Essendant’s Shutdown: Employee Layoffs and Legal Scrutiny

Essendant, previously recognized as United Stationers, is shutting down and laying off nearly 1,300 workers across six states. The Illinois Department of Labor is investigating potential violations of the state’s WARN Act, as layoffs occurred without the mandated 60-day notice.

Legal Concerns

The Illinois WARN Act necessitates businesses with 75 or more employees to notify workers and the state 60 days before closures or mass layoffs. Essendant dismissed hundreds of workers prematurely, leading to legal concerns. A representative from the Illinois Department of Labor confirmed the commencement of an investigation.

If Essendant is found to have violated the act, it may face penalties, including back pay for terminated employees and civil fines of up to $500 per day of the notice violation. Strauss Borrelli, a law firm based in Chicago, is examining if Essendant’s actions breached state WARN laws and is reaching out to former employees for legal consultation.

Brief Company History

Essendant’s origins trace back to 1906 with the Utility Supply Co. It grew significantly, becoming United Stationers in 1960 and was at one point the largest wholesale office product supplier in the U.S. The company went public in 1981 and underwent several relocations and acquisitions until it rebranded as Essendant in 2015.

Recent Challenges

Essendant’s financial issues emerged post-pandemic, particularly under private equity ownership. Attempts to shift from selling office products to cleaning supplies failed, impacting their operations significantly. The company’s restructuring efforts included relocating to Lincolnshire and advertising a focus on janitorial and foodservice supplies as a strategic pivot.

Despite these efforts, Essendant announced mass layoffs in various locations, including Atlanta, Dallas, Philadelphia, and others, as corroborated by WARN notices. These notices, dated August 3, indicated layoffs effective October 3, but employees were let go early, raising legal flags.

Private Equity Involvement

Private equity firm Sycamore Partners acquired Essendant in 2019. The merger aimed to synergize Essendant’s operations with Staples, another Sycamore acquisition.

However, Essendant struggled to maintain its market position, while Sycamore continued its acquisition endeavors, such as purchasing Walgreens for $10 billion.

Conclusion

Essendant is closing its operations and nearing the end of its journey. This century-old company, after attempting shifts in business strategy and enduring economic hardships, may soon become part of history.