Essendant, a historic wholesale office supply company, will lay off about 1,300 employees across six states and shut down operations entirely. There are concerns about potential violations of Illinois employment law during these layoffs. Allegations suggest Essendant terminated hundreds of workers without the mandatory 60-day notice required by the state’s WARN Act.
The Illinois Department of Labor is investigating the abrupt layoffs. They reportedly occurred five weeks earlier than previously scheduled. Agency spokesperson Paul Cicchini confirmed receiving a complaint about older layoffs last month.
Formerly United Stationers, Essendant evolved from a Chicago family-owned store to the largest independent wholesale office supplier in the nation. However, recent struggles under private equity ownership, amid shifts toward remote work, have affected the company. Essendant rebranded in 2015, and failed attempts last year to change its business model from office products to cleaning supplies followed.
On August 3, Essendant issued a WARN notice stating plans to close its Lincolnshire headquarters and Carol Stream distribution center, laying off 510 and 134 employees respectively. The notice slated employment termination on or after October 3. However, on August 27, a mass video call abruptly dismissed hundreds of employees from the Lincolnshire headquarters, according to insiders. An August 28 follow-up letter set the final employment date as August 31, without severance pay or benefits.
Marcela Sztainberg, Essendant’s senior vice president of human resources, signed the letter. The company has not responded to requests for comment.
Businesses with 75 or more employees must provide a 60-day notice of closures or layoffs under the Illinois WARN Act. If Essendant breached this rule, the Department of Labor could recover back pay and benefits for terminated employees. The company may face civil penalties, accruing up to $500 daily for notice violations.
Chicago-based Strauss Borrelli, a class-action law firm, is investigating whether layoffs violated state WARN laws. They are reaching out to former employees for potential legal remedies.
In addition to Illinois, Essendant issued WARN notices for closures in Atlanta, Dallas, Phoenix, Philadelphia, Sacramento, and Los Angeles, totaling 1,278 layoffs.
Signed WARN notices from Sztainberg cited strategic alternatives attempts such as asset sales or securing additional capital to avoid liquidation. However, certainty remains elusive, with closures expected.
Essendant’s roots originate in 1906, with Utility Supply Co. in downtown Chicago. A change in ownership launched a burgeoning family business. United Stationers became the largest wholesale office supplier following a 1981 public offering and shifts away from retail. In 1995, Dallas private equity firm Wingate Partners acquired United Stationers for $258 million, merging it with a local rival. Moved to Deerfield in 2005, the company rebranded in 2015.
New York-based Sycamore Partners acquired Essendant in January 2019 for $487.2 million and assumed debt. This was part of a broader merger with Staples, acquired by Sycamore in 2017. Essendant’s struggles intensified with the pandemic’s onset, dismantling its core business.
Last fall, Essendant informed customers of its departure from office products to focus on janitorial and foodservice supplies, promoting a “new way forward.” They emphasized building for the future through expanded capabilities and partnership strengthening.
Essendant relocated headquarters to Lincolnshire in March. Six months later, closures are imminent.
Sycamore Partners made Chicago acquisitions during Essendant’s struggles, buying Walgreens for roughly $10 billion in August.
The enduring office supply company faces closing after more than a century. For certain employees, plans changed five weeks earlier.