Employees at a Sarpy County Shopko distribution center are resigned to the fact that they’ll lose their jobs Monday.
But now they’re also worried about not receiving severance pay they said they were promised if they stayed on the job until the end.
“Even if it’s two weeks, well, two weeks is a lot,” said one employee, who didn’t want her name used because she feared retaliation.
Advocacy groups and workers laid off from beleaguered stores like Sears, Kmart and Toys R Us have launched similar fights for severance payments. A $20 million severance fund was set up for eligible former Toys R Us employees last November, according to news reports. And Sears drew criticism for seeking bankruptcy court approval to pay out $25 million in executive bonuses while employees still were lobbying for severance.
About 300 workers at the Spectrum America Supply Chain Solutions warehouse in Sarpy County were scheduled to be laid off on April 15 as part of the fallout from Shopko declaring Chapter 11 bankruptcy in January.
Along with the filing, the retailer, weighed down by excess debt, announced it would close more than 100 of its 363 stores, including 20 Shopko stores in Nebraska and Iowa.
In March, the company announced that its efforts to find a buyer to keep Shopko alive had come up short: All stores would close by June, retail workers and others would be laid off and company assets would be liquidated.
According to notices filed with the Nebraska Department of Labor since January, layoffs will affect more than 300 additional workers at Shopko and Shopko Pharmacy locations in Lincoln, Broken Bow, Ord, Grand Island, Albion, Beatrice and North Platte, among others.
Spectrum America, a Wisconsin-based company, took over the former Shopko Distribution Center at 10808 S. 132nd St. in 2016, when Shopko decided to outsource its distribution operations. The Spectrum America website states it is a subsidiary of a third-party logistics provider and “operates distribution centers and transportation services in 3 locations for our customer, Shopko.”
In a March 27 letter from Spectrum America’s head of human resources, workers at the Sarpy warehouse were told that they would still receive retention bonuses for sticking with the company even with layoffs hanging over their head, but severance payments were up in the air. The retention bonus for some workers would equal 50 cents for every hour worked between February and the layoff date.
“Shopko has advised us that despite its efforts, its Bank refuses to allow it to fund your severance payments for reasons that are unknown to Spectrum,” the letter read. “Shopko made a commitment to Spectrum that it would without a doubt fund the severance payments … Shopko has now reversed its earlier commitment to fund Spectrum’s payment of severance.”
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On April 1, Spectrum America filed an application asking the U.S. Bankruptcy Court for the District of Nebraska to order Shopko to pay more than $490,000 in severance payments.
“The Debtors have reneged on a contractual and moral obligation to pay Spectrum $490,419.16 in promised severance payments for the Spectrum employee teammates who loyally served at the Debtors’ distribution centers in Omaha, Nebraska and Boise, Idaho,” the court document reads.
The bankruptcy court hasn’t weighed in yet.
Shopko and Spectrum officials did not respond to several requests for comment.
One worker said he felt caught in the middle. While he knew layoffs were coming, he stayed at the distribution center instead of quitting because he needed the guaranteed paycheck. And if he didn’t find another job right away, he feared that quitting, versus being laid off, could interfere with his ability to collect unemployment benefits.
“People have been here 20 years and they’re losing their job … and not even getting severance now,” he said.
One worker said he was paid just under $14 per hour at the warehouse, where workers unloaded trucks full of Shopko inventory, prepared shipments and handled packages being shipped out to different stores.
As Shopko’s financial situation became more precarious, workers said three shifts were downsized to two. A number of workers were furloughed at the end of January. Those who returned after not working for a month were offered $400 retention bonuses.
Spectrum is also closing distribution centers in Boise, Idaho, and near Green Bay, Wisconsin. Shopko is trying to auction off its optical business to another buyer, a move that could save as many as 700 jobs, the Green Bay Press-Gazette reported last week.
A Nebraska Department of Labor spokeswoman said the severance issue is outside the department’s jurisdiction.
Workers should apply for unemployment even if it’s unclear that they’re eligible, she said. An adjudicator decides eligibility after reviewing the facts of a case.
Under Nebraska law, “good cause” for leaving a job includes relocating for a spouse’s new job, non-work-related injury or illness and unsafe working conditions.
The Department of Labor has also held several sessions at the distribution center, which included information on unemployment benefits and some computer training.
There is interest in buying or leasing the Sarpy County warehouse when Spectrum vacates it, said Andrew Rainbolt, the executive director of the Sarpy County Economic Development Corp. The distribution center sits on 80 acres and spans 535,000 square feet, with 145 docks and adjoining office space.