Nordstrom Fights Labor Allegations at Annual Session
Nordstrom Inc. launched a counterattack Tuesday against allegations that it makes employees work without pay, defending its business practices and challenging union officials to hold a referendum to see if they have the backing of employees.
Management’s defense took center stage at the annual shareholders’ meeting at the Four Seasons Hotel in Newport Beach, overshadowing disappointing earnings.
Bruce, James and John Nordstrom, the Seattle-based retailer’s co-chairmen, managed to avoid any direct clashes with union officials. Their closest brush came when a pro-union shoe salesman from a Nordstrom store in Seattle walked to the front of the room and told shareholders that the company “has serious problems that need to be addressed.”
He was referring to Nordstrom’s continuing problems with labor grievances and a union class-action lawsuit filed on behalf of the firm’s roughly 100,000 employees alleging that clerks were encouraged to work extra hours without pay. The retail chain, known for its attentive customer service, also faces a shareholders’ lawsuit that claims the company failed to reveal the extent of its labor problems.
Several pro-management workers were applauded when they rose to say they backed the store’s policy of personal service and were proud to be associated with Nordstrom. Earlier, they had joined in a rally in front of the hotel to show their support for the company.
Nordstrom, with $2.7 billion in sales last year, operates 59 stores in Washington, Oregon, California, Alaska, Virginia and Utah. Employees in California do not belong to a union.
Bruce Nordstrom, in a defense of what he termed “a media smear campaign” waged by two Washington state locals of the United Food and Commercial Workers Union, said the chief issue was freedom. Employees should have the freedom to decide their representation and the company should have the freedom to continue to conduct business as it has in the past, he declared.
“Our people resent having to be members of a union that to them represents mediocrity,” Nordstrom said. If Nordstrom workers seek a decertification vote, “we will stand by whatever the employees tell us,” he added, receiving a round of applause.
He repeatedly defended company sales policies, in which clerks receive both an hourly wage and commission. He asserted that the company’s workers are the best-paid in the retailing industry. He offered examples of a men’s suit salesman who earned $100,000 in salary and commissions last year and a shoe salesman who garnered $82,000.
The company’s defense drew a sharp rebuttal from Joe Peterson, president of UFCW Union Local 1001 in Seattle. Peterson, dressed in a tuxedo, noted that the National Labor Relations Board has pending complaints against Nordstrom, including an allegation that the company tried to sidestep the union by illegally encouraging employees to negotiate directly with the company to resolve back-pay disputes. In addition, the Washington State Department of Labor and Industries has found Nordstrom in violation of minimum-wage laws and ordered it to pay back wages.
Also, the union has filed a lawsuit demanding back pay for all Nordstrom workers who worked unpaid hours performing such duties as writing thank-you notes or making deliveries. Peterson estimated that Nordstrom faces a potential $300 million in back-wage claims. The company has established a $15-million fund to pay such claims.
“I think the company recognizes we’re not going to go away,” said Peterson. But he said the company refuses to meet the union at the bargaining table and can expect a continued “public relations nightmare.”
A group of Seattle-area Nordstrom employees who said they paid their own way to Orange County to attend the annual meeting joined in Bruce Nordstrom’s challenge to the union to allow a decertification vote.
Larry McCargar, an NLRB official in Seattle, said the agency would not authorize a decertification election “until the unfair labor practices are remedied.”
Nordstrom officials downplayed the effect of labor problems on lackluster earnings.
Nordstrom earnings plunged 43% for its first quarter ended April 30 to $13.2 million, down from $23 million a year earlier. Sales, however, were up 8%.
James Nordstrom said the retailer lowered its prices to keep pace with competitors, which squeezed profits. Also, he said, inflation and expenses related to the labor strife kept costs high.
The company said it believes that the $15 million set aside to pay back-pay claims is sufficient and that the claims should not substantially affect earnings this year.
John A. McMillan, Nordstrom’s president, said the firm’s earnings for its fiscal year ended Jan. 31 were hurt by the effects of the San Francisco earthquake in October, and by general disarray in the retail industry. Nordstrom had earnings of $31.4 million in fiscal 1990, compared to $47.5 million in 1989.
