The Industry

WeWork Locations Are Essentially Unusable Now. They’re Still Charging Rent.

The facade of a WeWork in New York.
WeWork is still charging its members. Reuters/Lucy Nicholson

Rebecca Shamtoob had only been working for a month at a firm based in a Manhattan WeWork before things started feeling off—well, more off than usual for the scandal-beset co-working company. It was early March, and COVID-19 cases were skyrocketing in New York City. She noticed the WeWork location was getting dirtier—particularly the bathrooms—and that there were few protective measures in place. WeWork staff were placing hand sanitizer at various places around the office, but people kept stealing the highly sought bottles, Shamtoob says. On March 12, the location threw a pizza and pie party for Pi Day (since March 14 was on a Saturday) and announced it would be the last office event for the foreseeable future. The location, at 401 Park Ave. S., planned to remain open for work, however. People were coughing and sharing food at the party, so Shamtoob decided to start working from home.

The email from WeWork came a week later: Someone at the location had tested positive for COVID-19. The last time that person had been in the office was the day of the Pi Day party.

You can understand why the co-working model would not be particularly appealing during a pandemic. But now that cases have exploded and lockdown orders across the country have prevented many people from even going in to work, many WeWork customers allege that the company has been inflexible in giving them breaks on rent and easing lease terms. WeWork is keeping its locations open, declaring itself an essential business. Yet many members feel that the offices are unusable, particularly given that nonessential workers are expected to stay home and the fact that there have been positive cases at some WeWork locations. The company has said that it is working with its 600,000 members on an individual basis to figure out compromises on rent during this time. But many members have been turning to media outlets to allege that WeWork has either offered unfair terms or completely refused to make concessions. (WeWork itself has stopped paying rent at certain locations.)

When New York went into lockdown in late March, lawyer Stephanie Hendricks knew business for her practice would slow to a trickle. Hendricks contacted the WeWork branch at the Brooklyn Navy Yard, where she’d been working since fall 2019, to see about getting a rent reduction. Instead, she says, the company shot down all her proposals, such as her suggestion that she simply pay WeWork a $600 monthly storage fee for her office supplies. (Her base rent is $1,850 per month.) Because her credit card was already on file, she had no way of stopping the payments. Getting out of the lease also isn’t an option, since she signed on for three years. At this point, she says there’s not much else she can do. “I’m honestly just taking things on a day-to-day basis,” she said. Hendricks said that when she’s gone in to check on her belongings, the workspace has been completely empty save for one staff member at the front desk. (The kitchen is no longer serving complimentary beverages.)

Jacob Feldman, CEO of the education consultancy Nexus Academics, had been on a month-to-month lease at the 300 Park Ave. WeWork location in Manhattan and was planning to move out when the pandemic hit. He told the company during the first week of March that he’d be leaving at the end of the month. WeWork told him, however, that he would’ve had to have notified them on Feb. 29 to do that—so he would have to pay through April 30.

Feldman says that getting in touch with WeWork representatives at the corporate level was impossible because by March, when New York’s coronavirus infections were rapidly climbing, they were overwhelmed with tons of other move-out requests. He asked his location’s office manager whether he could get a break on rent for April since the workspace had been closed for a combined two weeks for deep cleanings after several customers tested positive for the coronavirus. (When they did the cleanings, they would only close the floor where the infected person’s office was located, even though members are typically able to access all three floors.) The manager told him that he wouldn’t have to pay April rent, but only if he agreed to extend his lease through May. He opted to take the hit rather than extending.

Feldman recently visited the office during the workday to gather his belongings and noted that the lights were off and no other tenants were there. He saw two or three staff members who weren’t wearing masks. Some signs were up to remind people to practice social distancing, but that appeared to be the only protective measure that the location had taken.

Several members have now hired lawyers in an attempt to force WeWork to stop billing them and issue refunds for April and May. The firm Walden Macht & Haran is currently representing more than 20 small businesses located in New York, Los Angeles, and D.C. that initially found one another on social media and formed a group to protest WeWork’s practices. Lawyers on the case are also vetting 50 more from Ohio, Tennessee, and other states that have contacted the firm to join the group. The lawyers sent a letter to WeWork on Thursday threatening to pursue arbitration if its demands for rent relief and refunds are not met. It also asked the company to allow the customers to join together as a class in a potential suit; most WeWork contracts stipulate that tenants cannot join class-action lawsuits. WeWork replied to the firm’s letter asking for a list of the clients it’s representing, though the law firm wants a no-retaliation guarantee before providing it.

“For many of the clients we represent, WeWork’s monthly rent is the largest overhead they have, so forgiving rent during the pandemic while these stay-at-home orders are in place is a critical lifeline for these companies,” the law firm’s managing partner Jim Walden told Slate. “Our main goal is to convince WeWork that it should not be collecting rent from tenants in locations where people are not lawfully entitled to access the space.” Walden further noted that police have visited WeWork locations in Los Angeles and D.C. to ensure that people weren’t violating stay-at-home orders. He plans to file a letter with the New York State Attorney General’s Office and the Department of Justice alleging that WeWork is illegally ceasing retainers without a contractual basis and debiting accounts even when the company has received explicit requests not to do so. WeWork declined to comment on the legal dispute and customer complaints.

Even before the pandemic, WeWork had been trying to cut costs and shore up revenue streams wherever it could. In September, the company indefinitely postponed its initial public offering after investors brought up serious concerns about the company’s actual value and the leadership of now-former CEO Adam Neumann. From there, WeWork quickly unraveled, laying off thousands of workers in an attempt to stem its multibillion-dollar losses. Now, as the country faces an economic crisis and staying at home remains a necessity for the office workers upon whom WeWork relies, the company’s path to profitability seems even more remote. “I understand that WeWork is having its own difficulties. I’ve been rooting for them,” said Hendricks, the lawyer in Brooklyn. “I want to work with WeWork and not be treated like I have some magical ability to make money during this difficult economic time.”