Equinox sent letters to contractors last month, informing them that the luxury fitness company would not be fulfilling invoice payments until further notice.
The New York-based company confirmed the action to Fortune on Tuesday, pointing toward the coronavirus outbreak and subsequent shutdowns affecting businesses around the world as contributing factors.
“Equinox has temporarily halted payments to our vendors given the current circumstances surrounding COVID-19 and government-mandated closures of our clubs. We expect to resume business as usual as soon as it is safely possible,” an Equinox spokesperson said.
The company did not disclose how many contractors were affected by the decision, nor which roles or vendors were included.
With more than 100 locations in major cities across the United States as well as outposts in London, Toronto, and Vancouver, Equinox is estimated to have just over 900 full-time employees, although the company’s LinkedIn profile puts the total company size at more than 10,000, including part-time employees, freelancers, and temporary vendors.
When asked if Equinox made further budget adjustments or cuts as a result of the imposed closures to curb the spread of COVID-19, a spokesperson said the company has communicated payroll changes. Equinox, as well as its subsidiary SoulCycle, quietly began furloughing some of its employees last week. Equinox is not alone in this regard as companies across all industries have been furloughing thousands of workers nationwide due to the economic fallout from the pandemic.
“In an effort to protect our teams in the wake of COVID-19 pandemic yet remain financially strong for the long term, Equinox has had to make a number of difficult decisions that impact individual roles and payroll at all levels of the organization, including implementing pay reductions and furloughs for employees unable to work due to club closures,” an Equinox spokesperson said in an additional statement to Fortune. “Our people are at the core of everything we do, and through these actions, we are able to continue to compensate the majority of our workforce with as minimal a reduction in pay as possible, while continuing to provide health benefits and access to mental health services to all employees enrolled.”
Some contractors have started posting the letters they received from Equinox on social media. Writer Erin Van Der Meer posted a letter to Twitter on April 6 from Equinox dated from March 18—three days after New York state ordered all non-essential businesses to close—adding that the company owed her upwards of $8,000 for copywriting and digital content completed in February and early March of this year.
But Van Der Meer says she didn’t receive the letter until this week. ” I had been making many attempts to contact both my manager there, and the accounts department, for several weeks,” she explains. “My manager said she was trying to get me paid, but there was a ‘freeze on invoices.’ I kept hoping they would still pay me despite her saying that, but when I got that letter on April 6, I knew unless I took drastic action I would not see that money for a long time.”
However, on Tuesday, Van Der Meer tweeted that a representative for the company called her and informed her that she will “likely” receive payments this week. While she says she’s glad Equinox was apologetic, she doesn’t plan to work with the company again in the future.
“When I received that letter, I knew immediately I would cease working for them,” Van Der Meer says. It would be a risky business and financial move on my part to work with a client who seems unreliable when it comes to payment.”
A source close to the company says that Equinox will continue to pay freelancers, adding that the vendor letter wasn’t intended for them, while the majority of employees—including those unable to work because of shuttered facilities—will be paid at 75% of their pre-pandemic wages for at least 30 days, at which point the company plans to reassess.
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