Macy’s Restores Associates’ Commission for In-Store Sales of Mobile Apps

Macy’s can’t offer its Scan and Pay app to purchase from departments where employees earn commissions. Instead, Macy’s must reimburse such commissions. According to the ruling, this determination applies to three collective bargaining arrangements between Macy’s employees and Macy’s at stores in Boston and other New England areas. Macy’s was found guilty of violating the rights and obligations of New England workers. The company was ordered by the ruling to pay back all employees who were unable to earn commissions through Macy’s App. Macy’s must also exclude all commissioned departments from its app. This means that any products purchased from these departments must be rung-up by an employee at a register.

In September 2018, just a few months after Macy’s launched the “Scan andPay” app, the United Food and Commercial Workers International Union filed a complaint against Macy’s. Sixty-six employees from six stores in Boston and Rhode Island filed the grievance. The case was then heard by an independent arbitrator in Dec 2020. Arbitrator determined that Macy’s Scan & Pay did not require customers to pay cash at the register. This allowed the arbitrator to bypass the traditional method of identifying employees eligible for commissions. The arbitrator concluded that workers were not entitled to the commissions they would have earned if the transaction had been made at a cash register by using the Macy’s Scan and Pay app.

Total Retail’s View: As retailers offer more shopping options and payment channels, customers and associates have become more confused about online and in-person shopping. These new payment options are starting to have an impact on retail employees who earn commission. What happens if a customer uses the retailer’s app for payment? If so, does the worker receive the commission according to rules that apply to checkouts in commissioned and non-commissioned areas of a store? Macy’s and UFCW answered this differently, with Macy’s coming out on top.

Marc Perrone, UFCW International President, stated that today’s win for Macy’s workers sends a strong message to CEOs in the industry that companies can’t use mobile apps to force a backdoor cut on workers. The decision found that Macy’s department store chain had violated all UFCW 1445 Macy’s collective bargaining agreements by adopting a new payment model in-store that changed the parties’ practices in accounting for and tracking in-store sales, as well earning commission credit. Perrone also demanded that the company ensure that all stores in Massachusetts and nationwide comply with this ruling and stop using its Scan and Pay app as a way to deny workers the compensation they are entitled to for the service provided.

Macy’s legal and digital teams didn’t consider this aspect before implementation. However, unionized workers were not going to let their in-store sales efforts go unpaid. This is a warning to other retailers that they should evaluate their mobile app payment methods in-store if associates are paid commission.

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J.C. Penney Reduces 650 Jobs and Reducing Associate Count to About 50,000.

Brookfield Asset Management and Simon Property Group, J.C. Penney’s new owners, announced last week that they had reduced the corporate staff of over 3,500 by approximately 100 people. Field operations were also reduced by 550 employees. J.C. Penney had 84,000 employees when it filed for bankruptcy protection May 2020. At that time, 846 stores were in operation. Since then, 156 stores were closed and another 18 are scheduled to close on May 16. Numerous distribution centers have also been shuttered. Around 34,000 employees have lost their jobs. According to the new management, the company is now smaller and better structured to meet strategic priorities.

Total Retail’s View: It will be fascinating to see how J.C. Penney, and other department stores, such as Macy’s or Kohl’s, recover from the COVID-19 outbreak and the disruptions it has caused their businesses. J.C. Penney, like others, is trying to position its businesses for the “new normal” in retail. J.C. Penney has had to tighten its belt by closing down underperforming stores and cutting back on employee headcount. The iconic retailer will continue to make changes such as strengthening its digital presence and equipping its stores for curbside pickup and increased BOPIS. Will it also provide a variety of brands that will attract customers back into its stores? These questions will have a major impact on J.C. Penney’s future viability.

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