Hotel Online  Special Report
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The Global Hospitality Advisor

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Labor Wars: A Hotel Survival Guide
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Watch Out For Neutrality Agreements


By Marta M. Fernandez, September 2005

They go by many names—neutrality agreements, card check agreements or even peace agreements—but they all refer to the same thing, and they continue to be UNITE-HERE’s most powerful organizing tool against hotel operators. For consistency, we will just call them neutrality agreements. By means of these devices, hotel operators are leveraged into trading away their employees’ right to self-determination in exchange for labor peace. 

Neutrality agreements are designed to avoid traditional NLRB elections with secret ballot to determine whether or not the employees will be represented by a given union. Neutrality agreements usurp this process by a contract, usually forced on an employer by a union, which says that union representation is affirmed when more than 50 percent of employees in a bargaining unit have signed union authorization cards in the presence of union organizers. A secret ballot election is not available to the employee. The neutrality agreement also eliminates other benefits of a traditional NLRB election by requiring the employer to stay neutral in union campaigns, agree not to campaign against the union and not to interfere with union attempts to organize workers. In exchange, the union agrees to give peace in the workplace, by not disrupting the workplace through strikes, picketing or boycotts and also agrees not to fight any city permits, licenses or other applications. 

The good news is that the NLRB has agreed to review the legality of these neutrality agreements through two pending cases: Dana Corp. and Metaldyne Corp. In both cases, a decertification petition was filed after the employer voluntarily recognized the union under a neutrality agreement. In granting review, the majority of the Board acknowledged the NLRB’s long-standing policy on voluntary recognition, but distinguished the cases based on the fact that “an agreement was reached between the union and the employer before authorization cards, evidencing the majority status, were obtained.” The majority also stated that Board supervised elections—as opposed to voluntary recognition without a secret ballot vote—are the “best method” for determining whether employees desire union representation.  

As the labor war continues, unions will likely continue to try to pressure hotels into signing neutrality agreements. Employers in the hospitality industry should resist this pressure by recognizing these agreements as another union tactic used to organize workers and place restrictions on employers. In addition, with the impending NLRB review of neutrality agreements, employers should avoid signing any agreement and seek advice from legal counsel prior to taking any action.  
 

So what can you do?

As organized labor continues to wage war on the hospitality industry, union organizing—whether it be through traditional organizing tactics or pressure on hotels to sign neutrality agreements—is likely to continue. Here’s what you can do:

If you are union free 

  • Do not sign any neutrality agreement before consulting with labor counsel. Remember that all terms of a neutrality agreement are subject to negotiations
  • Conduct periodic employee audits and management training to identify any areas of vulnerability well in advance of any union campaign
  • Conduct ongoing preventative labor relations programs
  • Update written policies and procedures to ensure non-solicitation, non-distribution and no-access rules are enforceable
If you are unionized 
  • Evaluate the benefits and burdens of remaining in a multi-employer bargaining group, if you are already a member. Consult with counsel for appropriate guidance
  • Continually assess vulnerability of non-union departments and/or other properties
  • Prepare for the next round of negotiations well in advance by a thorough evaluation of the economic and non-economic terms of your labor agreements. Never under-estimate the cost savings you can realize with changes to work rules that are also subject to renegotiation on contract renewal
  • Take your employees’ temperature to assess union support. Remember employees may voluntarily choose to decertify a union if they no longer wish to be represented

An Update On Labor Wars Against The Hotel Industry

Labor disputes can devastate the hotel industry’s bottom line. Drawn-out labor negotiations between hotel workers and management often lead to strikes, lock-outs, and, in the end, increased labor costs with bad blood between employer and employees. Public relations wars over these disputes play out in the media and result in cancelled reservations and lost revenue. In this past year, this scenario became all too familiar in the hospitality industry with labor disputes between hotel management and unions representing hotel workers erupting in major cities across the United States. In June 2005, Los Angeles-area hotels ended a bitter 14-month contract labor dispute with UNITE-HERE, Local 11, avoiding an employee lockout at the height of the summer tourist season. An ongoing hotel workers’ dispute in San Francisco has cost hotels in that city an estimated $50 million in lost revenue, and the war is not over yet. Rolling strikes and lock-outs are predicted in the coming months.

The Los Angeles Dispute

When the UNITE-HERE labor contract between Los Angeles-area hotels and the union expired in April 2004, disagreement quickly arose over the terms of a new contract. The dispute was between the 2,500 housekeepers, bellmen, front desk workers, banquet servers, cooks and other workers represented by Local 11 and a pack of luxury hotels, including the Regent Beverly Wilshire, the Westin Century Plaza and the Millennium Biltmore. Key issues in the dispute centered around employee wages, health insurance and contract length. 

Conflict over contract negotiations escalated in November 2004, when the union called for a boycott of the seven upscale hotels. A major point of contention between the union and employers was the term of the new contract. The union wanted a 2006 expiration date that would coincide with the expiration date of the contracts of other UNITE-HERE locals in cities including New York, Boston and Honolulu. Representing the hotels, the Los Angeles Hotel Employers Council (LAHEC), fought for a longer term, such as a five or six-year term. The union argued that a nationally coordinated contract ending date would allow hotel chains to effectively deal with industry-wide solutions to common concerns. Hotel management contended that a common expiration date would enable unions to call a nationwide strike, unfairly increasing the union’s bargaining power. 

The dispute reached a boiling point on June 14, 2005, when the LAHEC voted to schedule a lockout of hotel workers. A deal was reached literally minutes before the scheduled lock-out when LAHEC succumbed to union pressure and agreed to a two-year contract term. The terms of the new contract also gave hourly hotel employees a 65-cents-an-hour raise over the life of the contract and guaranteed family health insurance with no employee contribution. The hotels also paid $1 million in settlement of unfair labor practices.
For now, the labor dispute in Los Angeles is in “time out,” but with the current contract ending in 2006, the war will certainly start over in the early part of the new year.
 
San Francisco’s Labor Battle 

While Los Angeles-area hotels have temporarily settled their dispute with the union, their colleagues to the north are still duking it out. Hotels in San Francisco have failed to reach an agreement with the union and the protracted fight is costing hotels in that city millions of dollars in lost revenue. San Francisco has been the scene of an ongoing dispute between UNITE-HERE Local 2 and the Multi-Employer Group (MEG), a consortium of 14 area hotels, since August 2004. Both sides have fought with strikes and lock-outs, temporarily on hold for the summer tourist season. The fight is over the same term of contract issue as well as comprehensive health care, wage increases and fully funded pensions. San Francisco is bracing itself for the post-summer months when the rolling strikes and lock-outs are likely to resume.

The unionization of hotel workers has become a national issue, and hotels, normally the places visitors come to rest and relax, are becoming battlegrounds in a heated labor dispute. It is also an issue that is not isolated just to the management and the workers, but pulls in city leaders, local residents and potential tourists. While it is an issue that truly touches everyone in a locality, it is one that can be dealt with—with careful negotiations.”


Marta Fernandez is a senior member of the Global Hospitality Group and a partner in the Firm’s Labor & Employment Group. As a management labor lawyer, Marta specializes in representing hospitality industry clients in all aspects of labor and employment, including labor-management relations including union prevention, collective bargaining for single as well as multi-employer bargaining units, neutrality agreements and defense of unfair labor practice charges before the NLRB; and implementation of preventative management strategies, such as executive training, arbitration enforcement and policies and procedures; defense of administrative and litigation claims, such as employee claims of sexual harassment and discrimination.

For more information, please contact Marta Fernandez at 310.201.3534 or at mfernandez@jmbm.com.

 
The Global Hospitality Advisor ® is published four times a year for the clients, business associates and friends of Jeffer, Mangels, Butler & Marmaro LLP.

The information presented in this newsletter is intended as general information and may not be relied upon as legal advice, which can only be given by a lawyer based upon all the relevant facts and circumstances of each particular situation.

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