Fontainebleau stopped paying worker health insurance contributions. Now it’s suing.

  • Oops!
    Something went wrong.
    Please try again later.
Taylor Dolven
·5 min read
  • Oops!
    Something went wrong.
    Please try again later.

The Fontainebleau Miami Beach Resort wants to stop paying for laid-off workers’ health insurance during the COVID-19 pandemic.

In a lawsuit filed against the hotel workers’ union in federal court last week in Miami, Miami-Dade’s largest hotel is asking a judge to exempt it from contributing to its employee health insurance fund — a sum that has reached somewhere between $3.9 million and $5.35 million for April, May and June, according to the lawsuit.

The hotel laid off 2,083 of its 2,151 employees in March, including the 1,077 employees represented by Unite Here Local 355, due to what it calls “the worst business conditions the American lodging and hospitality industry has ever known,” the lawsuit said.

In April, the hotel owned by Jeffrey Soffer entered into a process called “special servicing” to renegotiate its nearly $975 million commercial mortgage-backed securities loan. Brett Mufson, president of Fontainebleau Development, has said the company is current on its debt service.

The hotel’s decision to discontinue payments leaves workers without health insurance as COVID-19 cases in Florida are surging. The company insurance contributions are required under the Fontainebleau’s labor contract with Unite Here Local 355, a hotel workers union. Other Miami hotels that employ Unite Here Local 355 workers have continued to contribute to health insurance funds during the pandemic.

“Most of Fontainebleau’s workers are Black and brown workers who we know are dying from the virus at twice the rate of white people in this country,” said Wendi Walsh, secretary-treasurer of the union. “Cutting off healthcare in a deadly pandemic is a life-threatening act for workers and one that will burden an already overwhelmed public health system in Miami.”

Michelle Phillips, 32, was able to support herself and her two kids for the first time last year with her $15 an hour salary from her job as a prep cook at the Fontainebleau. She landed the job in January 2019 after graduating from an eight-week culinary training course meant to provide hospitality job opportunities to residents from the City of Miami’s District Five — Overtown, Liberty City, Little Haiti and Allapattah.

Then, the COVID-19 pandemic struck. Her last day of work was March 13 before the hotel shut its doors completely on March 23 to comply with a Miami Beach city order. Phillips’ husband caught COVID-19 at the rehabilitation center where he has lived since a debilitating heart attack in 2018. She has not been able to visit him since March.

“It’s been very, very, very difficult,” she said. “I have days where I cry out of nowhere. My kids have those same days. We talk about it when we need to.”

The Fontainebleau was Phillips’ first choice for an employer when she graduated. The job came with a starting hourly wage of $14.85 and health insurance, an upgrade from her previous job as a dishwasher and line cook at a breakfast restaurant making $11 an hour. She heard there would be opportunities to grow her career.

In the lawsuit, the Fontainebleau argues that Phillips and the other laid-off workers are no longer employees as defined by the collective bargaining agreement and therefore the hotel is not obligated to contribute to their health insurance. Even if the court finds the hotel is responsible for the contributions, the lawsuit says that obligation no longer exists because of unforeseen circumstances — force majeure — caused by COVID-19.

“Even if Fontainebleau could be found to continue to be obligated to make contributions to the Fund for its laid off workers, that obligation would be eliminated based on the catastrophic negative impact on the hotel caused by the forced closure of the hotel as a result of safety measures implemented to attempt to prevent the further spread of the COVID-19 pandemic,” the lawsuit says.

The collective bargaining agreement says that employees retain their recall and seniority rights unless they have been laid off for a full year. It also says that the hotel can only stop paying health insurance contributions if an employee doesn’t meet the minimum required monthly hours in two consecutive quarters — 350 hours for all months except July, August, and September, when the minimum is 300 hours.

Fontainebleau vice president of human resources Silvia Pereda said the hotel was forced to file the lawsuit as a last option.

“Fontainebleau is focused on recovering its financial stability so that it can return as many of its laid off, former employees as possible to employment, which will, critically, result in them receiving a paycheck and benefits once again,” she said in an email. “The Union’s demand for payment of contributions for laid off, former employees makes that much harder.”

The St. Regis Bal Harbour Resort, a Marriott, the Diplomat Beach Resort, a Hilton, and the Hyatt Regency Miami have all continued to contribute to laid off employee health insurance funds during the pandemic, Walsh said.

On Monday, November 29, 2019, Michelle Phillips, 33, prepares chicken Caesar salads for the Chez Bon Bon cafe at the Fontainebleau resort in Miami Beach.
On Monday, November 29, 2019, Michelle Phillips, 33, prepares chicken Caesar salads for the Chez Bon Bon cafe at the Fontainebleau resort in Miami Beach.

The Fontainebleau began to call workers back to their jobs when it reopened its doors on June 1, but so far Phillips hasn’t received a call. She is discouraged about the hotel’s decision to stop contributing to her health insurance.

“It seems like they are trying to take away from us during this difficult time,” she said.

She has applied for unemployment benefits, food stamps and Medicaid for her and her two kids to make ends meet. She has started to look for other jobs.

The hotel is proposing wage cuts for returning employees — 10% for those with 2019 annual earnings of $75,000 or less, 15% for the $75,000-$100,000 bracket, 20% for the $100,000-$150,000 bracket, and 30% for those who made $150,000 or more in 2019.

The cuts would bring Phillips’ wage down to $13.50 an hour, less than when she started at the hotel in January 2019.