J.C. Penney furloughs most of its workforce; to cover 100% of their health premiums

Marianne Wilson
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JC Penney exterior

J.C. Penney joined the growing list of major retail chains that are furloughing employees as stores remain closed amid the COVID-10 crisis.

The department store giant said it is extending the temporary closure of its stores and business offices due to the pandemic and, as a result, will temporarily furlough the majority of store hourly associates, beginning April 2.

Also, beginning April 5, a “significant portion” of employees in Penney’s home office, in Salt Lake City, and its SoHo design offices will be furloughed, along with its store salaried associates. Many of Penney’s associates in supply chain and logistics centers were previously furloughed on March 20, and those furloughs will continue.

All furloughed associates who are currently enrolled in the retailer’s benefits program will continue to receive full health benefits and the company plans to cover 100% of employee-paid premiums for the duration of the furlough. Many impacted associates are also eligible to receive state unemployment benefits, which were recently increased with the passage of the federal stimulus bill.

“Our thoughts are with our valued associates and their families who are all being affected as we face this troubling time together,” said Penney CEO Jill Soltau. “This is a true public health crisis, so we are maintaining health benefits and paying premiums for associates.”

Penney said it has taken several actions to improve its cash position and financial flexibility during the pandemic, including deferring capital spend, utilizing funds available under the revolving credit facility, pausing hiring, cutting spending, reducing receipts, and extending the terms for payment of goods and services. It has also suspended 2020 merit increases and is evaluating other financial options.

The company’s e-commerce distribution centers and customer care will remain open, fulfilling online orders and answering customer inquiries. The centers will continue to operate by following enhanced social distancing, best practices for sanitization, and other safety measures. Its international operations continue, while complying with government mandates.

“These are difficult days all across the country and the globe,” said Soltau. “At J.C. Penney, we are making tough, prudent decisions to protect both the safety of our associates and the future of our company. We remain optimistic about J.C. Penney’s ability to weather this pandemic. We also believe these short-term solutions will have a long-term benefit for our associates, customers, and key stakeholders as we look forward to the day that we reopen our doors.”