In leaked letter, Hobby Lobby prepares to lay off employees and slash salaries to cut costs in states with mandated store closures due to the coronavirus

BETHANY BIRON MARCH 26, 2020

Hobby Lobby is cutting jobs and salaries.

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Hobby Lobby is slashing jobs and cutting salaries in states where the company has been forced to close stores due to coronavirus-related state mandates.

In a termination letter obtained by Business Insider, Hobby Lobby told part-time and temporary employees they will be laid off due to "unforeseen business circumstances caused by the COVID-19 pandemic/natural disaster."

Hobby Lobby also plans to cut the pay of salaried managers and full-time workers by 10% and freeze all benefits, according to two Hobby Lobby employees and one manager, all speaking to Business Insider on the condition of anonymity in order to protect their jobs.

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Hobby Lobby is laying off workers and slashing salaries of employees in states where it has been forced to temporarily shutter stores in response to state mandates issued to prevent the spread of the coronavirus.

In a termination letter addressed to part-time and seasonal employees and obtained by Business Insider, Hobby Lobby told employees they will be laid off due to "unforeseen business circumstances caused by the COVID-19 pandemic/natural disaster."

According to the memo, the layoffs will be effective at the close of business on March 27.

"We hope this layoff will be temporary, but we cannot predict how COVID-19 will affect Company operations," the memo states. "We encourage you to file for state unemployment benefits. We appreciate your service to the Company."

Additionally, the company plans to cut the pay of salaried managers and full-time workers by 10% and freeze all benefits, according to two Hobby Lobby employees and one manager, all speaking on the condition of anonymity out of fear of reprisal. Their identities and employment statuses were confirmed by Business Insider.

The employees said the layoffs are expected to impact 20% of the staff in states with mandated store closures.

"The managers have been instructed not to warn employees until it happens, and to not tell other stores at risk of closing down," the Hobby Lobby manager wrote in an email to Business Insider. "[This makes] it harder for employees to receive aid because it will come out of nowhere and they will go from 'report back to work in a few weeks' to 'you're fired.'"

While Hobby Lobby stores have been required to temporarily shutter in states with strict policies regarding the operation of essential versus nonessential businesses, hundreds of stores remain open around the country. In a memo sent to store managers on March 23, Randy Betts, Hobby Lobby's vice president of store operations, wrote that the company "is going to make every effort to continue working the employees."

Further, in a note to employees allegedly written by Hobby Lobby founder David Green last week, the CEO wrote that the employees "may all have to 'tighten our belts' over the near future."

"Guess this is the belt-tightening David Green was talking about in his letter," one employee told Business Insider.

Hobby Lobby did not respond to Business Insider's request to comment.

Hobby Lobby is reversing its hazard pay policy, to the detriment of some employees

The Hobby Lobby employees told Business Insider they were informed that the company would be reversing its former policy of requiring full-time employees to use their paid time off and vacation days before qualifying for hazard pay in the case of store closures or illness. Instead, they will first be paid out for 75% of their rate of pay, based on the average amount of hours worked in the previous six weeks.

However, as a result of not paying employees 100% of their wages for originally scheduled shifts — a policy several major retailers have enacted — one full-time employee said she will now receive less money that she would have under the original plan. She told Business Insider she received a call on Wednesday notifying her of these policy changes so that "no memo can be leaked."

"They have cut our hours to 32 for some and even less for others," she said. "When using vacation or PTO it has to be eight-hour increments. Hobby Lobby will save more money by doing the 75% first."

While executives at companies like Macy's have started to forgo their salaries to help support store workers, one employee said he is frustrated that Hobby Lobby founder Green — whose net worth is estimated at $6.2 billion according to Forbes — has not extended a similar effort.

"Despite this huge public outcry, anytime the upper echelons have been told about the company's morale loss and negative public reception they've been incredulous, disbelieving, shrugging it off as untrue, and in some cases blaming employee greed," the employee wrote in an email.

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