroger’s proposed acquisition of Albertsons.

“Even as your company was failing to address concerns about systemic wage theft, you have been pushing through a $24.6 billion merger with Albertsons Cos. Inc. that further threatens workers’ wages and jobs and hurts consumers by reducing competition among grocers,” the senators wrote. “This merger would exacerbate corporate consolidation in the grocery sector, and likely result in the shuttering of some stores across the country and the firing of workers from both Kroger and Albertsons. As we noted in our letter to the Federal Trade Commission urging them to reject the deal, ‘Kroger’s and Albertsons’ high combined market shares in certain geographic markets would give the new company significant leverage’ to cut benefits for worker.”

The Kroger spokesperson, though, reaffirmed the company’s support of its employees—including with the planned merger—in the email to WGB.

“Kroger associates are at the center of everything we do. We value and respect each of our team members,” the spokesperson said. “The merger will provide meaningful benefits for our associates, including new and exciting growth opportunities. We committed to investing $1 billion to raise wages and improve comprehensive, industry-leading benefits. This builds on our track record of supporting associates, including the incremental $1.2 billion we have invested in wages and comprehensive benefits since 2018. Kroger will not close any stores, distribution centers or manufacturing facilities as a result of this merger, including stores that may need to be divested to obtain regulatory approval.”

Still, opposition to the Kroger-Albertsons merger deal continues to grow. Arizona Attorney General Kris Mayes on Thursday announced an investigation of the proposed transaction, citing concerns about its possible impact on the state’s grocery retail market.

“In addition to skyrocketing prices, the proposed merger raises questions about the potential for store closures that could force consumers to travel farther for groceries, possibly creating food deserts that disproportionately affect minority communities,” Mayes said in a statement.

In Arizona, Kroger operates supermarkets under the Smith’s and Fry’s Food & Drug Stores banners, while Albertsons’ banners in the state include Albertsons and Safeway. Together, the two retailers operate more than 250 stores, employ over 35,000 workers and represent nearly half of grocery market sales in Arizona, Mayes reported.

“Thousands of employees will also wonder whether their jobs will still exist if the merger is finalized. And even if they remain employed, workers may have to worry whether their wages or benefits will decrease,” added Mayes. “Farmers and ranchers also fear that a consolidated supermarket giant might wield unfair buying power that would force them out of business in favor of corporate producers.”

Thus far, the mega-merger has encountered a number of hurdles on the legal front. For example, earlier this month, a group of 25 consumers from 11 states filed a private lawsuit in federal court to block the merger as well as terminate a $4 billion special dividend payment by Albertsons disclosed when the agreement was announced. Albertsons, however, was cleared to initiate the dividend payment last month after an over two-month delay from state litigation aiming to prevent the dividend. Colorado and Washington state also are pursuing their own investigations to potentially block the merger.

*Editor's Note: Article updated with UFCW comment.