Why This Matters to Distributors: The state investigation adds another challenge for Essendant as the national wholesaler moves through widespread layoffs and facility closures while facing lawsuits from employees and vendors.
The Illinois Department of Labor has opened an investigation involving Essendant after receiving a complaint related to the state’s Worker Adjustment and Retraining Notification Act, the department confirmed to Distribution Strategy Group.
“We have received a complaint and the department is investigating,” an Illinois Department of Labor spokesperson told DSG.
The department did not identify who filed the complaint or provide details about its allegations. No determination has been made that Essendant violated the law.
The investigation follows Essendant’s Aug. 3 WARN filings covering planned closures at its Lincolnshire headquarters and Carol Stream distribution center. State WARN records list 510 affected employees in Lincolnshire and 134 in Carol Stream, for a combined 644 Illinois jobs. The records list Oct. 3 as the layoff date for both locations.
The Illinois WARN Act requires employers with 75 or more full-time employees to provide workers and state and local government officials 60 days’ advance notice of a covered plant closing or mass layoff, according to the Illinois Department of Labor.
“For clarity, the WARN Act doesn’t dictate when a business can close,” the department spokesperson told DSG. “It requires employers with 75 or more full-time employees at a single Illinois worksite to give workers and state and local government officials 60 days advance notice of a plant closing or mass layoff.”
An employer that fails to provide the required notice may be liable to each affected employee for back pay and benefits covering the period of the violation, up to 60 days, according to the Illinois Department of Labor. The employer also may face a civil penalty of up to $500 for each day of a notice violation.
The department says WARN investigations consider whether appropriate notice was provided, whether affected employees were properly compensated and whether a company took steps to obtain capital or pursue other options to keep workers employed.
The state investigation comes as Essendant also faces a federal WARN Act lawsuit.
Former Essendant employee Andrew Viverito filed a complaint Aug. 28 against Essendant Co. and Sycamore Partners II LP in U.S. District Court for the Northern District of Illinois. The federal court docket identifies the case as an action under the Worker Adjustment and Retraining Notification Act.
The lawsuit’s allegations have not been adjudicated, and the federal case is separate from the Illinois Department of Labor investigation.
Essendant’s Illinois WARN filings are part of a broader contraction at the wholesaler as it moves to close facilities and eliminate jobs. The company previously disclosed that it was seeking additional capital or potential transactions to avoid liquidation.
The Illinois Department of Labor has not determined that Essendant violated the WARN Act.
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