Peloton Keeps Instructors on Payroll, Gives Fired Workers Year of Classes

Peloton said it is letting go of 2,800 employees and will give them a free monthly membership for the next year, while it reportedly is keeping all of its class instructors.

Co-founder and Executive Chair John Foley, the former CEO, sent a memo to employees on Tuesday announcing the layoffs. He said company saw an "unprecedented demand" during the pandemic but its "post-COVID demand picture looks different than anticipated."

Peloton saw rapid growth during the COVID-19 pandemic but experienced several problems along the way. The company recalled its treadmill after several injuries and the death of a child, and went into damage control after a major character on HBO's Sex and the City reboot died of a heart attack after riding a Peloton, Forbes reported.

The massive layoff, which is about 20 percent of the workforce, is another speed bump for the company as new CEO Barry McCarthy took over for Foley, who is stepping down but remaining in the company as executive chair, NBC News reported.

Foley said the North American teams would have conversations on Tuesday, while other countries will work on a different timeline based on their legal process.

"While today is one of the more challenging ones in our history, we are doing everything we can to ensure you can remain proud of what we have done together," Foley said in the statement.

The memo said Peloton wants to equip its team members with "helpful tools" to make them "comfortable" as they look for a new job. The employees laid off in North America can expect to can expect to get a free year of Peloton membership worth about $468 and a "meaningful cash severance allotment" based on their job and how long they've worked there.

In addition to the severance pay, the employee's health care was extended "for a period of time," although it did not specify how long. Affected employees can also access career services through RiseSmart, which include a certified resume writer, job leads and career tools.

The company also announced it would pull back from its Ohio factory, a $400 million investment expected to provide an additional 2,000 jobs to the community, NBC News reported. Peloton had previously said it was halting the production of its bike until March and its treadmill for at least six weeks since demand was down.

The memo said layoffs and other recent changes were a part of a restructuring of the business as the company had a net loss of $494.4 million in the fourth quarter.

Update 2/8/22, 4:06 p.m. ET: This article was updated with additional information.

Peloton Fired Employees
Peloton fired 2,800 employees on February 8, 2022, but is giving the workers a free year of classes while keeping the instructors on payroll. Jeff Chiu/AP Photo