Lumber Liquidators Inc. has agreed to pay $2.5 million to California state regulators to settle charges related to the safety of the hardwood-flooring company’s laminate products sourced in China.
The company didn’t admit wrongdoing, according to a regulatory filing, and Lumber Liquidators said the California Air Resources Board “concluded its review with no formal finding of violation or admission of wrongdoing on the part of the company.”
Shares in the company rose 11% to $13.39 midday, though they are still down more than 20% so far this year.
As part of the agreement, Lumber Liquidators will implement a series of compliance procedures to ensure its flooring products comply with CARB’s formaldehyde standards, which are the most stringent in the country. The company and CARB have also agreed to collaborate to establish best practices and protocols for testing flooring products with the aim of setting a new industry standard.
Lumber Liquidators came under fire after a “60 Minutes” segment last March alleged the company sold laminate flooring with unsafe levels of formaldehyde, a carcinogen. The report has pummeled the company’s stock, and led to sharp declines in sales and the departures of several top executives, including the CEO at the time.
In February, federal regulators said certain types of its laminate flooring are three times as likely to cause cancer than it previously reported.The Centers for Disease Control and Prevention corrected an error in a previous report it had issued, which said the flooring contained levels of formaldehyde that could cause minor health issues but posed little chance for increased cancer risk.
On Tuesday, Chief Executive John Presley pointed to consumer-safety initiatives the company has taken over the past year.
“We strengthened our quality assurance procedures, launched the largest voluntary testing program in our nation’s history and, in May 2015, voluntarily suspended the sale of all laminate flooring sourced from China,” he said.