Oct. 26, 2011--IRVINE -- An Embassy Suites hotel in Irvine that's owned by a public-employee pension investment fund is accused of exploiting low-wage workers and retaliating against workers who promote collective bargaining.

The investors are Los Angeles County Employees Retirement Association, Wisconsin State Investment Board, San Diego City Employees Retirement Association and Teachers' Retirement System of the State of Illinois.

HEI Hospitality LLC, which manages the 293-room hotel, was recently ordered by a state Labor Commissioner hearing officer to pay $36,827 in back wages and penalties to full-time housekeepers who were denied 10-minute rest periods. The breaks are a legally mandated minimum standard in California.

In all, 43 of the 80 employees at Embassy Suites Irvine filed formal complaints with the Labor Commissioner about the rest-period issue. Of the seven hearings that have so far been held, all seven workers received awards averaging $5,261 each.

Those housekeepers earned an average of $8.92 an hour before taxes. Their work included scrubbing toilets and showers, vacuuming, mopping floors on their knees, changing blankets and sheets, cleaning out microwaves, refrigerators and coffeemakers, taking out the trash, wiping down mirrors and counters and changing shower curtains.

The housekeepers said HEI would assign them workloads of 16 or 17 rooms to clean in an eight-hour shift, threaten them with discipline if they did not finish all their work on time and give them extra work such as cleaning hallways if they were seen standing around. Several of them were never made aware, as is required by law, that they had a right to take the breaks.

Connecticut-based HEI, which owns and/or operates 41 hotels, has appealed the rulings and says it does not mistreat employees.

"We have very good relations with our employees," HEI spokesman Chris Daly said.

Embassy Suites housekeeper Argelia Rico, a resident of Anaheim, disagrees.

"The company exploits us, the workers," she said.

The company's employee satisfaction ratings are above the industry average, according to surveys conducted by an outside firm, Daly said. Workers at the Irvine hotel said managers were present when the surveys were done.

So, if it is so bad to work there, why don't employees like Rico move on and work elsewhere?

"Because leaving this job would be closing my eyes to a huge injustice going on there," Rico said. "We want to make sure HEI does not escape the law."

In response to the 43 complaints, the state Division of Labor Standards Enforcement and the state Employment Development Department in May opened an investigation into HEI's practices regarding wages, hours, reporting and rest periods, according to Peter Melton, and spokesman for the state Department of Industrial Relations. The investigation is still open, and he would not comment further, Melton said.

ORGANIZED LABOR

Workers at HEI have become emboldened in the past couple of years.

"We are no longer afraid of HEI," Rico said. "We are standing our ground, and we won't back down."

Unite Here Local 11, a private-sector union, has been helping Embassy Suites Irvine workers bargain collectively. Unite Here has filed a formal complaint with the National Labor Relations Board. The complaint says HEI disciplined and then fired front-desk staffer Andrew Cohen for engaging in protected labor activity, retaliated against other employees for the same reason, and unlawfully increased the wages of employees specifically to discourage them from participating in collective bargaining.

The federal agency said it is conducting an investigation and said it could not comment until it is finished.

"HEI is cooperating with the NLRB in its investigation of these allegations," Daly said. "The company has not been found guilty of any unfair labor practices."

HEI in July settled a separate complaint filed with the board that claimed HEI issued formal warnings to employees for conducting legally protected union-related activities on their own time at the hotel; told employees they could not distribute handbills outside the hotel's front doors and told a suspended employee that she could not discuss her suspension with other employees.

"There have been no violations of labor law in regards to (those claims)," Daly said.

Without admitting guilt, HEI agreed to purge six employees' records of all warnings and to publicly promise employees that it would not engage in the claimed actions or in any way interfere with, restrain or coerce employees in the exercise of their labor rights.

Andrew Cohen, the ex-HEI employee in the still-open complaint, now works for Unite Here Local 11. He says that after he was interrogated about his effort to promote unionization, he was later fired for allegedly breaking a city noise-limit ordinance with a bullhorn on a protest line outside the hotel. He claims he was under the noise limit.

HEI is supportive of unionization as long as it is established by secret ballot, not by "card-check" petition, Daly said. HEI owns 36 of its own hotels, of which only one is unionized.

National labor law says card-check votes are a valid way to establish a union but that employers don't have to recognize them. A secret ballot vote is legally binding on the employer, though it can appeal to labor courts. Daly contends that secret ballots are more democratic because union reps can't "coerce" employees to join.

At Embassy Suites Irvine, about 80 percent of the workers have already signed a card-check petition that said, "I want to join Unite Here Local 11 and authorize our organizing committee to bargain for my equality with my employer over wages, benefits and working conditions," according to Unite Here.

HEI has consistently offered to hold secret ballot votes, but Unite Here has declined the offer. Union spokeswoman Leigh Shelton said that's because companies use the required waiting period to divide and persuade individual employees to vote against the union while union reps are banned from the hotel.

"Workers have asked for a fair process to organize a union, where the company remains neutral and allows workers to decide whether to join a union in an atmosphere free of intimidation or harassment. So far, HEI has not agreed to this," Shelton said.

WORKERS' COMP

Another dispute involves a workers' comp injury case. Tustin resident Maribel Duarte, a 16-year housekeeper at Embassy Suites Irvine, claims she has several health issues with her neck, arms and legs because of repetitive motion from cleaning rooms. The most significant was an elbow injury that she first felt while changing heavy blankets, she said. She needs surgery on her elbow, but HEI's insurance company -- Massachusetts-based Liberty Mutual Insurance Co. -- has refused to pay for it.

An orthopedic surgeon has found that Duarte's injuries were 100 percent caused by her job, said Duarte's attorney, Dave Goldstein. Liberty Mutual claimed there was no evidence that the injuries are work-related without exercising its right to have its own doctor examine her, Goldstein said. He has appealed Liberty's denial to a state workers' compensation court.

Public records show at least three other recent workers comp cases from Embassy Suites Irvine that have had to go to court before being resolved. If an insurance company pays a claim, it does not show up in court records.

It has been more than a year, and Duarte has no income. She can't receive disability checks because it is a workers' comp case. She can't get unemployment checks because she is technically still employed. She can't get another housekeeping job because of her injuries. And HEI won't give her any work, Duarte said.

"At this time, we do not have any work that matches the restrictions listed by her doctor," human resources manager Melanie Peters wrote in a letter dated July 28.

HEI can't comment on the workers comp case, which is being handled by Liberty Mutual, Daly said. Liberty Mutual did not return phone calls from The Orange County Register.

PUBLIC-WORKER PENSIONS

HEI bought Embassy Suites Irvine in 2006 and sold it to the pension funds' investment pool last year. The investment pool administrator -- Cornerstone Real Estate Advisers LLC -- knew about the labor-law allegations before buying the hotel and still retained HEI to operate it, according to a letter from Cornerstone to Los Angeles County Employees Retirement Association (Lacera). The letter said Cornerstone executives asked HEI about the allegations, and HEI told them they were meritless.

The Wisconsin and Los Angeles pensions are the largest contributors to the pool -- Cornerstone Hotel Income and Equity Fund II -- with $150 million each.

Minutes of Lacera board meetings indicate that the pension fund continued to invest money in the Cornerstone investment after employee representatives from the hotel alleged the labor law violations in person to the board earlier this year.

Lacera and Cornerstone officials did not return phone calls from The Register seeking information and comment for this story.

A Lacera staff memo to the board says the pension fund is barred from intervening in labor issues at the hotel by its investment agreement with Cornerstone -- a structure specifically designed to limit Lacera's liability and risk exposure. Lacera's assets total $33 billion.

But the Los Angeles County Federation of Labor says Lacera should do something to help the HEI workers in Irvine.

"As the largest retirement system in the United States, Lacera has a responsibility not only to prudently manage the retirement of its 150,000 members, but to do so in a way that is in accordance with the values of that membership," federation Treasurer Maria Durazno wrote in a Feb. 8 letter to Lacera. "Not only are HEI's actions completely contrary to the values of all working families in Southern California, but the boycott resulting from this dispute could have a tangible negative impact on returns on Lacera's investment."

How much money are the pensions making on these investments? Cornerstone was expected to deliver a projected 15 percent to 18 percent return for investors in its hotel and resort investment funds, according to an article by Investments & Pensions Europe International Publishers Ltd.

The Wisconsin State pension spokeswoman Vicki Hearing told The Register that technically, the pensions don't directly own the hotel. They are shareholders in a legal entity that owns several hotels. "It's like owning shares in a mutual fund rather than owning stock in a company," she said. She said the pension has had a long-term relationship with Cornerstone and that pensions look at an overall fund and investment, not individual properties, when deciding to invest.

Embassy Suites Irvine is at 2120 Main Street in Irvine.

Contact the writer: [email protected]

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