Grocer, Workers Settle Lawsuits -- Albertson's Was Target Of Wage, Hours Dispute

Albertson's and attorneys representing current and former employees of the Idaho-based grocery chain have settled eight class-action cases in federal court in Boise.

The company said it would take a $37 million one-time charge against earnings for the quarter ended Oct. 28 to cover costs of the settlement.

The lawsuits, which date back to 1996, charge that the company did not record and compensate employees for "off-the-clock" work.

Throughout the litigation, which is supported by the United Food and Commercial Workers International Union (UFCW), and in the settlement agreement, Albertson's denied the claims.

The union hailed the agreement as a major victory for Albertson's workers.

"The UFCW is pleased that Albertson's has finally agreed to do the right thing: Clean up its act, and pay employees who worked off the clock to meet arbitrary labor-cost goals," said Douglas Dority, international union president.

The union said it had received more than 5,000 complaints from Albertson's workers who claimed they had been cheated out of wages and told not to file workers' compensation claims. The union said employees feared they would be fired if they reported the extra hours worked at ends of shifts and on their days off.

When Albertson's refused the union's request to stop its pay practices, the union agreed to financially support the filing of class-action lawsuits in Washington, California, Florida and Idaho. These were consolidated in federal court in 1997 and cover employees in every state where the grocery chain operated at the time. Albertson's now has almost 2,500 stores in 38 states.

The settlement, which is subject to court approval, includes a procedure for handling individual employee claims raised in the lawsuits, a consent decree requiring Albertson's to modify some wage and hour practices and payment of plaintiffs' attorney fees and costs - estimated to be $17.5 million.

Affected employees will be mailed an explanation of the settlement and the claims procedure. An outline of the agreement is available on the Internet at http://www. Albsuits.com or workers may call 888-BACKPAY (222-5729) for more information from the attorneys.

The plan allows current and former employees who meet eligibility criteria to present their claims to a settlement administrator. The parties anticipate that many of the claims will be resolved quickly, while some will be subject to arbitration, a company statement said.

Neither Albertson's nor the plaintiffs' attorneys could specify the number of individuals likely to submit claims, or the amount involved, but union officials said up to 150,000 workers could be affected.

Plaintiffs' lead counsel James Webster, with the Seattle law firm Webster, Mrak & Blumberg, described the settlement as one of the broadest ever negotiated for alleged violations of wage and hour laws.

Albertson's today also released its latest financial results, which disappointed investors.

In the third quarter ended Oct. 28, profit from operations fell to $185 million, or 44 cents a share, from $218.5 million, or 52 cents, a year earlier. Sales rose 1.6 percent to $8.98 billion from $8.84 billion.

Analysts had expected a profit of 59 cents a share.

"This was a tough quarter," said Chairman and Chief Executive Gary Michael in a statement.

Albertson's said it expects to earn 70 cents a share in the fourth quarter and $2.70 next year. Analysts had been expecting earnings of 87 cents and $2.99, respectively.

Albertson's has struggled with the costs to fix up stores and combine operations since it bought supermarket chain American Stores for $12.5 billion. Its stock has lost more than half its value this year. The stock fell $3.875, or 10.8 percent, to $31.938 at the close of trading.

Information from Bloomberg News is included in this report.