Dozens of layoffs at former Vermont Teddy Bear distribution center due to start Thursday

A Vermont Teddy Bear worker uses a die and press to cut through multiple layers of fur to create the fabric pieces that will be sewn into bear parts. (VtDigger - Mike Dougherty)

A Vermont Teddy Bear worker uses a die and press to cut through multiple layers of fur to create the fabric pieces that will be sewn into bear parts. (VtDigger - Mike Dougherty) VTDigger — Mike Doughtery

By JUAN VEGA DE SOTO

VTDigger

Published: 05-25-2024 6:01 PM

Roughly 30 people will lose their jobs at a distribution center for the former apparel brands of the Vermont Teddy Bear Company, according to a letter the new owner sent to the Vermont Department of Labor. 

The first round of layoffs were expected to begin Thursday and proceed in stages until June 5, according to the letter. The Shelburne, Vt., facility would fully close by June 6.

Vermont Teddy Bear was recently sold to USA brands, which also owns Vermont Flannel. The plush toys company simultaneously sold its apparel brands — Pajamagram, Pajamajeans and The 1 for U — to an affiliate of New York City investment firm Lionel Capital. 

According to the letter, the new owner of the apparel brands was unable to negotiate a lease for the warehouse, prompting its sudden closure. The state’s labor department was still trying to sort through the intricacies of the move, according to Labor Commissioner Michael Harrington.

“Our legal team is working with their legal team,” Harrington said. “Part of what we’re trying to figure out is what part of the company closed.”

USA Brands president Matt Bigelow said the layoffs were not occurring on the side of Vermont Teddy Bear that actually makes the plush toys. 

“We don’t have any intent of making any major staffing changes and certainly no layoffs,” Bigelow said. “But it sounds like that’s not the case on the apparel side.”

The affected employees work in the distribution center’s accounting, human resources, contact center, inventory and information technology departments. They were notified of their imminent termination on May 16, according to the letter.

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Under the federal WARN Act, employers must give employees 60 days notice if a plan to close a facility would result in mass layoffs. A company may be exempt, Harrington said, if it can prove that the facility closed due to an unforeseeable circumstance. 

“They may … provide pay for the equivalent of the notice period,” Harrington said. 

In its letter, the new owner of the apparel brands said: “The inability … to negotiate a lease with the building’s owner was a sudden unexpected business development which prevented us from providing employees with more notice about their upcoming terminations.” 

A representative from Lionel Capital could not immediately be reached for comment.

Harrington encouraged any employee to contact the Department of Labor if they believe there was any indication of wrongdoing in their termination. The department also provides rapid support services for finding work and accessing unemployment benefits.