Sugar Bay struggling to pay employees
Published: September 27, 2012
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ST. THOMAS - The V.I. Workers Union is airing complaints about Sugar Bay Resort and Spa failing to pay its employees on time during the last three months.
However, resort management has responded with a simple rebuttal: Better late than never.
Charles Nicholas, president of the V.I. Workers Union, said last week he found workers' reports of the resort's payroll woes "troubling."
"The only issue is employees are struggling to get paid for the last three months now," Nicholas said. "The last pay day, some had to wait three, four, five days."
Some employees reported waiting up to two weeks after a scheduled payday to cash their checks, which created an added strain during the back-to-school season, and the longest delays were at the beginning of September, according to Nicholas.
"That was the same week school was going to be open," he said. "Employees could not even get a check to get supplies for their children."
Nicholas said he reported the problem to the U.S. and V.I. Labor departments. He said hotel management tried to write the issue off as a computer glitch with a new payroll system, but that explanation became dubious when the problem kept recurring.
In all of the reported cases, employees eventually have been able to get paid, but Nicholas said he still is concerned because the hotel does not appear to be in a financially stable situation.
"I don't think management is telling openly the truth," Nicholas said. "If there's financial hardship there, we need to know, and the public needs to know. Workers are going there and doing a service, and if they're not receiving their due pay, it's a serious, serious concern."
Nicholas said that despite these grievances, he does not want to "bash" the hotel management.
"I want the hotel to be open," he said. "At the same time I want our members to be paid and be paid on time."
Nicholas said the union's options for action are limited because it has yet to sign a collective bargaining agreement with the hotel management to formalize its representation of between 150 and 200 Sugar Bay workers, only some of whom pay dues to the union. He said the union has about 500 dues-paying members overall.
U.S. Labor Department spokesman Ted Fitzgerald confirmed that federal Labor Department representatives met with the union and the resort about the late payments. He said the scenario described at Sugar Bay "could be" a violation of federal labor law.
"It's hard to just say off-hand whether that would constitute a violation or not," Fitzgerald said.
When asked to specify the controlling law in a case like this, Fitzgerald pointed to a section dealing with timely payment for overtime work.
"Payment may not be delayed for a period longer than is reasonably necessary for the employer to compute and arrange for payment of the amount due and in no event may payment be delayed beyond the next payday after such computation can be made," the law states.
Fitzgerald said a determination about the matter would require a complaint to be filed the department's Caribbean field office in Puerto Rico. He encouraged any workers in the territory to contact 787-775-1924 or 1-866-487-9243 with questions or concerns regarding this or any other payment issues. Further information is available through the U.S. Labor Department's website at www.dol.gov.
Nicholas said he also is concerned about the V.I. government failing to respond when workers first reported the problem.
"The government just likes to lay back and have nobody not say anything," Nicholas said.
Nicholas said he and hotel management had been involved in meetings with V.I. Labor Commissioner Albert Bryan Jr. However, Bryan did not return several calls for this story during the last week.
Sugar Bay General Manager Kashmie Ali said the payroll issues stem from a cash-flow problem associated with the territory's slow season for tourism and a series of unforeseeable setbacks.
Ali said occupancy at the resort in the late summer and early fall normally drops to below 50 percent, meaning payroll is being financed by the resort's owners, the $8 billion New York real estate firm The Moinian Group, not revenues generated from guests.
"Typically what we should be doing is laying people off more than we've done during the slow months," Ali said. "The state of the economy is so difficult, but we've tried desperately to not lay off a massive amount of employees."
In the last 18 months, Sugar Bay has been hit with a perfect storm of financial hardships, according to Ali. The resort owners first incurred added costs from their decision last summer to part ways with Wyndham Hotels and Resorts at the end of a 15-year management contract, he said. That was followed by the normally slow months of August through November, in which the resort expects to lose hundreds of thousands, if not millions, of dollars, Ali said.
Then in late December, the resort's massive air-cooling unit, which he described as "one of the three main arteries that keeps our heart going," broke down just as tourism business was beginning to pick up for the winter season.
Hundreds of guests' reservations were refunded, which helped create a ripple effect of cancellations as the resort rebuilt its air-cooling system, Ali said. He estimated the lost revenue at "a few million."
The unit went down again for a few more weeks this summer, starting on the Fourth of July weekend, Ali said.
"It's been a very rough year," he said.
The added costs have culminated in a sometimes serious cash-flow problem in recent months. Ali said he has been faced with the decision of whether to pay $50,000 for a fuel truck to supply the diesel that will keep the resort's lights on and ask employees to hold their paychecks for a few days, or to skip the fuel truck - and effectively close the resort - to pay employees on time.
"We have a bigger responsibility," Ali said.
He also said the fact that the resort has remained open without major layoffs despite this series of setbacks makes him confident in the resort's future.
Ali said the public should focus on the fact that the resort has been "an ideal corporate citizen" by not laying off staff when, from a strictly financial perspective, it probably should. He also said he was assured by federal and local labor officials that the resort did nothing illegal with the delayed payments, but he hopes to improve communication anyway.
"We believe we have the situation under control," Ali said.
- Contact reporter Lou Mattei at 714-9124 or email firstname.lastname@example.org.