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Cintas Under a Microscope JUMP

By · October 8th, 2008 ·

invaluable assets to Cintas’ Board. In fact, Phillips was just named 2008 Private Company Director of the Year by the National Association of Corporate Directors.”

The donation to Cincinnati Works, Trainer says, was made by the Farmer Family Foundation, not Cintas. “The donation was disclosed and discussed with the Board,” she says, “and it was determined that the Farmer Family Foundation’s contribution to Cincinnati Works in no way conflicted with the independent relationship that Cintas has with Dave Phillips.”

Concerns over safety record

In July, yet another institutional shareholder — the Manville Personal Injury Settlement Trust — filed a lawsuit alleging the firm’s board of directors isn’t fulfilling its fiduciary duties and fosters a corporate culture that ignores safety regulations.

At least 10 Cintas facilities nationwide have been cited for safety violations by the U.S. Occupational Safety and Health Administration (OSHA) in just over the past year. OSHA imposed a $2.78 million fine against Cintas last year for violations that led to the death of Eleazar Torres- Gomez at the company’s laundry facility near Tulsa, Okla., in March 2007. Gomez died after he jumped onto a conveyor belt to dislodge clothes and was dragged into an industrial dryer, where he burned to death. 

Federal and state inspectors have issued citations against Cintas facilities in Alabama, Arkansas, California, Illinois, Indiana, Ohio, Texas and Washington.

Since 2003 Cintas has been cited for more than 170 OSHA violations in its facilities, including more than 70 citations that OSHA deemed could cause “death or serious physical harm.” Cintas representatives say the company has adequate safety procedures and blame the accidents on workers who don’t follow their training on how to handle machinery.

Last month Cintas also lost a legal battle in California involving back wages for workers. The company must pay more than $1.6 million in back wages, interest and penalties for violating a “living wage” law in Hayward, Calif., after the California Supreme Court rejected its appeal.

More than 200 Northern California laundry workers will be affected by the decision, which experts say is one of the largest living wage awards in U.S. history and will strengthen cities’ ability to enforce local labor standards. In June the California Court of Appeals upheld a September 2005 ruling by the Alameda Superior Court that found Cintas had violated the Hayward law. Cintas workers filed the lawsuit in 2003 in an attempt to enforce Hayward’s living wage law, which required employers to pay higher wages to workers who worked on city contracts. That means employees without health insurance should have been paid $10.71 per hour. Instead of paying the living wage, Cintas cancelled the city’s contract.

The city of Cincinnati has a similar law. In the Hayward case, Cintas fought against paying workers the required wage, unsuccessfully raising constitutional and procedural challenges to the workers’ lawsuit.

The 2005 judgment awarded $805,243 in back wages plus $375,000 in interest to 219 workers, including current and former employees from Cintas’ San Leandro and Union City laundries.

The final amount will be higher because more than $250,000 in interest has accrued over the past three years while Cintas fought the ruling, according to a statement issued by the Union of Needletrades, Industrial and Textile Employees (UNITE), an organization trying to unionize Cintas workers.

Additionally, Cintas must pay $258,900 in civil penalties, which will be split between the workers and the state of California. The court further ordered Cintas to pay the workers’ legal fees and other costs associated with the litigation. Based in Mason, Cintas is the largest uniform supplier in the United States.

The company reported $531 million in profits for the 2008 fiscal year, which ended in May. ©

“These proposals offer an opportunity to make real change at a company that is underperforming and failing to address the concerns of shareholders.”

— Richard Moore, State Treasurer of North Carolina, representing North Carolina Retirement Systems, a pension fund that’s a Cintas shareholder



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