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Rocky Mount QVC employees under investigation

Posted August 5, 2009
Updated August 6, 2009

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— Dozens of employees at a QVC distribution center in Rocky Mount were turned away as they reported to work Wednesday.

A spokeswoman for the company said the workers are under investigation for irregularities in emergency withdrawals from their 401K plans. She would not say how many employees and declined to comment further.

Dozens of QVC workers suspended Dozens of QVC workers suspended

Employees who gathered near the plant in protest told WRAL News that as many as 150 employees might be affected and that they are on unpaid leave, pending the outcome of the probe.

They said they received letters Wednesday morning, advising them to schedule a meeting within 48 hours with a company loss prevention specialist and human resources representative to prove the hardship loans were legitimate.

"Failure to set up a meeting will indicate your decision to voluntarily resign from the company," the letter stated.

Employees found to have improperly applied for the loan could be terminated, it continued.

"We cannot have this," QVC employee Layvonne McCauley said. "We have families. We are in dire need of hardship. We are in dire need of our jobs."

The plant, which employs about 900 people in the Rocky Mount and Edgecombe County community, has imposed a salary freeze, cut back on overtime and hours and started paying employees bi-weekly, instead of weekly, employees said.

The changes, they said, have forced them to tap into their 401K accounts.

Fidelity, the company that holds the 401K plan, they continued, reviewed and approved the loan applications and sent them the checks.

"It just seems like (QVC is) betraying me," employee Yeshica Lynch said. "If they had any problems with it, Fidelity should have approached me, not QVC."

54 Comments

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  • scooter13 Aug 6, 2009

    I don't think the people were taking loans out. They were taking money out of their 401k as a withdrawal. They would not have to pay this back if it was a true "hardship case". The issue then becomes the fact that they have not paid taxes on the money. Now the IRS steps in.

    They have tried to pull a scam & find a way to get money out without paying taxes on it or paying it back. And now they have been caught.

  • Mommyoftwo Aug 6, 2009

    oldb77 - Thanks for the update. If that is the case then the HR Rep is looking at Federal charges. Money passed over many state lines therefore it is the Feds.

    And I agree that those who did have a LEGITIMATE hardship claim can hopefully prove it. For those that didn't have one, I wish you luck.

  • 4DukeTillDeath Aug 6, 2009

    Turns out the employees paid someone in hr to produce false hardship letters to get these loans approved. I heard $80 a letter. They are now fired and probably being brought up on charges. 250 people getting 401K hardships in the same workplace should have thrown up a red flag. Hopefully the ones who truely used this money the right way can provide documentation.

  • 4DukeTillDeath Aug 6, 2009

    from an IRS person...

    To those of you who say "It was their money" You are flat out Wrong! It wasn't their money. 401k's have matching funds up to a certain amount. I put in a dollar QVC puts in a dollar or whatever the agreement is. A person can take a loan on their 401k for anything they desire. This is an actual withdrawal in which you receive a 1099-R at the end of the year. There are only 4 reasons you can take a hardship withdrawal before 59 1/2 years of age:
    *Medical expenses for you or family
    *Downpayment on principle residence
    *Tuition
    *Eviction or foreclosure

    These are IRS rules, not QVC's.
    You break the law when none of the aforementioned reasons apply to you and you take early withdrawal under false pretense. It sounds like they had an insider with a "standard" form letter just changing the Name/Date. Real genius there! They were located in an audit and all involved were sent a letter and subsequently let go for fraud. Next stop may be federal court if the I

  • justcommonsense Aug 5, 2009

    continuation.....he's been unemployed therefore no health coverage. Some have made comments that these people should have learned to live within their means ie not depend on overtime, learn how to budget for the bi-weekly rather than weekly salary etc. What seems to have been missed is the fact that overtime was cut yes, but regular hours were cut as well. That's one hit, reduced regular hours. Perhaps they had a spouse who had lost their job along with the millions of others in this country with this economic nightmare? That would create a financial burden many know all to well.
    Mention has been made about defrauding the IRS....I did not see anywhere in the story anything about the IRS looking into it. This to me is very clearly something in the wind with QVC...they have no business doing what they are doing...it is not their money. The withdrawals don't affect their stock and shouldn't affect their bottom line. something fishy indeed.

  • thought Aug 5, 2009

    does the employer match the 401K? That may be a point of view they are looking at. I don't understand how they would say they can't feed their kid as a hardship. If you have a job - be thankful- many like me wish we could find one- you need to buget your money and stop buying things you don't need. It will be interesting to see what comes of this

  • justcommonsense Aug 5, 2009

    Hmmmmmmm....something stinks here. Why is QVC investigating it's employees requesting and receiving hardship withdrawals from their 401K plans? There are indeed strict guidelines in regards to hardship withdrawals. Generally it must be to prevent foreclosure, purchase of first home, uncovered medial bills of a family member or college tuition. The application must be accompanied by documents such as actual forclosure notice, copies of medical bills, copies of all paperwork involved with purchase of the first home etc. The application along with supporting documentation are reviewed by the adminiatrators of the plan and either approved or denied. You are never allowed to take the full amount in your 401k and you do indeed pay taxes on all before-tax contributions. The 10% penalty for early withdrawal is not waived...you will pay it when you file your taxes. I just did a hardship withdrawal from my 401k due to unexpected medical bills for my son who had to have a aortic valve replacement

  • ticktrading Aug 5, 2009

    Can someone explain hardship? Would needing to feed ones kids be a hardship? Is this an option on the 401K form? If not, I'm sure most of the people that did lie about a hardship, did it with good cause. Thats my 2cents.....

  • Deer Hunter Aug 5, 2009

    First, I don't think anyone is speaking of a union. However a company has got to be stupid to assault this amount of people with the same charge. They didn't do it all at one time. It should have been stopped early. If these claims are fraudulent then Fidelity has the right to go after them. This is the employees money not QVC not Fidelity's. The IRS collects what is due. They are hurt every year by people who lie on their return. It has happened for years. The IRS is going to be going after the administrators for allowing this to happen and then the fraudulent claims.

  • No longer in NC Aug 5, 2009

    Sure bring in the Unions so the employee can have more money taken out of their check and really get nothing in return. If these employees committed fraud, how would the union be able to help them??

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