An unexpected cosmetics company is now cutting 100 jobs as it looks forward to change its business mode, according to a press release.
Hair and skin care brand Rodan and Fields on Monday announced the changes.
The company will move away from a multi-level direct selling model starting on September 1st.
Current Rodan and Fields consultants will become part of a new affiliate program, per Retail Dive.
Commissions made through product sales via recruitments will no longer be part of the brand’s business model.
Additionally, the brand has reconfigured its corporate structure and has eliminated around 100 jobs.
Rodan and Fields has pulled back from its multi-level marketing model because it wants to streamline operations and reach new customers, according to the company.
Instead, the brand will support its consultants through marketing and advertising across traditional channels and social media.
Consultants will receive increased commissions on sales and product discounts, resulting in over 90% having “higher earning potential based on their current sales performance,” per the company.
“We are confident these changes will enable us to meaningfully expand the lives we can impact and — importantly — allow us to continue to provide our passionate Consultants with a modern and meaningful earning opportunity,” Dimitri Haloulos, CEO of Rodan and Fields, said in a statement regarding the changes.
The company and its founders recently faced a class action lawsuit in California regarding the classification of its consultants.
Its filing claimed that Rodan and Fields exploited its California sales force by misclassifying them as independent contractors instead of employees.
The lawsuit also alleged that in 2022 one-third of its consultants did not receive a commission check during the year.
Rodan and Fields declined to comment to questions regarding the lawsuit or further questions regarding the change in business model.
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Other Economy News Today
Applications for unemployment benefits now surge to new highs, a sign that the white-hot labor market is starting to cool off.
First-time applications for unemployment benefits rose last week to 231,000, the highest level since August, per CNN.
Thursday’s data also showed that the number of continuing claims, or applications from people who have filed for unemployment for at least one week, was 1.78 million.
That’s an increase of 17,000 from the prior week, according to the Bureau of Labor Statistics.
The latest numbers come less than a week after the monthly jobs report showed the US economy added just 175,000 positions in April, less than economists expected and a steep drop-off from prior months.
US employers have now added an average of 245,500 jobs per month, versus 2023’s 251,000-per-month average.
Still, hiring remains strong. Although the unemployment rate ticked up to 3.9% last month, it’s the 27th consecutive month that the jobless rate has held under 4%, matching a streak last seen in the late 1960s.
Weekly jobless claims data tends to be volatile but, while one week’s worth of data “does not a trend make,” said Chris Rupkey, chief economist at Fwdbonds.
“We can no longer be sure that calm seas lie ahead for the US economy if today’s weekly jobless claims are any indication.”
“Company layoffs are picking up, hinting at caution on the part of companies as they weigh the outlook for the second half of the year,” he wrote in a note Thursday.
The Federal Reserve has been battling inflation by raising its key lending rate in the hopes of slowing the economy.
While the labor market has so far resisted those efforts, remaining white hot for the past 18 months despite 11 rate hikes from the central bank, Fed Chair Jerome Powell said last week that demand has “cooled from its extremely high level of a couple of years ago.”
Ian Shepherdson at Pantheon Economics said in a note Thursday: “We’d need to see at least a month of elevated readings to convince us that the trend really has turned.”
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Also Read: A Giant Company Now Announces Unexpected Layoffs in Virginia
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