Southwest Airlines (LUV) has hit upon challenging times. New investor Elliott Investment Management, which recently bought enough company stock to be able to call a special meeting and vote among shareholders, has been looking to oust chief executive Bob Jordan and board chairman Gary Kelly over what it sees as "poor execution and leadership's stubborn unwillingness to evolve the company's strategy."
The airline's stock is down more than 13% since last year and the current executives have repeatedly spoken of "urgent and deliberate steps" necessary to break the string of unprofitable earnings reports — including getting rid of its decades-old policy of open seating that the hedge fund investor called "too little, too late."
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At the same time, Southwest is now facing a lawsuit from the California city of Oakland that dates back to a December 2020 settlement over minimum wage and sick leave for employees based there.
'Southwest continues to deprive thousands of employees of their rights'
"Despite seven years of investigations and negotiations, Southwest continues to deprive thousands of its Oakland employees of their rights under Oakland and California paid sick leave laws," the office of Oakland City Attorney Barbara J. Parker said in a statement.
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The lawsuit alleged that Southwest has not allowed employees to use the sick days they accrued during their time 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'
Back in 2014, the City Of Oakland passed the Minimum Wage and Sick Leave Ordinance (shortened as Measure FF) that requires any employers working there to provide at least one hour of sick leave for every 30 hours worked — a significant increase from the 56 hours per calendar year required of companies with more than 100 employees nationally.
"Southwest has continued to violate the law — in several ways that the settlement agreement does not address — by denying employees their rights 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-related records and information required by law," the office writes further.
The other claim put forward by the Oakland attorney's office accuses Southwest of not carrying forward the sick days employees acquired into the next calendar year on January 1 (another requirement included in Measure FF.)
Southwest, in turn, has denied the accusations and responded by saying that it "fully complies with applicable sick leave laws in Oakland and California, as well as with the terms of a December 2020 settlement agreement with the city." It counterargued that Oakland has also not respected its side of the settlement agreement.
"Although 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 by asking the court to address the city's own breach of the settlement agreement," the airline said in a statement.
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