Costco cut ties with Club Demonstration Services, the contracting company that handled in-store samples, during the coronavirus pandemic. Instead, the big-box retailer said cleaning its warehouses will be the responsibility of its employees, and CDS laid off thousands of contractors working at Costco stores. The news came just before the Department of Labour announced more than 6.6 million Americans filed for unemployment in the past week, setting a new all-time high.
On Monday, Costco told CDS it would no longer employ its contractors to hand out free samples or clean its warehouses, reports BuzzFeed. In March, Costco already began shifting CDS contractors to cleaning warehouses so they could remain employed. Typically, they are responsible for handing out free samples to customers.
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“Over the past 4 weeks you have all partnered with our CDS teams to increase warehouse sanitation for our members and employees,” Costo chief operating officer Ron Vachris wrote on March 30. “As our traffic in the warehouses has slowed due to various state directives, we will assume these duties with Costco employees effective April 6th.”
Vachris said the company hopes to resume in-store samples “as soon as possible,” since it is “part of our DNA.” Costco dropped the free sample service in March, but chose to continue employing about 30,000 people at Costo warehouses by shifting them to sanitizing locations. Vachris said they hope to work with CDS again once the coronavirus pandemic is over. They are also working with employees to help them get state and federal assistance.
CDS plans to lay off all its employees who work with Costco by Sunday, sources told BuzzFeed. CDS and Costo did not comment on the situation.
“Nobody knows when or if the company will ever come back,” one CDS employee, 19, told BuzzFeed in an email. “They are giving us pretty much no information except ‘thanks for the help, bye!’ We deserved more than that. Also we deserved more of a job security than what they gave us, only a few days warning.”
Other Costco employees described what CDS contractors were doing as “grunt work.” Four told BuzzFeed they were concerned for the employees’ health as many are elderly and considered “high risk” for contracting the coronavirus.
With “stay-at-home” orders in place across the country, the economic impact of the coronavirus pandemic has been swift. On Thursday, the Department of Labor announced more than 6.6 million Americans filed for unemployment benefits through the week ending on March 28. That was more than double the week before, when a record 3.3 million unemployment claims were filed. Businesses have been forced to layoff or furlough workers in the past two weeks.
“The COVID-19 virus continues to impact the number of initial claims,” the Labor Department’s report reads. “Nearly every state providing comments cited the COVID-19 virus. States continued to identify increases related to the services industries broadly, again led by accommodation and food services. However, state comments indicated a wider impact across industries. Many states continued to cite the health care and social assistance, and manufacturing industries, while an increasing number of states identified the retail and wholesale trade and construction industries.”
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