Restaurants

Even at pandemic's peak, enforcing Covid rules was a challenge at fast-food distributor's warehouses

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Key Points
  • Although Sysco's Sygma Network has procedures in place to prevent the spread of Covid-19, the precautions have rarely been taken, employees told CNBC.
  • These workers attributed the lax enforcement to both the pressure to meet growing business demands and a culture of skepticism toward the pandemic.
  • They said basic protective measures, including face masks and social distancing, have been flouted by management at some distribution centers and even discouraged at times.
An employee hands a customer their order at the drive-thru window of a Wendy's restaurant in Peoria, Illinois.
Daniel Acker | Bloomberg | Getty Images

As the U.S. approached another peak of the pandemic last fall, a truck driver at a top supplier for major national restaurant chains, including Panera Bread, Wendy's and Arby's, began to show symptoms of the coronavirus.

The truck driver informed the Sygma Network, one of the largest fast-food distributors in the country, that he needed to take time off to quarantine and get tested for Covid-19. But he was called back to work almost immediately as the company sought to staff routes for its thousands of restaurant customers.

"I was showing symptoms, and they were calling my phone up every single day," said the Michigan-based truck driver who, like others interviewed for this story, spoke on the condition of anonymity. "They wanted me to come back right away when my test results hadn't even come in, just because they were so short-handed."

A CNBC review of internal Sygma documents and interviews with nearly two dozen current and former employees across the country revealed that pressure to meet growing business demands and a culture of skepticism toward the pandemic have undermined efforts to prevent the spread of the virus within the company and beyond. The employees declined to be named because they were not authorized to speak to the press, but their identities were confirmed by CNBC.

The balance between employee safety and speedy customer service is a delicate one, and the juggle could grow even more precarious in the months ahead. As the vaccine rollout gains steam, with more than 2 million Americans receiving shots daily, complacency could set in and further pressure compliance with safety protocols.

Mask mandates, which have helped curb the virus's spread, are already being lifted in states such as Mississippi and Texas, despite calls from public health officials to remain vigilant. Although Covid cases were dropping rapidly in February, the pace of decline has slowed. According to a seven-day average of Johns Hopkins University data, about 57,400 new cases are still being diagnosed in the U.S. each day.

Truck drivers, warehouse associates and office clerks at Sygma said the growth of their business has often been prioritized over protective measures against Covid. They said basic protective measures, including face masks and social distancing, have been flouted by management at some distribution centers and even discouraged at times.

Sygma, a subsidiary of the publicly traded company Sysco, has been the beneficiary of a pandemic-driven sales surge as Americans favored drive-thrus over sit-down restaurants in recent months. Indoor dining bans or capacity caps fueled the trend.

At the same time, a historic recession has forced some competitors to scale back or even close. When rival distributor Maines Paper & Food Service filed for Chapter 11 bankruptcy protection in June, Sygma acquired hundreds of additional customers, according to union representatives. Shannon Mutschler, the senior director of external communications at Sysco, said, "We do not name any specific customers that are won/lost during transition with other distributors."

In addition to Panera Bread, Wendy's and Arby's — which did not respond to requests for comment — Sygma delivers fast food and supplies to more than 3,700 other customers. Sales climbed more than 4% to $1.5 billion in its fiscal second quarter, which ended Dec. 26, a second consecutive period of growth.

"We continue to see new business wins in the Sygma segment," Sysco Chief Financial Officer Aaron Alt said in an earnings call in early February, adding that the increase in sales was "driven by the success of national and regional quick service restaurant servicing drive-thru traffic."

Sysco, the Sygma parent company whose customers include schools and health-care facilities, suspended its share buyback program in March 2020 as sales slowed. In the fiscal year ended June 27, 2020, Sysco's sales fell 12% to $52.9 billion. Declines have continued. In the second quarter, the company's sales tumbled 23% year over year to $11.6 billion.

Investors have been hopeful that Sysco will bounce back as the economy recovers, and its stock reflects that optimism. On March 18, 2020, shares hit a 52-week low of $26, but the stock hit a high of $83.19 on Monday. Its market value has swelled 20% over the past year to $41.54 billion.

Delays and gaps in enforcement

Sygma has outlined a series of policies over the past year to address the pandemic. It provides temperature checks and health screenings. There is an internal email mailbox for questions and concerns, and contact tracing. Notices tell employees who show signs of flu-like illness to not report to work.

Face masks were first recommended to employees in April and required "in certain circumstances," according to Mutschler. In June, the company began to require face masks in warehouses only when social distancing "could not be maintained" and at customer locations. The policy was extended in February to all warehouse employees, regardless of social distancing.

"At Sysco, the health and safety of our associates and customers is our highest priority," Eve McFadden, the senior vice president of legal, general counsel and corporate secretary at Sysco, said in a statement to CNBC. "Throughout the pandemic, we have continuously monitored developments of COVID-19 and evolved our approach to create new processes and guidelines to keep associates and customers safe, with careful consideration to remain aligned with guidance from relevant health authorities."

All locations are required to comply with these protocols, McFadden said, adding that this message is reinforced by the company's executives.

At one Sygma warehouse in Texas, where Sysco is headquartered, several employees said management has closely followed mask and sanitation guidelines from the corporate office and federal health officials.

"We're top tier at this Sygma," said a truck driver at the Texas warehouse. "That's why I love it and probably don't want to go anywhere else. As far as taking care of us in every aspect, they do their very best to. It's all up to the drivers to follow through with the instructions."

A truck driver wearing a mask is seen as the coronavirus continues to spread across the United States on March 18, 2020 in New York City.
Dimitrios Kambouris | Getty Images

But employees and union officials in other parts of the country expressed alarm about how Covid-19 has been handled by the company. They complained that delays and gaps in implementation and enforcement of policies have led to unnecessary risks of exposure to the virus.

Face masks have rarely been worn at some warehouses in the Midwest and during deliveries to fast-food restaurants across the country, a dozen employees and two union officials said. Temperature checks and health screenings have been inconsistent, they added, which has limited the ability to mitigate the spread of asymptomatic cases.

Some employees said when they requested time off to quarantine or get tested, they were at times met with anger and backlash from management. The company said it updated its medical benefits to waive an associate's cost share for coronavirus testing and treatment, but those who did not have any sick or vacation leave available were not paid for that time off. At least one employee said he had to file for unemployment benefits while quarantined after suspected exposure to the virus, while others relied on savings.

After months of private scrutiny of the company, union leaders have turned to health and labor regulators to sound the alarm. According to emails reviewed by CNBC, a Teamsters affiliate in Ohio recently alerted local health boards of "Covid-19 spread at Sygma" and requested "assistance in enforcement."

"Many drivers employed by Sygma are being needlessly exposed to COVID-19 by lax enforcement of federal and state regulations by Sygma," an attorney for Teamsters Local 284 wrote in the emails to the city and county health officials.

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The Columbus Public Health Department said in a statement that it "did not find any violations" at the Ohio distribution center last week. The Franklin County Health Department did not respond to a request for comment.

In a charge filed with the National Labor Relations Board in January, the Teamsters affiliate alleged that Sygma "refused to supply information" on Covid-19 cases at the company and sanitization records for equipment. The union also said the company has turned to outside contractors to fill a number of delivery routes.

"In both cases, we believe the charges are without merit," Mutschler said.

Union leaders have struggled to include Covid-19 precautions in labor agreements with Sygma, according to Kurt Denzer, a business agent at Teamsters Local 337. He said the company left little room for negotiation with the union as it furloughed some employees following a wave of stay-at-home orders in April. (Sygma told CNBC it has since recalled furloughed employees. It has also posted dozens of listings for open positions at the company.)

"They kind of threatened us and said if you don't agree to these terms we're just going to lay them off instead of putting them on furlough," Denzer said. "They kind of shoved it down our throats. It would have been a good idea to have specifics as far as how to keep the employees safe."

Mutschler denied that the company had forced the union to accept terms that did not include coronavirus precautions, saying "the union leadership team was made aware that our strong COVID-19 protocols have been developed and implemented across the enterprise for all of our associates regardless of union representation."

Sygma declined to answer questions from CNBC on how many total cases have been suspected or confirmed among the more than 4,200 total employees at the company, which has distribution centers in at least a dozen states.

At least 13 employees at one distribution center in Michigan had tested positive for the virus over a 10-day period in November, according to the internal documents reviewed by CNBC. Some employees said they never saw Covid-19 memos because they were taped on a wall they rarely looked at and they did not have Sygma email addresses.

"We had a driver that came down with it, and we didn't find out on our end until way after," said one truck driver at that distribution center. "And it's like, shouldn't we have known about this for a while?"

Sygma said truck drivers have access to information through software installed in trucks and a company app that employees can download on their personal phones. Several employees told CNBC that they were unaware of the app, which was created last year.

"We are launching new channels to try to reach them and communicate with them," Mutschler said of truck drivers and warehouse associates at the company.

'They said Covid was a hoax'

Mixed guidance from federal and state government officials has appeared to fuel skepticism toward Covid-19 among Sygma employees, undermining policy implementation and enforcement at some distribution centers.

"When you get conflicting messages from the government and from the scientists — you know, they say one thing and the government says another thing — it's confusing," said a truck driver in Illinois.

At the height of the pandemic, former President Donald Trump repeatedly downplayed the threat of the coronavirus and contradicted public health experts about face masks and testing. According to one study from researchers at Cornell University, the 45th president had been the "single largest driver of misinformation" about Covid-19.

In Ohio, a politically competitive state Trump won by comfortable margins in the past two elections, one former office clerk at a Sygma warehouse said she and others were jeered by colleagues when they advocated for stricter enforcement of Covid-19 measures. The office clerk lived with three family members at the time who were at risk of serious complications from the virus.

"They started making fun of us. The supervisors encouraged that. They said Covid was a hoax," the office clerk said. "I was like, the flu could wipe out my whole family. I really don't want to try Covid."

Some think the mixed messages are continuing. Texas Gov. Greg Abbott has rescinded a statewide mask mandate, but he said businesses can set their own standards. In an interview with CNBC last week, Abbott said Texans already know that "the safe standard, among other things, is to wear a mask."

"Do they really need the state to tell them what they already know for their own personal behavior?" he said.

With the emergence of more contagious coronavirus variants, U.S. officials warn the pandemic is far from over even as the weekly numbers of hospitalizations and deaths decline.

While transportation and warehouse workers are considered essential, vaccine supply and eligibility varies widely across states and even counties. Some local governments have diverged from federal recommendations to broaden access to front-line workers, instead prioritizing individuals over 65.

Despite the spread of Covid-19 variants in nearly every state and lags in the vaccine rollout, hazard pay was discontinued at Sygma in August. Union officials have pushed to reinstate the extra $25 to $50 per shift that had been temporarily offered to some employees, though the company told CNBC it has no current plans to do so.

"People are more at risk than they were," said Denzer, the business agent at Teamsters Local 337.

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