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Resort Management Skips Meeting, Faces Subpoenas

Aug. 4, 2004 – In chambers overflowing with Grand Beach Palace hotel employees, V.I. senators met with labor representatives Tuesday night to seek solutions to the employees' plight. The workers will be out of a job Aug. 28 when the hotel closes, perhaps forever.
The hotel suspended its membership in the V. I. Hotel and Tourism Association Monday in what Association President Beverly Nicholson called "an unprecedented occurrence."
Tuesday evening's testimony, before the Labor and Veterans Affairs Committee, was strictly about employee concerns, as hotel legal counsel and representatives for the hotel failed to appear. Hotel legal counsel Derek Hodge wrote Sen. Norman Jn Baptiste, committee chair, that he could not appear because of prior commitments. Luis Estrala, hotel manager, wrote that he could not appear without counsel.
On a motion by Sen. Usie Richards, which passed unanimously, both Hodge and Estrala, have been subpoenaed to appear with purchase agreements and employee records on Aug. 11 at the committee's next meeting.
Palace Resorts bought the 290-room resort last November for $9.75 million from CTF St. Thomas Corp., which operated it as the Renaissance Grand Beach Resort. Hodge said last month, when the hotel announced its closing, that if Palace Resorts did not upgrade the property its holdings elsewhere would be adversely affected. (See Grand Beach Resort to Close for Renovations ).
Benjamin said he came away "frustrated" from the July meeting with Estrala and the hotel's personnel manager, Isabelle Horencia. He was told the employees would have to re-apply to get their jobs back when the hotel reopened. He was also told that if the hotel could not obtain Economic Development Commission benefits it would not reopen.
Senators were incensed that the hotel would make this condition. Frank Schulterbrandt, Economic Development Authority chief executive officer, told the committee that the hotel had not yet applied for benefits. He said, "If, and when, it is received, the application will receive the normal due diligence and examination like all other applicants."
After this statement, the senators were outraged. "It's extortion," said Jn Baptiste. "You forget 'due diligence' for these worthless employers," said Sen. Celestino A. White Sr. "You just take it out of your vocabulary." Sen. Louis Hill heartily agreed. "When they apply to you, tell them when they treat V.I. residents correctly, then you shall consider their application," he said.
Benjamin had told the Senate Finance Committee in July that, because of a loophole in the territory's plant closing act, the resort management was exempt from its provisions. The resort is claiming it has been in business for less than a year. As a result, he said, all staff members are to receive one week's severance pay without regard to longevity, even though some have been working at the hotel under its various owners and managers for 20 years.
Under this interpretation, employees who have worked at the hotel for as long as two decades under various owners and managers – including the Wyndham, Stouffer, Renaissance and Marriott chains – would still get only a week of severance pay.
Luis "Tito" Morales, president of United Steelworkers of America Local No. 8249, which is trying to organize the hotel employees, disagreed with Benjamin's opinion. He said the plant-closing statute does not apply in this case.
Speaking for more than a half-hour, Morales made one major point. He said that the property did not close; it simply changed its name remaining the same business, and therefore is a "successor" business, which falls under the federal Warren Act. Morales cited a litany of legal precedents for his opinion. Morales also said the hotel agreed to accept the Marriott contract with the workers which includes benefits and severance pay.
Joseph Edwards, a hotel waiter for 12 years, backed up Morales. He said the new owners promised the employees all pay and benefits would be transferred over from Marriott. "We had a deal," Edwards said, "and we are not going to let them violate it."
Edwards said the management began behaving differently towards the employees after the employees decided to join the USWA.
Last week the National Labor Relations Board ruled that the employees can move forward with unionizing despite the impending closing. (See NLRB Rulings Bolster Resort Workers' Position ).
Senators were critical of Labor Commissioner Cecil Benjamin not acting on the situation sooner and more forcefully.
In questioning late in the meeting, Benjamin said the DOL has only one attorney, acting legal counsel Adelbert Anduze, director of Workers Compensation. He said was called in off leave recently to assist.
When Benjamin couldn't answer questions about the employees' 401k benefits to his satisfaction – he said the matter was "under investigation" – Sen. Almando "Rocky" Liburd asked who was the regular counsel. Benjamin said hotel management had referred him to its legal counsel when he had queried them. The DOL doesn't have an actual counsel, Benjamin said, though the department has repeatedly asked for one. Liburd said Benjamin should have sought assistance from the attorney general's office long before now. "Based on how you're moving with this, Aug. 28 will pass and you'll still be investigating."
Under questioning by Jn Baptiste, Benjamin said the hotel's penalty for violating the plant closing statute would be $100 per employee, or about $30,000. "That's small in comparison to what severance pay would cost the hotel," Jn Baptiste observed. Unemployment benefits would cost the hotel between $3 million to $4 million, based on 300 employees, he said.
Sen. Lorraine Berry said she sees the need for a class-action suit to be filed. She agreed with Liburd's assessment that the DOL hasn't done enough to move the case forward. "Labor should keep track of what is happening (in the territory)," she said.
She asked Benjamin why he had demurred at pursuing the Warren Act. Benjamin said because it is a federal law, and "we are to carry out local laws." Benjamin added, "We are not saying we won't purse the Warren Act."
The five Committee members – Sens. Douglas Canton, Hill, Jn Baptiste, Richards and White – attended the meeting along with non-members Sens. Berry, Roosevelt David, Adlah "Foncie" Donastorg, Liburd, Shawn-Michael Malone, Richards and White.
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