Like thousands of laid-off hotel workers in the state, they wonder when — or if — they’ll get their jobs back. As the pandemic lurches into 2021, hotel employees are anxious to see if state lawmakers may revive past “right to recall” proposals to rehire based on seniority or propose new help. And although many workers will receive $600 in direct payments and a $300 unemployment boost, they are worried new aid from last month’s $900 billion federal relief package won’t reach them again.
Labor unions charged the first coronavirus relief package was flawed for allowing major hotel chains to participate in the Paycheck Protection Program, which was aimed at helping small businesses. UNITE HERE, the country’s leading hospitality worker union, alleges hotels that took PPP loans did not use the loans to rehire workers or extend employee benefits as intended by the program. Hotel officials called allegations of misuse baseless.
“The Paycheck Protection Program didn’t protect jobs,” said Marty Leary, UNITE HERE’s research director. “Certainly not in our industry.”
Travel restrictions and a tanking economy have devastated an industry fueled largely by business travel and tourism. The unemployment rate in the leisure and hospitality industry is 15% — twice the national unemployment rate — and holds the largest share of lost jobs in the nation at 35%. California’s leisure and hospitality sector has dropped 518,000 jobs since October 2019, according to data from the state’s Employment Development Department.
In Los Angeles County alone, more than 16,000 hotel workers have lost their jobs. Lezama is one of them.
For most of this year, Lezama, 39, was unsure if Mr. C Hotel would ever offer her a job again. She and 18 of her coworkers had been laid off permanently. Lezama suspected the permanent layoffs were masked retribution for their involvement in unionizing the hotel.
A National Labor Relations Board investigation validated that claim and the hotel agreed in a settlement to convert the permanent layoffs into temporary layoffs and restore recall rights for the 19 workers.
Recall rights — that’s where labor has been making a big push. Local 11, UNITE HERE’s L.A. branch, has backed several local worker recall ordinances in Southern California.
The City and County of Los Angeles both adopted COVID-19 right of recall and retention ordinances over the summer, mandating businesses to offer laid-off workers jobs as soon as positions become available.
Gov. Gavin Newsom vetoed a piece of legislation that would have done the same statewide, Assembly Bill 3216, saying the bill would place “too onerous a burden,” on employers in the hard-hit hospitality industry. Democratic Assemblymember Ash Kalra, who authored the bill, is still weighing whether to reintroduce the bill, according to a spokesperson. The bill introduction deadline is Feb. 18.
Lynn Mohrfeld, president of the California Hotel and Lodging Association, says recall ordinances are unnecessary since hotels have an incentive to rehire their old employees who are already trained.
He takes issue with ordinances requiring recalls to be in order of seniority, meaning hotels must offer positions to workers with the highest seniority even if they had held a different position. Unions see it as a defense against employers looking to cut labor costs by phasing out older, more expensive employees. Mohrfeld sees it as nothing more than an impediment.
Morales did things the right way, working his way up at La Costa over the course of 32 years. A well-paying union job helped him start a family, secure health insurance and become a homeowner. His fears of never seeing his job back were soothed last month when the City of Carlsbad passed an ordinance requiring big hotels to guarantee recall rights for laid-off hotel workers in the city. But he remains jobless.
Now he’s preparing to sell his house, standing in food lines and giving his son old medication because he was thrown off his health insurance.
“Everything that I worked for for 30 years is going to be washed away in one day,” Morales said.
Even though the law guarantees Lezama a recall in Los Angeles, she worries her employer will find a way around it. But she has to clear today’s hurdles first. Her unemployment benefits expired last month. Left without income, Lezama had to take out her 401k to pay rent this month.
Mazique’s unemployment benefits are also due to expire soon. She had been earning some income from her freelance lash business before her supplies were stolen from her car in June. Now she is on the hunt for a new job.
UNITE HERE alleged the hotel industry misused the Paycheck Protection Program, prompting members of congress to call on the Small Business Administration to investigate one firm that received millions.
The $669 billion PPP fund, which has been renewed under the new stimulus bill with an additional $284 billion, was pushed by lawmakers as a remedy for struggling small businesses, but Congress allowed large hotel firms in the rattled hospitality industry to participate. The union alleges hotel companies received PPP loans without any intention of spending 60% on payroll costs as required by the loan for it to be forgiven.
Mohrfeld says labor accusations are just that — accusations.
“I mean, has there been any further evidence or is this just UNITE HERE getting a letter from Congress,” Mohrfeld said. “As far as I know, these are just baseless allegations.”
Leary says the PPP was a bailout for the hotel industry that failed to protect workers. The union estimates 80% of its members remain unemployed. Leary says hotels could have used the loans to pay for their laid off employees’ health insurance, a forgivable payroll expense. They didn’t.
It’s simple for Mohrfeld. If hotels haven’t used PPP loans to rehire workers, it’s because there is no work for employees to do.
California’s hotel occupancy rate was 45.7% the last week of November, down 36% from last year. According to Visit California, travel to the state is projected to plummet from 264 million visitors in 2019 to 160.9 million visitors in 2020, knocking visitor spending to $66.1 billion from $144.9 billion in 2019.
The industry’s forecast is grim. Hotel occupancy rates will be at 94% of pre-pandemic levels in 2023, meaning recovery is years away.
Updated Jan. 7, 2021, to correct Hector Morales does have recall rights due to a local ordinance.
This article is part of the California Divide, a collaboration among newsrooms examining income inequality and economic survival in California.