WeWork, the startup office-sharing company is facing bankruptcy, but that could be the least of the company’s woes. According to Reuters, WeWork has had to close nearly 2500 shared office “phone booths” at some of its 223 sites in the United States and Canada, after it says it discovered elevated levels of deadly cancer causing chemical formaldehyde.
The company – which abandoned plans for an initial public offering last month after investors questioned its operating practices and mounting losses – said in an email last week to its tenants that the chemical could pose a cancer-risk if there is long-term exposure. After a tenant complained of odor and eye irritation, WeWork began testing and based on the results they initially took a little over two thousand of the phone booths out of service. An additional 700 booths are closed after more testing was conducted.
All of the phone booths that had to be closed had been recently installed, “just over the past several months,” WeWork said. In a statement to the press the company said, “The safety and well-being of our members (WeWork calls its tenants “members”) is our top priority and we are working to remedy this situation as quickly as possible.”
The “phone booths” provide private spaces for shared office members to make calls, or work without distractions.
Closing and replacing the booths is liable to be a costly endeavor and more costs are the last thing needed at the company, which some analysts say is fast running out of cash. Reuters says that WeWork declined to comment on the cost of testing and replacing the booths.
The company is currently in talks for a multi-billion dollar rescue deal that could lead to its largest shareholder, Japan’s SoftBank Group Corp, taking control, two people familiar with the matter said. WeWork is also talking to JPMorgan Chase over a possible debt package, they said.
WeWork declined to identify the manufacturer of the phone booths.
“Long-term exposure to formaldehyde, such as that experienced by workers in jobs who experience high concentrations over many years, has been associated with certain types of cancers,” WeWork told tenants in the email.
In 1987, the U.S. Environmental Protection Agency classified formaldehyde as a probable human carcinogen under conditions of unusually high or prolonged exposure. Some studies since then suggested that formaldehyde exposure is associated with certain types of cancer, according to the National Cancer Institute.
A tenant, who did not wish to be identified, said she was worried about the risk of cancer as she had spent hundreds of hours inside phone booths at a San Francisco WeWork that had been identified as one with the problem. Phone booths are popular in WeWork’s open-plan offices as they provide privacy and noise reduction, the tenant said.