REI CEO Says Closing On Black Friday Is A 'Radical Idea'

REI will be sacrificing one of its top business days when it closes its 143 retail stores on Black Friday to encourage customers to spend time outside.

CEO Jerry Stritzke told HuffPost Live on Wednesday that the decision to close up shop for the day wasn't "made lightly," and admits that "it's a bit of a startling idea from a retail perspective."

"[We] certainly had to think hard about it. This is new news. I haven't spoken to very many of my contemporaries about the issue, but I'm excited by the idea," Stritzke said. "I think it's intriguing that we can create this conversation [about] something so central to our brand and kind of who we are."

This is the first time REI will close on Black Friday, even though the day after Thanksgiving has historically been a "top 10 business day" for the company, according to Stritzke. However, the company's decision exemplifies some retailers' recent opposition to keeping stores open on what is traditionally a family holiday, and the day after.

Online shoppers will still be able to purchase items from REI on Black Friday, though they'll initially be directed to a blackout screen imploring them to explore the outdoors. Online sales aren't the initiative's priority, however.

"It's easier to leave [the website] on than turning it off," Stritzke explained.

Watch Jerry Stritzke's conversation with HuffPost Live in the clip above.

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Amazon Prime Now Drivers Claim They Were Paid Below Minimum Wage

Well, that didn't take long.

It was just a few weeks ago that Amazon launched its Amazon Prime Now service in Los Angeles and several other metropolitan areas, promising customers one- and two-hour delivery for tens of thousands of products.

On Tuesday, four former Amazon Prime Now drivers in Southern California sued the online retail behemoth, claiming the labor model behind the service is a sham. The drivers had made deliveries for roughly a month before they filed their complaint, which alleges violations of minimum wage and overtime pay laws.

The lawsuit provides yet another glimpse at how Amazon keeps its prices low in part by shaving labor costs deep down in its logistics network.

The drivers named in the complaint were not actually Amazon employees. Rather, they were "independent contractors" working on behalf of a courier service called Scoobeez, which the lawsuit indicates has a contract with Amazon. Since the drivers don't work for Amazon, the retailer doesn't have to worry about paying payroll taxes, workers' compensation costs or unemployment insurance taxes on them.

And since the workers are independent contractors, Scoobeez doesn't bear those costs, either. The drivers must cover their own work-related expenses, including providing their own vehicles and gasoline. Therein lies the claim that the Amazon-Scoobeez arrangement runs afoul of labor law: After paying their own automobile expenses, the drivers say their wages fell below California's minimum wage of $9 per hour. They also claim they were not paid the required time-and-a-half rate when they worked more than eight hours a day.

The suit argues that the drivers are, in fact, employees of Scoobeez, not independent contractors, as they've been classified.

The drivers were working for hourly pay, as opposed to the per-delivery rate that's common in the courier industry, according to the suit. Beth Ross, the attorney who filed the case, says the drivers typically logged at least 50 miles per day on their cars, often reaching or exceeding 100 miles. After subtracting the cost of gasoline and wear and tear on the automobiles from the $11-per-hour wage, Ross says the pay came out to roughly $60 for 8.5 hours of work on some shifts, or approximately $7 per hour.

"They are being paid a sub-minimum wage, and Amazon knew that," Ross told The Huffington Post. "And they're giving away the service for free to customers. Well, guess who's paying for it? Down-and-out, down-on-their-luck low-wage workers with no other job opportunities."

(Note: The Amazon Prime Now service is free for Prime members requesting a two-hour delivery; it costs $7.99 per order for one-hour delivery, with a $15 minimum order. The Prime service itself costs $99 per year.)

An Amazon spokeswoman said the company does not comment on pending litigation. A message left for Scoobeez, which was named as a co-defendant in the suit, was not immediately returned.

The independent contractor scheme is a cost-saving arrangement that already facilitates many Amazon Prime deliveries, as HuffPost detailed last year in a story about the Amazon contractor Lasership. Many of that company's drivers said they earned so little after expenses that a car breakdown would put them out of business.

The use of independent contractors is fast becoming the norm in trucking and delivery services nationwide, since it saves companies so much money. FedEx is widely credited with pioneering the independent contractor model, and the delivery giant has been fending off related lawsuits from drivers for years. Ross successfully sued FedEx on behalf of drivers in a closely watched case that was settled earlier this year for $228 million.

In addition to the minimum wage and overtime claims, the Amazon Prime Now lawsuit also accuses the company of breach of contract. The Amazon Prime Now app allows customers to leave a tip for their courier, but Ross alleges that the four drivers did not receive all their tips.

"This is brand-new ground for Amazon," Ross said of the Prime Now service. "They have the opportunity to make it right before this becomes a very entrenched business practice. They can set themselves apart from the rest of so-called sharing economy."

J. Crew Will End On-Call Shifts For U.S. Workers

ALBANY, N.Y. (AP) — J. Crew has agreed to end on-call scheduling at stores nationwide, following similar moves by several other major retailers, New York's attorney general said Friday.

In April, Attorney General Eric Schneiderman's office wrote to 13 retailers questioning the practice of keeping workers on call for shifts on short notice. The letter also cited possible violations of New York's requirement to pay hourly staff for at least four hours when they report for work.

"Workers deserve protections that allow them to have a reliable schedule in order to arrange for transportation to work, to accommodate child care needs and to budget their family finances," Schneiderman said Friday. The company has agreed to provide one week of advance notice about schedules at all its New York stores, he said.

Senior Vice President Maria Di Lorenzo said J. Crew ended on-call shifts nationally this month. The on-call shifts had helped the company deal with unexpected staff absences and schedule changes for product deliveries, she said. The retailer began discussing possible changes 10 months ago, has disabled the on-call feature from its scheduling software and now will fill needed slots on a voluntary basis, which may present some challengers for managers, she wrote in a letter to the New York attorney general.

"Further, J. Crew has strict anti-retaliation policies," Di Lorenzo wrote. "Consistent with those policies, J. Crew will not retaliate against associates who do not volunteer to cover these shifts."

That follows announced agreements confirmed by Bath & Body Works and affiliate Victoria's Secret, Abercrombie & Fitch and Gap Inc. Williams Sonoma said it's also ending the practice.

Urban Outfitters has agreed to end on-call shifts at its New York stores, according to the attorney general.

 

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Federal Judge Rips DOJ For Letting Corporate Lawbreakers Off Easy

A federal judge, disgusted by cushy deals that allow lawbreaking corporate bosses to avoid jail time, used a ruling in a little-known corruption case to tear into Department of Justice prosecutors this week. 

In an 84-page opinion Wednesday approving a deferred prosecution agreement for ex-Army contractors indicted in a bribery and kickback scheme, U.S. District Judge Emmet Sullivan, of the District of Columbia, slammed federal prosecutors for striking a similar deal with General Motors last month.

Faulty ignition switches in GM vehicles killed at least 169 people. The company, accused of concealing the defect from regulators and lying about it to customers, agreed to pay a $900 million fine as part of a deferred prosecution settlement. No individual GM executive or employee has been prosecuted.

In his opinion in the case of the former Army contractors, Sullivan called the Justice Department's deal with GM "a shocking example of potentially culpable individuals not being criminally charged."

“Despite the fact that the reprehensible conduct of [GM's] employees resulted in the deaths of many people, the agreement merely ‘imposes on GM an independent monitor to review and assess policies, practices, and procedures relating to GM’s safety-related public statements, sharing of engineering data, and recall processes' plus the payment of a $900 million fine," Sullivan wrote.

Charges against GM will be dropped in as few as three years. The deal was criticized as a slap on the wrist -- the fine amounted to less than one-third of the automaker's 2014 profit. As USA Today noted in an editorial last month:  

"Individuals are deterred from wrongdoing by the prospect of going to jail, much more so than by the prospect of seeing the corporate treasurer pay money to the government."

Days before the settlement with GM, the Justice Department released an internal memo pledging to prosecute individual corporate employees for white-collar crime, rather than just the institutions that employ them. That memo came after years of harsh criticism that the department had failed to successfully jail even a single top finance executive in the 2008 financial crisis.

Deferred prosecution agreements are intended to give defendants a chance to clean up their act and rehabilitate. If they comply (and pay fines), the charges are dropped. 

Increasingly, Sullivan wrote, such offers are extended to corporations accused of criminal misconduct.

From 2000 to 2005, the government made "just over four" deferred prosecution agreements a year, Sullivan wrote. That number "increased dramatically" since, with a record number this year, the judge said. 

Sullivan called the Justice Department's reliance on deferred prosecution deals for corporations "disappointing" and said the department should grant the same lenience to individuals.

"People are no less prone to rehabilitation than corporations," Sullivan wrote. "Drug conspiracy defendants are no less deserving of a second-chance than bribery conspiracy defendants. And society is harmed at least as much by the devastating effect that felony convictions have on the lives of its citizens as it is by the effect of criminal convictions on corporations."

H/T: National Law Journal

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Even The Most Elite Women Are Subject To The Gender Pay Gap

A business degree, even from one from a top school in the country, won't be enough to protect women from the gender gap in compensation.

A report Bloomberg Businessweek published Tuesday found that the difference in pay for men and women swells as time goes by. Both groups leave their MBA programs earning about the same -- men's $105,000 to women's $98,000 -- but the split becomes more exacerbated years later. By the time they're six to eight years out of school, median compensation for men is $175,000, and $140,000 for women. For the latter, that rounds out to about 80 percent of men's paychecks, proving unfortunately that the roughly 78 cents women make to a man's dollar still holds up.

The study counters arguments that the pay gap between men and women results from a discrepancy in education and skills, Businessweek reporter Natalie Kitroeff told HuffPost Live on Wednesday. "We're looking at them coming out of the same schools, in the same years," Kitroeff said. "It was surprising to find that there was such a persistent gap, and we found this across every single industry."

Men gain the most ground in year-end bonuses. When those are excluded, the pay gap shrinks. Women who graduated Columbia's business school between 2007 and 2009, for example, earned a median of $170,000 in 2014, while men raked in $270,000. The difference in base salaries, though, was just $30,000.

The study's findings also reject the notion that the gap stems from women choosing to go into fields that pay less. Generally, men do enter the more lucrative industries, including consulting, real estate and finance, at higher rates -- 43 percent of men versus 32 percent of women -- but "even when women went into the highest-paying industries, they were paid less," Kitroeff said.

And let's not forget that the gender pay gap starts way before higher degrees. At the most elite colleges in the U.S., male alumni far outearn their female classmates, with Harvard men earning an average of $53,600 more than women 10 years after they start their undergraduate studies.

Price-Gouging Pharma CEO Refuses To Talk About Drug Prices On TV

Martin Shkreli, the Turing Pharmaceutical chief executive reviled for jacking up drug prices, doesn't want to talk about drug prices anymore.

But he does want to be heard.

The so-called "most hated man in America" wanted to appear Thursday on CNBC to defend rival Valeant Pharmaceuticals against a short-selling firm's report accusing the company of Enron-like accounting fraud. But when producers said they wanted to probe him about drug prices, too, he refused to go on air.

Scott Wapner, the host of CNBC's "Halftime Report," tweeted the story:

.@MartinShkreli wanted to come on @CNBC to defend $VRX. We said have to talk RX prices too. He said no. We said see ya. Tells u all u need..

— Scott Wapner (@ScottWapnerCNBC) October 22, 2015

This is the same @MartinShkreli who also insulted our star healthcare reporter @megtirrell on Twitter. I guess that tells you more...

— Scott Wapner (@ScottWapnerCNBC) October 22, 2015

His bait and switch thing is compete BS. What news organization would put that guy on and NOT ask about drug prices? Find me one.

— Scott Wapner (@ScottWapnerCNBC) October 22, 2015

Instead, it appears that Shkreli took his interview to Fox Business Network, Fox News' business and finance branch that has struggled to compete with CNBC for viewers. 

Will be on Fox Business News tomorrow, exclusively, with Maria Bartiromo @MariaBartiromo .

— Martin Shkreli (@MartinShkreli) October 22, 2015

CNBC @CNBC asks me to come on and talk $VRX. then they tell me they want to talk Turing. i tell them to pound sand. pic.twitter.com/z5RSXcvCwv

— Martin Shkreli (@MartinShkreli) October 22, 2015

It remains unclear why his opinion on the subject is worth pursuing. However, it's bound to be entertaining television. 

Why Jack Dorsey Gave A Huge Portion Of Square To A Charity

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Jack Dorsey did something unusual last week.

On Oct. 14, his financial services startup Square filed for an initial public offering, and Dorsey disclosed in the documents that he would give away 20 percent of the company to the Start Small Foundation, a charity he set up to serve struggling communities. The nonprofit’s first focus will be Ferguson, Missouri -- a hotbed of tensions over racial injustice located just outside St. Louis, Dorsey’s hometown.

The 15 million shares Dorsey gave to Start Small can be sold during the IPO, though it's unclear when that will take place or for how much the stock will sell. He promised the foundation another 40 million in the future.

“I’d rather have a smaller part of something big than a bigger part of something small,” he said in the regulatory filing.

Dorsey's move underscores a larger shift in corporate culture, wherein companies are increasingly tethering their financial profitability to a larger social mission in their vision of succession.

“It’s always been the 20th-century model that people do well in their business, make money, then turn around and as a result of largesse give sums of money to philanthropy and nonprofits,” Jonathan Storper, a partner at the law firm Hanson Bridgett, told The Huffington Post in an interview. “In the 21st century, we’re seeing people actually using business itself as a force for good.”

Kind Snacks, the company that produces the high-end fruit and nut Kind Bars, provides monthly grants of up to $10,000 to individuals or organizations making positive social impacts. Unilever, adopting practices from its ice cream subsidiary Ben & Jerry’s, took the first steps toward getting B Corporation certification, a voluntary status that holds the company to strict environmental and social responsibility standards. Kickstarter last month reincorporated as a public benefit corporation, enshrining in the company's charter its social mission to fund artistic projects.

Square isn’t quite there yet. The mobile payments firm -- which allows users to swipe credit cards on a small white device that attaches to a smartphone or tablet -- is still focused on turning a profit, particularly as it continues to lose money.

But Square has Dorsey, a rare tech executive who drew comparisons to Apple’s Steve Jobs this month as he assumed the top spot at both Square and Twitter, the popular microblogging company he co-founded. His existing celebrity, coupled with the heightened scrutiny on all of his actions as he helms two public firms, elevates Start Small as a potential model for other firms going public.

“Somebody with his profile is going to set the stage for more of this as people take their companies public,” Rick Alexander, the head of legal policy at the nonprofit B Lab, told HuffPost.

It’s not just an evolved sense of corporate citizenship driving companies to fund social good. Dorsey’s net worth, which Forbes this year estimates at $2.3 billion, has ballooned in recent years. The wealthier people get, the more they tend to give. And as they give more, they tend to want more control over their donations.

“In active philanthropy, the wealthy are not just content to write a check anymore,” Paul Roy, a partner at the law firm Withers Bergman specializing in nonprofits, told HuffPost. “They have foundations, they want to be active and they want to see the results. They want to feel more hands-on.”

But there’s a downside to that.

The desire for control leaves the massive pool of money set aside for charities -- about $358 billion in the U.S. last year -- divvied between the roughly 1.5 million nonprofits registered in the U.S. Creating a new organization every time a company or wealthy individual wants to foster change only shrinks the available slices of that pie.

“Just because you were successful in the for-profit world doesn’t mean that nonprofits are a bunch of bleeding-heart idiots that need you to come in and show them how it’s done,” Ken Berger, the managing director of the social-good data service Algorhythm, told HuffPost. He previously ran the nonprofit watchdog Charity Navigator. “We have one of the most complex and sophisticated nonprofit sectors ever seen. Partnering with others is the best approach.”
Square declined to comment on this story. Start Small did not respond by press time.