The Washington Department of Labor and Industries has found the Nordstrom department store chain in violation of the state's minimum wage act, vindicating a union's complaint that the company requires salespeople to work "off the clock" to make good on its pledge of superb customer service.
In a ruling that carried no punitive fine but that is likely to cost the company in terms of public relations, the state on Thursday night ordered Nordstrom to pay a yet-to-be-determined amount of back wages to all affected employees and to "properly compensate" them in the future for such tasks as attending employee meetings, making home deliveries and writing thank-you notes to customers.
The ruling affects workers only in Washington, where the department has the option of turning its violation report over to county prosecutors or filing its own lawsuit against Nordstrom.
The state acted in response to a complaint by the United Food and Commercial Workers Union, which represents 2,000 Nordstrom employees in the Seattle area. The union, echoing complaints that have surfaced throughout Nordstrom's 30,000-member U.S. work force, alleged that managers coerced employees into not charging the company for hundreds of hours a year that many of them worked.
Times interviews with numerous employees indicated that Nordstrom's emphasis on salespeople's "sales-per-hour" ratio indirectly encouraged many employees to voluntarily "punch out" before performing some non-sales, customer-service activities. "Punching in" for those hours would lower the sales-per-hour ratio.
Nordstrom officials, who have consistently denied that they have a policy of ordering off-the-clock work, said in response to the state report that they will "fully comply with the law." A statement released by co-chairman Bruce Nordstrom neither quarreled with the ruling nor admitted wrongdoing.
"We will review the mechanics of our record-keeping procedures in light of this report to see where they need to be improved," he said.
The Washington ruling bolsters plans by the union, in cooperation with a San Francisco attorney, to file a class-action lawsuit on behalf of thousands of current and former Nordstrom employees. The union says it has so far received claims for $2 million from about 400 workers in Washington and California, where Nordstrom employees are not unionized.
Joe Peterson, president of Local 1001 of the commercial workers union in Seattle, said the state ruling "demonstrates clearly that the company has operated under a system that is inherently illegal. They are going to have to change. They can continue to provide good customer service but it's going to cost them a lot more in terms of their labor costs."
Nordstrom stock fell $3.25 Friday to $29.50 but the drop was attributed to an announcement made after the stock market closed Thursday that the company expects a lower fourth-quarter profit.
The state found that in several cases Nordstrom was violating its own written policies that require compensating employees for all time worked. While written policy states, for instance, that delivering merchandise to customers' homes is to be performed during regular work hours, the company told state investigators that such work is "generally performed before or after the scheduled workday or on the employee's day off." The state found that mileage vouchers indicated reimbursement for travel on days for which time cards indicated no hours worked.
Nordstrom also faces a National Labor Relations Board complaint in Seattle stemming from the company's alleged failure to provide documents needed in contract negotiations with the union.