A former employee of Vancouver-based Barrett Business Services Inc. has filed a lawsuit against the human resources company, alleging it withheld income from him, violated his contract, misrepresented the terms of his employment and wrongfully fired him for reporting corrupt practices.
Todd Krug, formerly a branch manager for the publicly-traded Barrett, filed the lawsuit in February in Clark County Superior Court. Krug seeks an unspecified amount in damages, including for back pay, prejudgment interest, future economic loss and compensation for emotional distress and mental anguish. He has requested a jury trial.
Krug argues the company retaliated against him after he confronted managers “about fraud and illegal activity,” according to documents filed by his attorneys, Allyssa Hale and Duncan Turner with the Seattle-based law firm Badgley Mullins Turner. The retaliation included threatening to fire him for questioning any action or statement by Barrett CEO Mike Elich, documents show.
In a response filed in March, Barrett denies the allegations and asks the court to dismiss Krug’s suit “with prejudice.” It also makes a counterclaim, accusing Krug of refusing to return a company-owned laptop computer and of taking or destroying hard copies of customer files belonging to Barrett. “There was just cause” for Krug’s firing, according to documents filed by the company’s attorney, Joseph Vance of the Vancouver office of the law firm Miller Nash. And Barrett “was damaged by plaintiff’s actions in an amount to be proven at trial.”
Court documents show Krug responded in May, admitting he has the computer but denying he refused to return it. He also denied taking or destroying customer files. In June, he changed his earlier response, saying that he has customer files but rejecting that he declined to return them. Otherwise, Krug rejects the company’s accusations, which include “trespass to personal property.” He asks the court to dismiss the counterclaim “with prejudice.”
Vance, the attorney for Barrett, declined Thursday to comment further on the case. A trial date hasn’t been scheduled yet.
Barrett provides temporary staffing, and employee recruitment and placement services, and acts as a co-employer for clients, handling their human resources responsibilities. The company, whose stock trades as BBSI on the Nasdaq exchange, has clients with employees in 22 states and Washington, D.C., according to the company’s most recent quarterly earnings report filed with the U.S. Securities and Exchange Commission.
Procedures questioned
Barrett hired Krug, who lived at the time in Kennewick, on Dec. 29, 2003, as a branch manager, court documents show. Both parties signed an employment agreement, which included a compensation package.
In addition to a base salary and benefits, the package encompassed a quarterly profit-sharing bonus allowing branch managers to achieve higher earnings based on the success of their branches. The bonus was based on calculations involving certain adjustments to the branches’ net income before taxes.
While at Barrett, Krug questioned the procedures used to determine the bonus, including “how (Barrett) was manipulating the bottom line so that the bonus basis was reduced to nearly nothing,” according to his lawsuit. He never got satisfactory answers. In 2012, Krug expanded his inquiries. “He discovered that (Barrett) had been violating wage and hour laws, had been under-paying his bonus from the inception of his employment, and was effectively ‘cooking the books’ to create inflated profit margins to entice interest in (the company’s) stock in violation” of federal securities regulations, his lawsuit asserts.
Krug started reporting his concerns to the company in late October 2012. By March 2013, “after receiving no satisfactory response to his inquiries,” Krug confronted Barrett management, “advising them that what they are doing is illegal and needs to be addressed,” according to his lawsuit. Barrett retaliated against Krug by threatening to fire him, suspending him for insubordination with no further explanation, and then, after his suspension, firing him in late April 2013, his lawsuit contends.
Krug’s lawsuit asserts that Barrett addressed only one issue that he reported: a bonus discrepancy in his contract. The company “acknowledged this as an ‘error'” and paid Krug $1,397.79 to “compensate him for past bonus earned.” But that amount doesn’t reflect what Krug should have been paid based on his understanding of the bonus formula, according to his lawsuit. Also, the company didn’t pay Krug lost interest on the amount due.
In its response, Barrett says it paid Krug $2,148 to compensate him “for the difference between using the profit sharing percentage of 5.33 percent versus 5.4 percent.”
Otherwise, the company denies Krug’s accusations. In its counterclaim, the company alleges Krug “refused to return” a company-owned laptop computer and that he “took or destroyed” hard copies of customer files belonging to the company. Such conduct constitutes “trespass to personal property,” the company alleges, and establishes “conversion,” a civil wrong involving the taking of property.
