Employee Lawsuit brought against Sephora for unpaid wages

Sephora is at the centre of an Employee Lawsuit after workers accused the retailer of failing to adequately compensate them for time spent going through security and applying make-up before a shift.

The lawsuit was brought against it in the Superior Court of California, County of San Francisco, with a team of attorneys representing around 8,000 Sephora workers. The employees are asking the judge to grant class certification for the wage-and-hour lawsuit, according to a report by Top Class Actions.

However, despite Judge Karnow raising concerns that lack of solid evidence of the unpaid time spent in work could lead to liability issues, attorneys on the Sephora employee lawsuit countered that this lack of time logging was due to Sephora, which had a ‘duty to track’.

An attorney allegedly stated, “As far as liability goes, a lot of the claims involve time. You can’t allow an employer to avoid paying employees by virtue of the fact it didn’t track its time. That means an employee cannot prove his or her damages. If they had tracked time, we wouldn’t be having this conversation.”

Sephora workers were said to have provided evidence that they are expected to wear and maintain their make up as part of their duties, while the lawsuit also alleged the retailer failed to provide ample rest and meal breaks.

The beauty retailer is said to have started compensating workers an extra three minutes for security bag checks, a move that attorneys argue is an acknowledgement by Sephora that it had been failing to do this previously.

How Beauty Products Are Sold: Part One

Customers don’t know very much about how beauty retailers sell them products. The process by which a lipstick goes from factory to store to you is pretty opaque. Sure, we know conceptually that beauty has high margins and a big markup. But while newer brands like The Ordinary and Beauty Pie have started to offer a bit of transparency into pricing and how brands are ultimately made available to consumers, there is still a lot of mystery baked into the process.

The recent apparent shuttering of an indie beauty brand and its lawsuit against Sephora helps shed some light on how truly complex it is to sell beauty products — and the costs that get passed on to shoppers.

A few weeks ago, the beloved indie makeup brand Obsessive Compulsive Cosmetics (OCC) abruptly shuttered its website, its New York City store, and all its social media accounts. While the brand has not made any official statement and none of its third-party retailers like Nordstrom and Urban Outfitters have confirmed anything, it’s widely assumed that the brand has gone out of business. Founder David Klasfeld seems to have started a new Instagram account under the handle @dkwmakeup, and notes in the bio: “I founded and ran the world’s first 100% Vegan & Cruelty-Free Cosmetics line from 2004-2018.” (Racked has reached out again to OCC and will update if we hear back.)

If this is the case, what happened? The only person who knows for sure at this point is the founder of OCC, but a lawsuit with Sephora dating back to 2015, may provide some clues. It also sheds some light on things like who actually is responsible for building and filling the product testing fixtures you find in stores, what large markdowns mean for a brand, and how store exclusivity works.

There are two legal documents publicly accessible, one from 2015, first published by blogger Zadidoll, and one from 2016. These provide an incomplete record of the full proceedings, and it’s unclear if Sephora and OCC settled this case or what the final outcome was. But what is clear is that retailers hold a lot of the cards and OCC probably lost a lot of money. A representative for Sephora sent the following statement to Racked: “Per company policy, we do not comment on pending litigation.

The terms of a Sephora contract

According to the 2016 order, OCC and Sephora signed a contract in 2012 stating that the retailer would sell the brand’s products and that OCC would be 100 percent responsible for the costs of the fixtures, which is the system of shelving and pigeonholes where testers and products for sale are displayed in the store. They can vary in size from a small box on a shelf to an aisle-long behemoth. Per industry sources, this is a pretty common arrangement. (More on what those fixtures cost in a bit. Hint: a lot.)  OCC then alleged in the suit that it entered into a verbal agreement with Sephora to alter the original contract in two ways: first, that Sephora would become OCC’s exclusive brick-and-mortar retailer with the understanding that it would place enough orders to make up for the ones OCC would have to decline from other retailers. Second, Sephora was supposedly going to help defray the costs of the fixtures by contributing 50 percent, since it supposedly wanted to increase the number of stores selling OCC, which would then necessitate building more fixtures. OCC alleged in the suit that Sephora reneged on these oral agreements by not placing more orders and not helping to pay for fixtures. Sephora argued that it was a moot point because the original contract stipulated that the contract could only be modified in writing and therefore the suit should be thrown out.

However, the judge ruled that OCC could continue pursuing it, because he determined that OCC had acted in such a way (turning down orders from other retailers, for example) that made it seem clear that OCC relied on Sephora’s verbal statements. (He threw out a fraud allegation that OCC made about Sephora, however.) Sephora was given 20 days to serve an answer, but the conclusion or settlement does not appear to have been made public.

But that’s not the full story. An earlier 2015 order details exactly how much money OCC stood to lose in the Sephora deal. Sephora wrote a letter to OCC to terminate the deal in 2015, stating it would sell the products it had until a certain date, while also requesting OCC to fulfill two outstanding purchase orders that OCC hadn’t shipped yet. After the date in the termination letter, Sephora expected OCC to take back leftover product (this is called a return-to-vendor, or RTV, clause) and reimburse Sephora for the unsold product. The bottom line? Sephora said it expected to be reimbursed $832,700 for the unsold products. Otherwise, it allegedly said it would liquidate its remaining stock at fire-sale prices. OCC asked for a preliminary injunction, arguing that “if provisional relief is not granted it will suffer irreparable harm because an immediate mark down of the outstanding inventory would have financially devastating effects and moot any award of damages.” According to the lawsuit, OCC never reimbursed Sephora for remaining stock, and Sephora did end up marking down the remaining products and selling them off quickly, according to Revelist. Ultimately, OCC claimed damages of $521,647.20. This is where the paper trail ends.

PART TWO COMING NEXT WEEK

Take Action To Clean Up The Beauty Aisle!

 

Dear friends

When we buy products that we put on our skin, faces and hair, we rightfully expect that they are free of toxic chemicals that increase our risk of breast cancer or  reproductive health problems. But think again.

A recent report card from our partners at Mind the Store shows that retailers Sally Beauty, Ulta Beauty, and Sephora, are failing to address cancer-causing chemicals in the cosmetic and personal care products they sell. Take action to clean up the beauty aisle!

Companies can and should make safer products, sell safer products, and make ingredient transparency a priority. Following pressure from consumers like you, companies like Target, Walmart, CVS Health, and Costco announced policies to get toxic chemicals off their store shelves last year.

Tell these beauty retailers to get their act together!

As more and more families are devastated by a cancer diagnosis, it’s more important than ever to focus on prevention. That’s why we believe – and think you do too – that chemicals that can cause cancer have no place in the products we use to clean and care for our bodies.

Please take action to tell these retailers to stop selling beauty products made with toxic chemicals. Because body care products shouldn’t cost us our health!

Thank you for your own good work on this issue,

Janet

Janet Nudelman
Director of Program & Policy, Breast Cancer Prevention Partners
Director, Campaign for Safe Cosmetics 415-321-2902 (direct)

P.S. Donate HERE to support our work to hold beauty retailers and other corporations accountable for product safety and transparency.

Loreal buys up – Emiliani Enterprises and Urban Decay Real Hair Truth!

 

French cosmetics giant L’Oreal S.A. (OR.FR)  reached an agreement to buy U.S.-based Emiliani Enterprises, a professional distribution business, for an undisclosed amount. Emiliani Enterprises established in the metropolitan New York area, New Jersey and Connecticut,  supplies hair salons through a network of representatives and sales outlets open only to professionals. Which wont last to long since L’Oreal acquired the company, L’Oreal USA will extend its distribution in the U.S., which now covers 48 states in the U.S. out of 50. And as for Urban Decay, created in 1996 by make-up expert Wende Zomnir, has built a reputation based on the concept of beauty with an edge and values of femininity and irreverence. The line has star products in the eye category such as the Naked Palette and recently successfully launched its new foundation, the Naked Skin weightless liquid make-up. Urban Decay is popular among the youthful highly-involved cutting-edge consumers who are attracted by the fashion-forward image of the brand. The market for make-up specialist brands represents 44% of the luxury make-up market in the US. In the fiscal year ended in June 2012, Urban Decay recorded net sales of 130 million US dollars. Urban Decay is distributed in the key assisted self-service channel which includes among others Ulta and Sephora. Which does not tell you much since everything and anything can be purchased in Ulta.

L’Oréal USA, headquartered in New York City, with 2011 sales of over $5.1 billion and 9,800 employees, is a wholly-owned subsidiary of L’Oréal SA, the world’s leading beauty company. In addition to corporate headquarters in New York, L’Oréal USA has Research and Innovation, Manufacturing and Distribution facilities across seven states, including New Jersey, Kentucky, Arkansas, Illinois, Ohio, Texas and Washington.  L’Oréal’s impressive portfolio of brands includes Lancôme, Giorgio Armani Beauty, Yves Saint Laurent Beauté, Viktor & Rolf, Diesel, Cacharel, Clarisonic, L’Oréal Paris, Garnier, Vichy, La Roche-Posay, L’Oréal Professionnel, Kérastase and Shu Uemura Art of Hair, Maybelline New York, Soft-Sheen.Carson, Kiehl’s Since 1851, Ralph Lauren Fragrances, essie Cosmetics, Redken 5th Avenue NYC, Matrix, Mizani, Pureology, SkinCeuticals and Dermablend. Basically your typical drug store shit. I will guarantee you more and more so called professional haircare products will show up on the commercial sectore of the consumer market.