Why are we still paying for Starbucks?
A company that was once hailed as the Starbucks of the digital age, Walmart’s chief operating officer is now on the receiving end of a lawsuit that accuses the retail giant of having a massive hidden cost: overpaying medical staff.
According to the lawsuit filed in federal court in the Southern District of New York, the retailer paid $14.9 million to help cover expenses for physicians, nurses, pharmacists, lab technicians and other healthcare workers employed by its medical staffing unit in 2013, a year in which the company expanded to 8 million stores across the country.
Walmart’s annual compensation for those workers was $1.5 million.
But the lawsuit contends that the company did not pay enough to keep them employed at its stores, and instead charged them $1,500 to $2,500 per month for their services.
In an emailed statement to The Next World, a spokesperson for Walmart confirmed that the payouts were for “specialized medical and dental work” and that the amount is only for those who are “not employed in Walmart stores.”
But the statement did not provide a reason for the extra payments, including the alleged $1 million cost to Walmart.
The company’s healthcare expenses for 2015 were $8.3 billion, according to its annual report, and the amount of money the company paid out is a fraction of what it spent in the same period last year.
Walmart spent $11.5 billion on healthcare in 2015, and it paid out $11 billion in total compensation to its employees, the company’s CEO Jeff Simon said in a statement.
According a Walmart spokesperson, the compensation costs are for “services that are not specifically assigned to medical personnel,” and the company is “investigating” the claims.
But Walmart’s compensation department told The Next Word that the total amount paid out in 2017 was $7.6 billion, or $7,902 per Walmart employee.
The spokesperson also said that Walmart’s total healthcare expenses in 2015 were less than $2 billion.
“The cost to us was the same as last year, with the exception of one year when we spent $14 million on a health care cost for our staff,” the spokesperson said.
“This year we spent only $3 million on healthcare.”
The spokesperson did not respond to further questions from The Next Way.
In a blog post on the company website, Walmart Chief Operating Officer Doug Oberman wrote that he is aware of the lawsuit and will respond to it as soon as possible.
The lawsuit filed Monday claims that Walmart violated the federal Fair Labor Standards Act by paying its medical staff more than the statutory minimum wage.
In addition, it claims that the compensation payments to medical staff “are excessive and unjustified.”
In a letter dated April 30, the Equal Employment Opportunity Commission (EEOC) announced that it was investigating the claims, which it called “an egregious example of retaliation.”
Walmart was already under fire in the media after a whistleblower filed a class action lawsuit against the retailer in December over pay discrepancies that resulted in some employees being paid less than minimum wage and some being paid more than $30,000.
The lawsuit claims that Wal-Mart’s compensation is “unfair and retaliatory” and said that the retailer was “underreporting” its pay.
The New York suit accuses Walmart of making an “unprecedented effort to cover up” its medical and medical-related costs and that “the company continues to provide insufficient financial incentives to employees for working at Walmart.”
Wal-Mart said in the letter that it has “never engaged in retaliation” against any of its medical workers, including that of the whistleblowers, and that its compensation department is working with the EEOC and the U.S. Department of Labor to investigate the claims and to address their “deeply concerning impact.”
WalMart also says that it is “looking into this matter” and is “actively addressing this matter with our employees, including reviewing our compensation programs to ensure that they align with the law and comply with applicable regulations.”
The company has said it is not looking to replace its medical workforce.