CBS 5 Investigates With Anna Werner

(CBS 5) You've undoubtedly heard about the Mervyn's chain shutting down. CBS 5 Investigates looks into why former employees are going without back vacation pay, yet executives are in line to receive vacation pay plus bonuses.

They're the people who made Mervyn's, Mervyn's. People like Kathi Finley of Castro Valley. "It truly felt like a family," Finley said of the closing chain.

Former employee Randy Spengler said, "There was always that Mervyn's-cared feeling."

And Yasmin Zialcita said of her time at the company, "it never occurred to me that we wouldn't be here."

They worked as buyers, managers and analysts at Mervyn's, a place they say wasn't just a job, it was their professional family. And they stayed there for decades; some as long as 25 and 36 years.

Economics professor Eugene Muscat of the University of San Francisco said the company was unique. "Mervyn's had a clientele and customers and staff that were family friendly," he said.

But Muscat said all that changed when Mervyn's was sold. "It wasn't purchased to be continued as a family operation," he said.

Muscat said that's because private equity firms bought the company and split off the real estate, essentially renting the stores back to Mervyn's and making it difficult for the stores to remain profitable.

"That meant that those store managers were now carrying a much higher burden and had to work that much harder to be able to make the stores profitable, and it was a very slippery slope," said Muscat.

Mervyns slid into bankruptcy and the chain is now going out of business.

Eight former Mervyn's employees told CBS 5 Investigates how they felt when they heard the news. Their answers ranged from words such as "shocked" and "devastated" to describing a feeling of being "socked in the stomach."

But for those employees, another shock was coming: their vacation pay is held up in the bankruptcy court.

The employees are owed amounts ranging from $12,000 to roughly $20,000.

Randy Spengler told CBS 5 Investigates he needs the $5,000 in back vacation pay that Mervyn's owes him right now.

"I cashed in my 401k yesterday, to try to make it through the next three months," Spengler said. Losing his retirement security he said is "pretty devastating, depressing at times. It's hard."

The former employees may get the money eventually, but only if Mervyn's makes as much as executives hope it will in those going out of business sales.

Kathi Finley isn't betting on it. "I would be surprised if there is anything left," she said.

All the former employees say their job hunt has been tough, especially since they're often competing for jobs with other former Mervyn's employees.

Denise Crozier said leaving Mervyn's was "scary" because it was her only job. "I started there when I was 18…" she recalled. "It's just so scary…"

CBS 5 Investigates first interviewed Jackie Chakoff in October, a few days after she was laid off.

"It's pretty painful, there's not a lot out there," Chakoff said.

It's a different story for some of Mervyn's former executives. Reports say top executives such as former CEO John Goodman already have new jobs.

And bankruptcy court documents show executives who remain to close out the business will receive vacation pay in individual amounts ranging from $31,000 up to over $67,000. Some also are expected to receive bonuses with the largest bonus going to the chief financial officer. The CFO's bonuses could add up to $300,000.

CBS 5 Investigates attempted to speak to Mervyn's CFO David Robson about the former employees' situations but he declined to comment.

USF professor Muscat said for many top executives, it's a simple equation.

"I am not being sympathetic, I'm being realistic, I think what they might say is we're going to stay and we're going to do the very best for the company, but in return for that we will expect something for ourselves," Muscat explains. He says many executives are in demand and can simply leave for another job.

It's a reality that is hard to accept for many former Mervyn's employees who are now without jobs.

"The little guys are always left holding the empty bag, and that is wrong," Finley said.

Meanwhile, the California Department of Labor is investigating possible violations of the Worker Adjustment and Retraining Notification or WARN Act in relation to the Mervyn's layoffs. The labor commissioner has subpoenaed Mervyn's for documents.

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