About 200 employees of Education Management Corp.'s online operation in Phoenix, Arizona were laid off this afternoon, according to multiple sources within the company.
A former employee of the facility, known as Cotton Center, told City Paper that the laid-off workers included academic counselors, financial-aid counselors and recruiters. According to that source and others, some of the lost jobs were affiliated with online courses offered through EDMC's South University branch; those positions have been eliminated. But other positions will remain open, and laid-off employees have been told they can reapply for them.
The move comes two weeks after the company sent an email to employees telling them that raises were not being given this year, in an effort to preserve jobs. In fact, the Arizona employee who contacted CP today said employees there were pulled into a meeting just two weeks ago "and we were told this was so they could avoid layoffs."
Although laid-off employees were sent home today, they will remain on EDMC's payroll until Aug. 1, on paid administrative leave. On that date, anyone not rehired will receive an additional one week's severance.
EDMC has previously given workers an advanced heads up that layoffs would be coming. In January, for example, employees were given a week's notice they were likely. That did not occur this time, according to sources.
EDMC has had its share of problems this year. Enrollment has lagged, and the company is fighting a U.S. Department of Justice lawsuit over the company's recruiting practices. EDMC is also contending with legislation being pushing by Illinois Sen. Dick Durbin, to limit the amount that for-profit educators can earn from veterans via the G.I. Bill.
Such problems seem to be taking a toll. Despite a stock buyback and hundreds of layoffs in January and after, EDMC's stock has fallen from $30 at the beginning of the year, to around $5.12 as of this afternoon.