WASHINGTON, June 17, 1998 - A former security guard at the Capital Hilton in Washington, DC, filed a nationwide class action suit in federal court today against Hilton Hotels Corp. of Beverly Hills, CA.
The suit alleges that the hotel chain has miscalculated the retirement benefits of its salaried and non-union employees, leaving many current and former employees with less than half as much in retirement benefits as federal law requires. Jamal Kifafi, age 56, who worked for ten years at the Washington, DC, hotel, said Hilton calculated his retirement benefits at $75 per month. Kifafi, who now provides security at a local apartment building, believes that ERISA, the federal pension reform law, requires Hilton to pay him at least double that amount.
ERISA requires that employees earn the retirement benefits payable for an entire career of service with a company at level annual rates. For example, a Hilton employee with eight years of service should earn pension benefits that are close to one-third of those payable to retirees with 25 years of service and equal pay. The complaint states that Hilton computes retirement benefits in a way that produced much lower retirement benefits for employees like Mr. Kifafi, saving the hotel chain more than $50 million.
Stephen Bruce, a Washington attorney retained by Mr. Kifafi, said, "Hilton is 'backloading' its pension benefits and ERISA makes this practice unlawful."
More than 11,000 employees and 4,000 former employees and retirees are covered by Hilton's retirement plan, which holds $242 million in assets. Hilton's union employees are covered under separate retirement plans.
The lawsuit also charges Hilton with not crediting prior years of service in union jobs for early retirement eligibility, not maintaining names of spouses in the event that former employees die before retiring, and not distributing individual statements of benefits to Mr. Kifafi and others.
An employee of the Beverly Hills, California, Hilton has acknowledged paying benefits to only half of those entitled. Hilton also admits the hotel chain does not send benefit statements to former employees until two years after their separation from service, thereby missing many of those who move.
After Hilton acquired Bally's Entertainment in 1996, Hilton amended the retirement plan to stop accruing any additional benefits for current employees. The result is that even employees who work for the hotel chain for a 25-year career will receive less than the benefits to which they are entitled.
Former Hilton employees who believe they are not receiving their full pension benefits and want more information may call Mr. Bruce at 800-471-8013 (toll-free) or send e-mail to [email protected]