Essendant, the wholesale office supply distributor headquartered in Lincolnshire, is shutting down and eliminating 510 jobs at its corporate office at 200 Tri State International. The Lincolnshire office sits about five miles from Lake Forest.
The closure is part of a broader shutdown that will cut nearly 1,300 jobs across six states, the Chicago Tribune first reported.
Marcela Sztainberg, Essendant's senior vice president of human resources, notified state and local officials in an Aug. 3 filing under the Illinois Worker Adjustment and Retraining Notification Act (WARN Act), the Tribune reported. The filing said the company expected to terminate 200 on-site employees and 310 remote workers who report to the Lincolnshire office. All terminations are planned for on or within 14 days of Oct. 3.
Sztainberg wrote that the company had explored alternatives, including selling assets and securing capital to avoid liquidation. None succeeded.
The layoffs are permanent. No affected workers have union representation, and no "bumping rights" to other positions exist, according to the WARN filing.
A separate notice covers 134 employees at Essendant's Carol Stream distribution center at 230 Lies Road East. Combined, 644 Illinois jobs are affected. The company also filed notices for facilities in Texas, Georgia, California, Pennsylvania and Arizona.
State investigation into early dismissals
The Tribune reported that on Aug. 27, the company dismissed hundreds of employees in a mass video call, five weeks before the planned Oct. 3 date, citing sources familiar with the situation. A follow-up letter signed by Sztainberg set Aug. 31 as the last day of employment for those terminated early, with no severance pay or benefits.
The Illinois Department of Labor has opened an investigation after receiving a complaint related to the WARN Act. Paul Cicchini, the department's public information officer, told the Tribune that the department "received a complaint and the department is investigating." The department has not determined that Essendant violated the law.
Under the Illinois WARN Act, employers with 75 or more full-time employees must give workers and officials 60 days' advance notice of a plant closing or mass layoff. Violations can carry liability for up to 60 days of back pay and benefits, plus a civil penalty of up to $500 per day.
Former employee Andrew Viverito filed a federal complaint Aug. 28 against Essendant and its owner, Sycamore Partners II LP, in U.S. District Court for the Northern District of Illinois, Distribution Strategy Group reported. Chicago-based class-action firm Strauss Borrelli PLLC said it is also investigating whether the layoffs violated WARN laws. The Tribune reported that Essendant did not respond to multiple requests for comment.
Essendant traces roots to 1922
Essendant was incorporated in 1922 as Utility Supply Company and became an office products wholesaler in 1978. It rebranded as Essendant in 2015. New York-based private equity firm Sycamore Partners acquired the company in January 2019 for $487.2 million plus assumed debt, in a deal valued at nearly $1 billion.
The company had relocated its headquarters from Deerfield to Lincolnshire just five months earlier, in March. After a failed effort to shift its business model from office products to cleaning supplies, it filed the Aug. 3 WARN notice. Lincolnshire Mayor Elizabeth Brandt and Lake County Board Chair Sandy Hart were among the officials notified.
The remaining employees face termination on or around Oct. 3.
