An Entire City Is Suing Southwest Airlines (Here’s Why)

Southwest Airlines (LUV) hit hard times. New investor Elliott Investment Management, which recently bought enough shares in the company to call a special meeting and vote among shareholders, sought to oust Chief Executive Officer Bob Jordan and Chairman Gary Kelly over what what he considers “poor execution and leadership stubbornness”. the refusal to evolve the company’s strategy.”

The airline’s stock has fallen more than 13% over the past year, and current executives have repeatedly spoken of “urgent and deliberate steps” needed to break the string of unprofitable earnings reports — including getting rid of the decades-old policy of open seats that the airline. hedge fund investor called “too little, too late.”

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At the same time, Southwest is now facing a lawsuit from the city of Oakland, California, that dates back to a December 2020 agreement over minimum wage and sick leave for employees there.

“Southwest continues to deprive thousands of employees of their rights”

“Despite seven years of investigation and negotiations, Southwest continues to deprive thousands of Oakland employees of their rights under Oakland and California paid sick leave laws,” Oakland City Attorney Barbara J. Parker’s office said in a statement.

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The lawsuit alleged that Southwest did not allow employees to use sick days accrued while working for the airline and retaliated against those who tried to claim them.

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“Disciplining them when they use or seek to use paid sick leave”

In 2014, the City of Oakland passed the Minimum Wage and Sick Leave Ordinance (abbreviated as Measure FF) requiring all employers who work there to provide at least one hour of sick leave for every 30 hours worked—a significant increase from the 56 for hours. per calendar year required for companies with more than 100 employees nationwide.

“Southwest has continued to violate the law — in several ways that the settlement agreement does not address — by denying employees their right to use earned paid sick leave, retaliating against employees by disciplining them when they use or seek to use paid sick leave and by discouraging them from exercising their rights and failing to provide employees with paid sick leave records and information required by law,” the office continued.

The other claim filed by the Oakland attorney’s office accuses Southwest of failing to carry over sick days employees accrued to the next calendar year on Jan. 1 (another requirement included in Measure FF.)

Southwest, for its part, denied the allegations and responded by saying it “fully complies with applicable Oakland and California sick leave laws, as well as the terms of a December 2020 settlement agreement with the city.” It countered that Oakland also failed to live up to its part of the settlement agreement.

“While Southwest remains willing to address the city’s concerns about sick leave policies, the airline is prepared to vigorously defend itself against these frivolous claims in court, including asking the court to address the city’s violation of the settlement agreement,” it said the airline. in a statement.

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