A recent investigation has brought to light a significant and recurring management challenge at The Kroger Co., the nation’s second-largest grocery retailer, centered on persistent legal battles with its own managerial staff. These employees have accused the supermarket giant of systematically cheating them out of overtime pay as a deliberate cost-saving measure. This practice, described by one attorney as “retail’s dirty little secret,” allegedly involves misclassifying employees with managerial titles to render them exempt from federal overtime laws, while simultaneously requiring them to perform the duties of hourly workers for extended hours without any additional compensation. The investigation underscores that this is not an isolated issue but a systemic pattern, as evidenced by more than 20 lawsuits filed against Kroger since 2020 for similar violations, exposing a profound disconnect between the company’s public-facing image and the alleged reality experienced by its workforce.
The Human Cost of Alleged Wage Theft
The personal account of Thomas Schell, a former assistant store manager from Dayton, Ohio, provides a compelling example of the allegations levied against Kroger. After three years of loyal service, the 30-year-old was promoted, a move he believed was a significant step toward a brighter future within the company. Instead, he claims he was misled and manipulated into a position that required him to provide what amounted to free labor. Schell eventually became one of six named plaintiffs in a major lawsuit that consolidated cases from across the country, representing a class of 2,500 current and former assistant store managers who shared similar experiences. With a salary of $49,000, he was exempt from overtime, yet his workweek regularly spanned 50 to 60 hours. His duties were largely devoid of genuine managerial responsibilities such as hiring, firing, or budgeting. Instead, he spent his time performing the tasks of hourly employees, from unloading trucks and stocking shelves to mopping floors, essentially filling in wherever the store was shorthanded. His experience, which included working a grueling 27-hour straight shift during the height of the COVID-19 pandemic, left him feeling “undervalued, misled and unable to fully do the job I believed I had earned.” After quitting in 2020, Schell, who is now an IT professional, asserted that Kroger needs to treat its employees like “actual professionals, not just placeholders with fancy titles.”
The grievances articulated by Schell echo throughout the numerous legal filings against the grocery giant, painting a picture of a corporate culture where the promise of career advancement is allegedly used to exploit ambitious employees. The lawsuits suggest a darker side to the narrative Kroger has cultivated for years, which promotes long-term career growth under its slogan, “Come for a job, stay for a career.” The company often highlights the success stories of its senior executives, such as former longtime CEO Rodney McMullen, who famously began his career as a stockboy. However, the legal challenges suggest that this path is not as accessible as portrayed. Plaintiffs argue that the managerial title becomes a tool for circumventing labor laws rather than a recognition of leadership and responsibility. By classifying these individuals as exempt salaried employees, the company allegedly gains the flexibility to demand excessive hours to cover labor shortages without incurring the cost of overtime, effectively shifting the burden onto a class of workers who are led to believe they are on a management track. This alleged strategy not only deprives employees of rightfully earned income but also fosters a sense of betrayal and disillusionment among those who once saw a long-term future with the company.
A Widespread Industry Problem
The issues highlighted in the lawsuits against Kroger are not an anomaly but are indicative of a broader, calculated business strategy within the retail sector. According to workplace experts, improperly classifying employees as exempt from overtime is a common form of wage theft, second only to safety and health violations in federal labor rule infractions. The practice is so pervasive that other major retailers, including Walmart and Costco, have faced similar legal challenges. Schell’s attorney, Jason Conway, who has been involved in overtime cases against other large chains like Target, Giant Eagle, and Food Lion, explicitly labels the practice a “systemic problem in America.” He accuses Kroger of having “built abuse of employees into their business model,” a sentiment that resonates across the industry as companies seek to minimize labor costs in a competitive market. This trend suggests a fundamental conflict between labor law protections and the operational demands of large-scale retail, where thin profit margins often incentivize cost-cutting measures that can directly impact employee compensation and well-being.
This perspective is strongly supported by academic research, which quantifies the staggering financial impact of this practice on the American workforce. A study co-authored by Lauren Cohen, a business administration professor at Harvard University, and Umit Gurun, an accounting professor at the University of Texas at Dallas, estimates that the use of bogus managerial titles to cheat employees out of overtime costs workers a staggering $4 billion a year. Cohen expresses skepticism that companies will voluntarily cease this behavior, stating that for many firms, getting sued is simply treated as a “cost of doing business” because the practice remains profitable even after accounting for legal settlements. Gurun underscores the devastating personal impact on employees, who are deprived of thousands of dollars in annual income. This lost compensation can amount to as much as 13% of the pay they were legally entitled to receive, a significant sum that could otherwise be used for savings, family expenses, or debt repayment. The research paints a grim picture where a legal loophole is systematically exploited for corporate gain at the direct expense of frontline managers.
Kroger’s Official Stance and Legal Battles
In response to these serious and repeated allegations, Kroger has maintained a consistent legal and public stance of denial. In numerous court filings, the company’s attorneys have refuted claims of worker abuse or violations of federal labor laws. While Kroger settled the massive lawsuit involving 2,500 managers and is in the process of finalizing settlements in other pending cases, the company has emphasized that it has done so without any admission of liability. In a statement provided to The Enquirer, Kroger clarified its position, noting that no judicial ruling has found it guilty of wrongdoing. “Kroger has not been found to have misclassified anyone or engaged in any form of wrongdoing and has denied any unlawful or wrongful treatment,” the company stated. This strategy of resolving disputes without admitting fault is a common corporate tactic that allows the company to mitigate legal risks and avoid the precedent of a court-ordered judgment while simultaneously maintaining its public image and denying any systemic issues within its operational practices.
The pattern of litigation extends across Kroger’s various subsidiaries, demonstrating the breadth of the allegations and suggesting that the issue is not confined to a single brand or region. For instance, Fry’s Food Stores in Arizona was sued early this year for allegedly misclassifying “e-commerce supervisors” who worked 55 to 60 hours a week without genuine management authority; a settlement in that case is reportedly being finalized. Similarly, at Smith’s Food and Drug in Nevada, an “assistant store manager” filed a lawsuit last year, claiming to work 60-hour weeks with 90% of his duties being “clerk work,” and a settlement there is also pending. The Mariano’s subsidiary in Chicago has been a particular hotspot for litigation, with one consolidated case from 2020 now including over 100 plaintiffs from former meat and bakery manager roles. Furthermore, at King Soopers in Colorado, a “supervisor” in the curbside “pick-up” section sued in 2021, alleging their duties were identical to those of hourly associates while routinely working over 55 hours a week; Kroger settled this lawsuit in 2023 for an undisclosed amount. This nationwide pattern of similar lawsuits across different Kroger-owned chains reinforces the argument that the alleged misclassification is a systemic issue rather than a series of unrelated, localized disputes.
Navigating Legal Hurdles and Future Protections
Legal experts asserted that combating this type of wage theft presented significant challenges, largely due to the difficulties in effectively enforcing existing labor laws. The Fair Labor Standards Act of 1938, the foundational law that established overtime pay, was often circumvented by corporate legal strategies. Companies frequently utilized tactics such as forcing employees to sign arbitration agreements and class-action waivers, which served to delay and complicate the legal process, making it harder for workers to seek justice collectively. Jason Solomon, director of the National Institute for Workers’ Rights, argued that the existing penalties for violations were not a sufficient deterrent for large corporations. He concluded that, under the current system, “It’s way too easy for employers to get away with not paying workers.” The cohesive narrative presented by the investigation was one where a major American corporation was repeatedly accused of leveraging a legal loophole to maximize profits at the direct financial expense of its most ambitious and hardworking employees, a practice that was pervasive across the industry and difficult to eradicate. This issue even captured political attention, leading figures like former U.S. Senator Sherrod Brown to propose the Restoring Overtime Pay Act in 2023, which called on retailers to compensate workers for the overtime they had rightfully earned.
