The earliest roots of ALDI trace back to 1913, when the mother of Karl and Theo Albrecht opened a small store in a suburb of Essen, Germany. Their father was employed as a miner and later as a baker’s assistant. Karl Albrecht was born in 1920, Theo Albrecht in 1922. Theo Albrecht completed an apprenticeship in his mother’s store, while Karl Albrecht worked in a delicatessen. Karl Albrecht served in the German Army during World War II. In 1946, the brothers took over their mother’s business and soon opened another retail outlet nearby. By 1950, the Albrecht brothers owned 13 stores in Germany. Today ALDI operates over 8000 stores worldwide and over 1400 in the United States alone (Amann, 2010).
In 2010 more than 200 ALDI store managers in 32 states filed a lawsuit against the U.S. division of the German discount grocer, saying they were wrongly classified as exempt from overtime and should have been paid for working more than 40 hours a week. The basis of the complaint made by Howard McNelley, a former ALDI Manager, concerns his classification as a Salaried Manager even though his duties were simply stocking shelves, cleaning, running a register, and many times he was the only employee in the store (Martin, 2010). Aldi stores will many times operate an entire work day with less than 3 employees in a store. During slow periods the employee designated as the manager will sometimes be the only employee present and will simply run a register. The hiring, firing, and promoting of all store employees is handled by the District Manager. The only duty performed exclusively by the Salaried Manager is the preparation of the schedule, all other duties are shared by the hourly workers or performed exclusively by the District Manager.
The Fair Labor Standards Act (FLSA), the federal overtime law setting wage and hour pay, sets certain conditions to be a salaried manager as follows: Do you “manage” or “supervise” other employees?

Management or supervision of other employees means that two or more full time employees report to you for work assignments and oversight of their daily tasks. Are you subject to pay docking if you miss part of the regular work day? If so then you are not exempt from overtime pay because pay docking is inconsistent with your status as a “salaried” manager or supervisor. Do you spend a majority of your time performing management or supervisory duties? Managers/Supervisors must spend at least 80% of their time in management duties. In other words, if you spend a large part of your time performing tasks such as ringing up sales, preparing food orders or filling in for absent non-managers then you may not be a “true” manager or supervisor and might be due overtime. Are you paid on an hourly basis or on a salary? If you are paid hourly, then you are not exempt from overtime pay regardless of your management duties (Crone, 2014). Howard McNelley contended that his designation as a Salaried Manager met none of the FLSA salary criteria. McNelley contended that he did not supervise 2 or more employees on a daily basis because he spent many days alone in the store or with just 1 other employee. McNelley was designated as “salaried”, however his paycheck showed an houly wage for five 10 hour days each week, regardless of the number of hours or days he worked. In fact, McNelley and other salaried managers did not clock in, they hand wrote a time card each week. If Mcnelley missed a day of work, 1 of those 10 hour days were docked or an earned “sick day” or “vacation day” was used to replace it. McNelley, and all ALDI Managers, spent most of their time doing the same work as the hourly employees and their paycheck’s even showed an hourly wage so it was easy for ALDI to dock if needed. The ethical implications of these allegations were compounded by the claims that most of the managers had to actually work more than 70 hours a week to meet company expectations (Amann, 2010).
ALDI defends their position by stating that they provide an outstanding work environment and they reward their employees with generous salaries and benefits that are significantly higher than the industry standard. As a testament to that, they said, it's common for ALDI employees to celebrate 15, 20 and 25 years of service. In a released statement ALDI stated "As a matter of policy and practice, Aldi consistently adheres to all employee-related laws and regulations. We look forward to presenting the facts in court.” (Martin,2010)
When ALDI had their day in court with the managers, they settled on paying, and back paying all of their managers involved in exchange that they would not have to admit blame. ALDI had already experienced another day in court for ethical violations in 2000. Those ethical violations concerned Mark Headley who had been diagnosed with HIV and had taken a leave of absence. When Headley tried to return after treatment he was terminated. ALDI claimed that Mr. Headley’s return would have lead to lost sales because of concerns from customers, and that other employees were uncomfortable working with him. ALDI settled in this situation as well in exchange that the terms be left private. The amount paid to this one violated employee though is believed to have been over $500,000 which is a record amount for this type of wrongful termination, disability, and sexual discrimination (Maguire, 2000).
ALDI has recently had new allegations of unethical behavior aimed at their employees. A former store detective, who worked at the German supermarket ALDI, has revealed to news outlets that in addition to looking out for shoplifters, ALDI wanted him to spy on store employees and install hidden cameras. The detective goes on to say that he was asked to install mini cameras in the store employee changing area, but he refused. In April 2012, Der Spiegel published a separate report revealing that some branch managers at Aldi supermarkets in Germany secretly videotaped female customers in low-cut blouses bending over to take items off the stores' shelves. Employees allegedly circulated the videos among other ALDI workers. The report also revealed that ALDI "monitored its warehouse staff and transport workers." At the time, ALDI said it would take disciplinary measures if it discovered employees engaged in such behavior (Stuart, 2013). That same month, a former ALDI manager named Andreas Straub published a book that alleged the supermarket used blackmail and coercion to lay off workers it no longer wished to employ, according to the Belfast Telegraph (Stuart,2013) In 2013 ALDI was embroiled in controversy over their fresh beef products actually being 80% Horse meat (Levs. 2013). ALDI acknowledged the Horse meat occurrence, and said that they have switched meat suppliers, they have not said how long they believe this happened. ALDI has not admitted to any responsibility, in any of the previous mentioned occurrences.
ALDI’s ethical history could point to a pattern that leads to a future Enron situation. In every ethical shortcoming ALDI leaders refuse to be held accountable, like the Enron leaders, and will just pay enough money for the publicity to go away. ALDI leadership may be guilty of what is referred to by Craig E. Johnson in Organizational Ethics as fallacy of omnipotence (pg. 349). Leaders guilty of fallacy of omnipotence would believe they are so powerful that they can do anything they want to make money and add profits. ALDI has represented selfish leadership in handling ethical issues. Johnson describes this: ”Selfish leaders justify their actions by narrowly defining morality. They want to allocate resources based on contributions (which favors them) rather than according to needs (which favors less powerful individuals), and typically fail to take into consideration other points of view when deciding on ethical issues” (pg. 253). The ethical shortcomings point to problems in the ALDI Human Resources department who are in charge of designing compensation systems, and responsible for the employees working long hours (Johnson, 354). The ethical issues seem to point to a culture at ALDI that reflects from the top of the organization down to the bottom, of commodifying people and exploitation (Johnson, 355).
For ALDI to begin to solve their culture problems they need to foster an environment of moral sensitivity first. Recognition of a problem is necessary to identify different courses of action, and to determine the different consequences of each potential strategy (Johnson, 86). After determining there is a problem they would then need to make a moral judgment on the courses of action identified (Johnson, 89). Finally, the leaders would need the necessary motivation to follow through with their choices (Johnson, 97). It is very difficult for some to put moral integrity above moral hypocrisy and put principle above self-interest and to promote transparency. ALDI would need to stop justifying unethical behaviors and begin looking at the costs of their immoral decisions (Johnson, 99).
ALDI like most companies could benefit from a Kantian perspective as described in Organizational Ethics. A Kantian organization consists of leaders that persuade rather than impose, and human resources that treat businesses like moral communities (Johnson, 357). Kant said “treat the humanity in a person as an end and never as a means merely” this proposes that all people are entitled to have inherent dignity, and meaningful work where workers get to make some of their own decisions. Johnson says that the workers that have been affected by these patterns of abuse need to be helped by the company to restore their dignity (Johnson, 360).
ALDI has built an empire and is the 10th largest retailer in the world.( Staff) The stores low prices and efficient staff unfortunately is overshadowed by the fact that though they pay their workers double that of an average Walmart worker, they make each of them do the equivalent work of seven people, and expect it in half the time.
Works Cited
Johnson,Craig, E. (2012). Organizational Ethics. Thousand Oaks, CA: Sage Publications Inc.
Staff,M. (2012, May). Retail-Digital: Top Ten Largest retailers in the world. Retrieved from http://www.retail-digital.com/top_ten/top-10-business/top-ten-largest-retailers-in-the-world
Amann, S. (2010, August). Spiegel Online International. Retrieved from http://www.spiegel.de/international/business/a-secretive-family-s-success-what-makes-the-aldi-discount-empire-tick-a-709937-5.html
Maguire, K.(2000, April) Supermarket pays sacked HIV employee 300,000 . Guardian. Retrieved from http://www.aidsmap.com/Cases/page/1498631/
Stuart, H. (2013, January) Huffington Post Business. Aldi orders grocery store surveillance. Retrieved from http://www.huffingtonpost.com/2013/01/08/aldi-german-grocery-store-surveillance-spying-employees_n_2427093.html
Martin, T. (2010, January) The Wall Street Journal. Aldi Civil Suit by Managers Retrieved from http://online.wsj.com/news/articles/SB10001424052748703699204575017410315169130
Levs, J (2013, January) CNN World. Battle over blame after horse meat found in beef products. Retrived from http://www.cnn.com/2013/02/10/world/europe/uk-horsemeat-probe/
Crone, M (2014, January) Overtime Scams.US retrieved from http://www.overtimescams.us/salariedemployees.html

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