Layoffs Reach Beyond Bars, Restaurants
Layoffs continue to pile up in businesses affected by Covid-19. A batch of recent Worker Adjustment and Retraining Act (WARN) letters to the Minnesota Department of Employment and Economic Development (DEED) reflects the diversity of businesses that are being affected, ranging from a producer of trade show materials to a student loan debt collection company.
Brooklyn Center-based Sign-Zone LLC, which does business as Showdown Displays, notified that state of layoffs of 178 employees at its Brooklyn Center and Ramsey facilities.
“Our products are generally used in event settings, tradeshows, and large gatherings. The cancellation of these events in recent weeks as a result of the Covid-19 virus has caused a drastic decline on the demand for our products,” wrote John Bruellman, president and CEO of Showdown Displays, in the March 31 letter to the state.
The company makes a wide range of products for trade shows and events including banners, tents, signage, and tabletop and floor displays.
The layoffs at Showdown Displays came in two different rounds as its business continued to evaporate in an environment with no tradeshows or events. During March 18-20, the company laid off 48 employees in Ramsey and 36 employees in Brooklyn Center. The company’s letter indicated that additional employees were being laid off today: 49 in Ramsey and 45 employees in Brooklyn Center.
Bruellman added, “We are now at about 20% of our normal run rate [of daily orders]. This trend is seriously threatening the survival of our company and we are very uncertain of a recovery in the immediate future. …We will also be placing a significant number of employees on furlough and reducing the salaries of our exempt employees.”
The federal WARN law requires employers to provide 60 days advance notice of planned plant closings and mass layoffs. WARN applies to employers with at least 100 employees. The law requires that a WARN letter be filed in actions that affect at least 50 employees, not counting part-time workers, at a single site of employment.
A recurring theme in the recent WARN letters to DEED is that given the sudden, unexpected and severe impacts of COVID-19, companies have not been able to provide 60 days’ notice. That might partially explain why the state has not seen more WARN letters: Companies are overwhelmed by the rapid downturn in business and haven’t had time to file anything. While the letters typically characterize the job losses as “permanent layoffs,” employers are hopeful that some positions can be brought back once the economy rebounds.
Ham Lake-based National Recoveries Inc. is a student loan debt collection company. NRI’s work requires the firm to have a government contract. The company laid off 248 employees from its offices in Ham Lake, Brooklyn Center, and Arden Hills on Sunday, March 22, because new policies in the wake of Covid-19 left employees with no work that could be done.
“On Friday, March 20, 2020, NRI received guidance from the United States Department of Education (“ED”) related to the Covid-19 virus and the president’s decision to cease collection of student loans, and to waive certain student-loan interest and penalties for several months,” wrote Joel Kunza, president of NRI, in a March 25 letter to the state. “The ED informed NRI that it was no longer allowed to make outbound phone calls or send collection notices. ED also informed NRI that it has stopped all wage garnishments and that it would be stopping Treasury offset.”
The term “Treasury offset” refers to a policy that allows the IRS to take some or all of a filers’ tax refund if a student loan is in default.
New York-based OTG Management LLC operates airport restaurants, bars, and markets. In a March 22 letter to DEED, OTG Management Midwest LLC said that it had laid off 156 employees who worked at the Minneapolis-St. Paul International Airport. The company has closed many of its concession operations at the airport.
The company’s letter to DEED, from OTG’s general counsel, said: “At this time, we have advised our employees that they should anticipate that the layoffs are permanent as we do not yet know the full impact and duration of Covid-19 on our operations. We are hoping that circumstances may permit us to resume operations in the not too distant future and that we will be able to hire back some of our laid off employees.”
The combined layoffs from Showdown Displays, NRI, and OTG total of 582 employees.