Miami’s Fontainebleau Hotel is suing the local hospitality workers union in federal court, arguing that the resort is not required to pay millions of dollars for health care coverage of laid-off employees.
The historic hotel owned by Jeffrey Soffer was forced to shut down operations March 23 as the result of an order from the city of Miami responding to the spread of the coronavirus. In turn, the hotel laid off more than 2,000 workers, including the 1,077 members of Unite Here! Local 355, according to the complaint filed on June 26.
The lawsuit cites sections of several federal statutes and argues that it is not obligated to provide between $3.9 million and $5.35 million in health care contributions to the South Florida Hotel and Culinary Employees Welfare Fund because the workers are no longer employed by the hotel.
“The uncertainty surrounding defendants’ demands for these huge payments has placed and will continue to place Fontainebleau under a financial cloud, as it attempts to re-stablize itself and regain its ability to again employ 2,000-plus people of the city of Miami Beach,” the complaint states.
The hotel owner argues that the company is not required to pay for former workers’ health care coverage until they resume employment.
“After a formal layoff, the laid-off worker is no longer an ‘employee,’ but is merely an individual with a contractual, contingent right to recall for a set period of time,” the complaint says.
Wendi Walsh, secretary-treasurer for Local 355, said the Fontainebleau is out of step with other large hotels in the region, including Marriott and Hyatt, which are continuing to fund employee health coverage.
“It is the only hotel that has made a decision to stop covering employees’ health insurance,” Walsh told the Florida Record.
The union has filed a grievance under its collective bargaining agreement to have the issue settled through arbitration, but the company is trying to prevent that, she said.
“We will file a legal response,” Walsh said. “At the moment we’re appealing to the company to drop the complaint and provide the needed coverage to laid-off employees.”
She said many of the hotel workers no longer receiving health coverage are low-wage and people of color who live in neighborhoods that are coronavirus hotspots.
“Florida clearly is the leader in covid cases, not just in the country but worldwide,” Walsh said, adding that the state’s virus epicenter is Miami-Dade County. “... We are guaranteed to have some of those employees, or members of their families, contract the virus.”
The hotel management has also borrowed heavily, amassing some of the largest commercial mortgage-backed security loans in the U.S. hotel industry, she said. And it has received $1 million to $2 million through the federal government’s Paycheck Protection Program, according to Walsh, who said it’s unclear what that money was used for.
She characterized the hotel’s payment of health care funds to laid-off employees as a moral obligation.
“Other hotels have decided to meet their obligations to continue health coverage,” Walsh said.