“From the company’s viewpoint, this was a great strategy, other than the fact that it was illegal.”

—Human Resource Expert

July 2006. The Ralphs Division of Kroger pleaded guilty to multiple felony counts in a case stemming from the 2004 lockout in Southern California. The company will pay $20 million in criminal fines and $50 million for a fund to provide back pay to locked-out workers and reimbursement to the union for strike benefits and other costs during the strike.

Ralphs and other Southern California chains locked out employees during 2004 contract bargaining over clerks in the United Food and Commercial Workers (UFCW). When the stores couldn’t operate without experienced workers, Ralphs started bringing a select group of scabs back to work.

They gave the rehired employees false identities and social security numbers—thereby providing false information to state and federal agencies, including the IRS At the same time, they misled benefit funds and concealed the fact that they had rehired workers.

This scam helped Ralphs extend a lockout that kept tens of thousands out of work and ultimately forced on them a contract with benefit cuts that will have an impact for years to come.

Hopefully the fines and settlement will discourage these tactics in the future.