NordicTrack maker to hand out raises, bonuses after waves of layoffs

The company that makes NordicTrack exercise bikes has promised bonuses and raises to employees after laying off hundreds earlier this month — sparking outrage among fired workers, with some refusing to sign their severance agreements, The Post has learned.

IFit — which like archrival Peloton has been hammered as a pandemic-driven spike in demand for home-fitness equipment has waned — nearly halved a workforce of 2,500 over the past 11 months, most recently slashing 376 employees on Nov. 14.

Now, the latest group of laid-off workers have until Monday to sign their severance agreements — and dozens are refusing to do so.

The Logan, Utah-based company offered a week of severance for each year worked – those hired this year got nothing – while health insurance was cut off immediately. By signing the document, workers would also waive their rights to unpaid bonuses and unused vacation days, according to a severance agreement viewed by The Post.

“We thought we were getting bonuses and raises [last] week,” one laid off employee who’d been at the company just under two years told The Post. “It was shocking and we feel they bait-and-switched us.”

The day after the layoffs, meanwhile, management told the remaining 1,200 employees that their managers were finalizing recommendations in November and December for pay increases retroactive to Sept. 1. Employees who survived the cuts may also receive bonuses “based on company and personal performance,” according to an internal memo that The Post obtained.

“It is not common after massive layoffs for a company to give bonuses to the remaining employees, but it is likely meant to improve morale,” labor attorney, Darren Oved, a partner at Oved & Oved told The Post. “Mass layoffs can damage productivity and create ‘survivor guilt.’” 

Some of the laid off employees have reached out to lawyers and contacted government agencies while more than 40 have started a Slack channel entitled “legal” to discuss taking legal action against iFIT.

“Every time there has been a layoff their strategy is to buy the loyalty of employees to stay with the company with offers of bonuses, but they have clearly taken advantage of that loyalty with deception,” said a former employee.

When the last big layoff occurred in February, then co-president Mark Watterson said ‘those of you who are left are the cream of the crop and who we are going to move forward with’ but the company continued to cut jobs afterwards, according to several former employees.

Some believe iFit has deliberately downsized in staggered installments to avoid giving its employees advance notice under the Worker Adjustment and Retraining Notification Act.

The WARN Act “is intended to give an employee transition time to adjust, plan or obtain other employment,” Oved said.

A dozen workers sent a letter to the company suggesting that iFit should have given them 60 days notice as federal law requires in certain circumstances including when the total number of eliminated positions represents at least 33% of the workforce.

Management’s response was that “the scope of iFit’s reduction in force falls short of Federal WARN Act minimums,” according to an email from iFit’s head of human resources, Andrew Stevens, that The Post reviewed.

Some companies “attempt to stagger layoffs to avoid triggering these threshold numbers,” Oved said. “But it may still be liable under the WARN Act if the layoffs occur within the same 90 day period.”

In a statement to The Post, iFIT spokeswoman Colleen Logan said that the company’s layoffs complied with all local and federal laws “and honored written agreements with impacted employees.”

The company, she added “has had to face challenges from the pandemic, supply chain disruptions and inflation.  In order to successfully continue our 45 year history, IFIT had to shape the business to meet today’s market realities, and as a result, Teammates were impacted. IFIT is committed to treating impacted Teammates fairly and with respect throughout this transition.”

The product engineering division of the company was particularly hard hit, with 80 of 140 positions eliminated, former employees told The Post. “We were solely responsible for supporting and developing the application to run workouts and iFIT’s content,” an employee from the department said.

One ex-employee said he is frantically trying to get a new job with health insurance because his wife is undergoing tests after she found a lump in her breast. 

“The timing was ruthless,” he said. “The pain and suffering of this was so unnecessary.”

“I’ve decided not to sign the [severance agreement] document,” said another employee, who was promised a bonus when he was hired earlier this year. “You waive your rights to take legal remedies and get your bonus and PTO days that have not been paid out.”

IFit said in the internal memo that it’s a $1 billion company and that it’s undergoing a $100 million restructuring of which a third is related to salary and wage cuts.

Owned by private equity companies – L Catterton, Pathlight Capital and Pamplona Capital Management – which sank $355 million into the company earlier this year – iFit has been transitioning from being a family owned business to one that’s backed by institutional investors.

The Watterson family, headed up by founder and longtime chief executive Scott Watterson, has controlled the company for the past 45 years. 

The investors took control in March when Watterson was booted as CEO. Since then other senior executives left the company as it became clear that it would not go public as it had previously planned.

Watterson remains the largest shareholder in the company. His four sons also work for iFit, but some family members, including Chase Watterson, a customer experience leader who’d worked for the company since its inception, were laid off, according to his LinkedIn profile.

“I was also affected by the reduction and it’s time to move on from iFIT,” he posted on LinkedIn.