Macy’s Ordered to Restore Associates' Commission for In-Store Mobile App Sales

Macy's cannot offer the use of its Scan and Pay app for purchases from departments where employees make commissions, and must pay back commissions on such purchases, a labor relations arbitrator has ruled, reports RIS News. The determination applies to three collective bargaining agreements between Macy's and employees at stores in Boston and other New England cities, according to the ruling. Macy’s was found to have violated the rights of the New England workers represented by the union, and the company was ordered to provide back pay to all workers who lost commissions on in-store sales through the Macy’s app. Additionally, Macy’s must exclude all commissioned departments from the app, meaning that products purchased from those departments must be rung up by an employee at a register.

The United Food and Commercial Workers International Union (UFCW) filed its case against Macy’s over the "Scan and Pay" app in September 2018, soon after the retailer launched it. The grievance was filed by about 600 employees at six stores in the Boston area and Rhode Island, and the case was heard by an independent arbitrator in December 2020. The arbitrator found that the Macy’s Scan and Pay app, by no longer requiring customers to complete their purchases at a cash register, bypassed the traditional method of identifying employees who should receive commissions on each sale. As a result, the arbitrator found that the use of the Macy’s app denied workers the commission they would otherwise have received had the sale been completed at a cash register.

Total Retail's Take: The lines between in-person and online shopping have blurred for customers and store associates alike as retailers add more and more shopping and payment channels. For retail employees working on commission, these new payment features are beginning to impact their earnings. If a customer used the retailer's app to pay, should the worker get the commission, following rules that applied to checkouts in commissioned vs. non-commissioned areas of the store? Macy's and the UFCW each answered that differently, with Macy's coming out defeated.

"Today’s victory for Macy’s workers sends a powerful message to CEOs across the industry that companies cannot use mobile apps to force a backdoor pay cut on workers,” said UFCW International President Marc Perrone. The ruling found that the department store chain violated the collective bargaining agreements of all UFCW 1445 Macy’s employees by adopting a new in-store payment model that altered the parties’ practice with respect to accounting for and tracking, as well as earning commission credit for, in-store sales. Perrone additionally called for the company to ensure that stores "both in Massachusetts and nationwide follow this ruling and end the practice of using its Scan and Pay app to deny workers the commission they're entitled to for the service they provide."

Whether Macy's digital and legal teams considered this angle before implementation, unionized workers weren't going to allow their in-store sales efforts go without compensation. This ruling is a stark warning for other retailers to evaluate their in-store mobile app payment methods if associates earn commission.