WeWork says it won't close, claiming office-sharing company is "essential"

By Stephen Gandel

/ MoneyWatch

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Office space-sharing company WeWork is keeping nearly all of its locations open despite the novel coronavirus and mass shutdown orders in New York, Illinois, California and elsewhere. It's even offering a monetary bonus of $100 a day to employees willing to go to the office, according to an internal memo that has been published online and CBS MoneyWatch has confirmed as authentic.

WeWork, which has struggled of late after once being among the hottest startups in the world, is also refusing to suspend rent for its tenants.

"I am just really shocked and offended and worried for people that WeWork is refusing to close," said Jill Raney of consulting firm Practice Makes Progress, which works with non-profits and others on LGBT workplace issues.

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Raney usually works out of a WeWork location in Washington, D.C., but said she started working from home a couple weeks ago out of a sense of responsibility to do what is necessary to curb the virus.

WeWork's decision is to keep offices open is "not in line with fundamental public health requirements," Raney said. "If WeWork cared about the businesses and well-being of its members, it would close."

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Raney last week contacted WeWork to request a pause in the $450 a month membership fee for the space. She said a community manager at the Washington, D.C., location replied that the co-working company is currently "not able to suspend or prematurely terminate memberships," while saying it is "looking to find a win-win situation for WeWork and our members."

On Tuesday, WeWork announced it was indefinitely closing a location in Brooklyn, New York. But all of its other North American locations remain open, according to its website. WeWork offices also remain open across Europe, which also is grappling with the spread of the coronavirus.

A number of the company's New York City locations, which have housed workers who have since tested positive for the coronavirus, were closed temporarily, cleaned and reopened. New York State last week ordered all non-essential businesses to shut their doors as of Sunday evening. Governor Andrew Cuomo has ordered residents of the state, which has seen the largest number of coronavirus cases in the U.S., to stay home as much as possible.

WeWork is skirting that mandate by claiming it is an essential business. In response to questions from CBS MoneyWatch, a WeWork spokesperson emailed a highlighted copy of New York's guidelines about what constitutes an "essential" service. Highlighted on the guidelines were "trash and recycling collection" and "mail and shipping services," as well as a few other services.

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WeWork provided CBS MoneyWatch with a highlighted copy of New York State's essential business guidelines. Courtesy of WeWork

A WeWork investor presentation in October that lists the company's various divisions does not include trash collection or shipping services. It says WeWork has expanded into other businesses, but that the company plans to refocus on its core business of providing office space.

In a statement to CBS MoneyWatch, WeWork CEO Sandeep Mathrani said his company is providing an essential service because some of its tenants themselves are considered essential businesses.

"WeWork is a service provider, and we have an obligation to keep our buildings open," Mathrani said in the statement. "In the same way we expect certain businesses to remain open for us — whether it be a fulfillment center to send us a package, a bank so we can handle finances, grocery stores and pharmacies to supply us our valued goods — we, too, have members counting on us to remain open so they can run their companies to generate revenue, pay their people and continue serving their customers."

Mathrani declined to answer additional questions from CBS MoneyWatch, including why WeWork was unwilling to suspend membership agreements and the monthly charges for them.

A person close to the company said WeWork has not applied for a special exemption to the mandatory shutdown rules in New York, but rather is relying on the guidelines. A spokesperson for Cuomo's office did not return a request for comment regarding whether WeWork qualifies as an essential service.

Raney has started a petition on Coworker.org asking Mathrani to close WeWork offices and suspend fees for members who cannot safely access their spaces. So far, the petition has gotten 338 signatures. WeWork does allow members to terminate their contracts early, but it requires a 30-day notice.

"I cannot use their service right now," Raney said. "I miss the coffee, but that's not an essential service."

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Some of WeWork's rivals have decided to remain open as well. But a number of smaller competitors have shut their offices and allowed members to suspend their contracts out of concern for public safety.

The Wing, a co-working space that caters to women-owned businesses, closed all of its offices and stopped collecting membership fees on March 14.

Second Home, which has seven office-sharing locations, including one in Los Angeles, has closed all of its offices as well and shifted toward offering online and other services to clients working at home. It has offered to suspend the contracts of its small business members who have asked for help.

Second Home co-CEO Rohan Silva described competitor WeWork's claim that a workplace-sharing company is an essential business as "bollocks" and "irresponsible."

First published on March 26, 2020 / 3:18 PM

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