Citing fraud, Hy-Vee ‘immediately’ ends employee discount

Citing ongoing fraud, Iowa-based Hy-Vee on Monday suspended its 10% employee discount and said it would launch a revamped benefit program by mid-April.

The program had been in place since December 2019, with rules that Hy-Vee employees and one member of their household would receive 10% off all grocery items as part of an “everyday employee discount.”

“Over the past several months, a significant uptick in the amount of users utilizing the employee discount who were not living in the same household or living in other cities was identified, in addition to other fraudulent practices and loopholes that were occurring within the program,” Hy-Vee said in a statement to WGB Monday. “The discrepancies found were significant enough to signal a much broader issues that needed to be addressed immediately.”

Hy-Vee, Iowa’s largest private employer, said it is working to revamp the employee discount program.

The grocer’s workers were informed of the discount’s demise on Friday, via an internal video from Hy-Vee Chief Administrative Officer and Chief Customer Officer Georgia Van Gundy.

A nearly two-and-a-half-minute portion of the video was posted to Reddit on Friday.

In it, Van Gundy detailed some of the abuses the retailer has noted recently, including an employee’s Fuel Saver account that had been used in five states in one hour and another employee who purchased a large amount of merchandise (“more than the value of their paycheck, to be exact,” she said) and is assumed to be reselling the items at a profit.

“Actions like this are just unacceptable,” Van Gundy said. She told employees a new benefit program would be announced this summer, a few months later than the mid-April deadline Hy-Vee provided Monday.

Van Gundy said the employee discount program is monitored very closely and that the grocer will “have conversations” with workers who were found to have abused the discount.

Hy-Vee, which operates more than 285 stores across eight Midwestern states, has had some internal upheaval recently.

In January, just a few months after announcing a dual-CEO structure with Jeremy Gosch and Aaron Wiese at the helm, the grocer said Gosch would serve as sole CEO, while Wiese had been named a company president.

“As we continue to expand as a company, our leadership has now been restructured into areas of focus,” Hy-Vee said in a statement at the time.

Last summer, though, the West Des Moines, Iowa-based company had said that Wiese would succeed longtime CEO Randy Edeker and that Gosch would remain president and COO. A month later, it named Gosch co-CEO.

Last March, Hy-Vee laid off 121 employees at the grocer’s corporate headquarters and at a technology center. A few weeks later, the company published an ad in the Des Moines Register, saying it planned to cut 500 office jobs and would ask those workers to relocate to retail stores.

In its statement Monday, Hy-Vee stressed that the company still offers one of the most "competitive and comprehensive" benefit packages in the retail industry, with perks such as a free Hy-Vee Plus premium membership with free delivery, weekly pay, a matching 401(k) program, holiday pay, part-time insurance, career development and more.