A former store manager has filed a lawsuit against Bed Bath & Beyond, saying the company failed to give proper notice of mass layoffs related to the permanent closure of Harmon, the company’s subsidiary beauty products store. The suit asks a judge to treat it as a class action because others were similarly harmed.
Plaintiff Michael Palmeri's 11-page March 24 lawsuit, filed in U.S. District Court in New Jersey, alleges that the distressed retailer violated both the federal and New Jersey Worker Adjustment and Retraining Notification Act.
Bed Bath & Beyond confirmed in late January it would close all of its Harmon stores, along with nearly 90 of its flagship stores as part of ongoing turnaround efforts to save the company and avoid bankruptcy. At that time, the company said it operated 50 Harmon stores in six states.
In an emailed statement to Retail Dive, Bed Bath & Beyond said: “As is our practice, we do not comment on legal or employee matters.” Palmeri’s attorneys at Nisar Law Group in New York City did not immediately respond to a request for comment.
According to the lawsuit, Palmeri worked as a store manager from 2015 until he was let go on March 2 of this year. Palmeri’s lawsuit claims that he did not receive the required advance notice of his impending layoff, “nor did he receive as much notice as practicable under the circumstances.”
The suit also says that the company failed to pay Palmeri and others their full wages, salaries, commissions, bonuses, and accrued holiday or vacation pay following the mass terminations.
The layoffs in February and March came just ahead of a change to New Jersey’s WARN Act. The state’s current law defines a mass layoff if 500 employees or 50 employees representing 33% of a company’s total workforce are let go. But effective April 10, that threshold will shift to 50 employees, even if that number is less than 33% of a company’s workers are affected.
Palmeri’s lawsuit requests a jury trial and asks for all damages allowed under state and federal law, attorney’s fees and damages equal to the sum of wages, salaries, bonuses, vacation pay, pension, and health benefits for 60 days, in addition to severance pay equal to one week of pay for each full year of employment.
Bed Bath & Beyond also faces another pay-related lawsuit from a former CEO.
Mark Tritton sued the company last week, accusing the retailer of abruptly stopping bi-monthly payments of his $6.76 million severance agreement in January. According to that lawsuit, Bed Bath & Beyond’s chief legal officer acknowledged the company stopped paying Tritton in order to preserve its cash reserves. Tritton led the company from November 2019 until June 2022.
Bed Bath & Beyond has “completed the wind down of the Harmon store fleet” and integrated the former company’s health, beauty and wellness products under the flagship brand umbrella, a spokesperson told Retail Dive. “Our company has faced a myriad of challenges over the past year, particularly over the last six months, and we have continued to operate by making difficult but necessary decisions to ensure that we have liquidity to preserve our business for the long term,” the company said.
As part of its ongoing turnaround plans, Bed Bath & Beyond announced Wednesday that it's partnering with ReStore Capital on a new vendor consignment program. Under the agreement, ReStore Capital, a Hilco Global company, will buy up to $120 million of merchandise from the company's key suppliers to supplement inventory at Bed Bath & Beyond and BuyBuy Baby.
In an announcement about the deal with ReStore Capital, CEO Sue Gove said the plan will help the company “overcome near-term operational and financial challenges.” Gove described the vendor consignment program as a “capital-light solution [that] can allow us to strengthen merchandise availability and better fulfill demand."
The company also recently announced a $300 million stock sale as a strategy to raise money. But analysts – and the company itself – warn that bankruptcy is likely if that strategy fails.