The company, whose production plants remain closed, said 750 full-time employees and 700 part-time workers are losing their jobs. That represents about 37 per cent of its 3,900 employees.
Another 1,400 workers will be furloughed but will still receive a substantial portion of their current pay. Employees essential to ongoing cleanup and repair efforts will continue working but have their pay reduced, Blue Bell said. Workers at distribution centres in 10 states will also be laid off.
The 108-year-old company's production plants in Texas, Oklahoma and Alabama have been closed since Blue Bell issued a full recall in April. The company's ice cream has been linked to 10 listeria illnesses in four states, including three deaths in Kansas.
Blue Bell CEO and President Paul Kruse called the decision to layoff and furlough workers "agonizing."
"At Blue Bell, our employees are part of our family, and we did everything we could to keep people on our payroll for as long as possible. At the same time, we have an obligation to do what is necessary to bring Blue Bell back and ensure its viability in the future," Kruse said.
Residents and officials in Brenham, Texas, where Blue Bell is headquartered, are bracing for how the layoffs will affect the city. Blue Bell is Brenham's second-largest employer with 900 workers. Blue Bell said that 250 workers were being laid off at its main plant in Brenham, with an additional 300 being furloughed.
"There will be an impact" said Terry Roberts, Brenham city manager.
Thirty workers at the Sylacauga, Alabama, plant will lose their jobs, and 20 will be laid off from the plant in Broken Arrow, Oklahoma. Blue Bell did not provide a breakdown of the rest of the layoffs; it has distribution centres in 10 states.
Washington County Judge John Brieden said Blue Bell has been a great ambassador for tourism in Brenham, which has around 16,000 residents and is about 70 miles northwest of Houston. Last month, more than 200 people gathered at a prayer vigil in Brenham to show their support for Blue Bell.
"When they hurt," Brieden said of Blue Bell, "we hurt."
Blue Bell said it hopes it can eventually restore its workforce.
"Obviously, over time, we hope to build back up, but we anticipate that will take quite some" time, the company said in an email.
Page Michel, president and CEO of the Brenham/Washington County Chamber of Commerce, said two job fairs have been scheduled for later this month to help laid off workers.
"It's going to be a tough time for a lot of people now, and our prayers are with them," she said.
The layoffs come after Blue Bell signed agreements Thursday with health officials in Texas and Oklahoma detailing steps the company will follow to resume making ice cream products. No timeline has been set for when Blue Bell will resume production.
The agreements require the company to inform the states whenever there is a positive test result for listeria in its products or ingredients. Blue Bell had failed to tell federal or state health officials of repeated findings of listeria at its Oklahoma plant that date back to 2013.
Listeria illness generally affects only the elderly, people with compromised immune systems, pregnant women and newborns. The three people who died in the Blue Bell outbreak were already hospitalized for other illnesses when they consumed the tainted ice cream.
Associated Press writers Terry Wallace and Jamie Stengle in Dallas contributed to this report.
Follow Juan A. Lozano on Twitter at www.twitter.com/juanlozano70