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Union Alleges Hotel Misused Federal Pandemic-Relief Funds

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Photo by Bill O'Driscoll
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90.5 WESA News
The Omni William Penn Hotel as seen from Smithfield Street, in Downtown Pittsburgh.

A hospitality workers’ union says Pittsburgh’s landmark Omni William Penn Hotel improperly used a federal pandemic-relief program meant to keep workers on the payroll.

The luxury Downtown hotel shut down in March, after the coronavirus pandemic struck, crippling the hospitality industry. The William Penn applied for a $3.56 million loan from the federal Paycheck Protection Program, or PPP, through Affiliated Bank.

PPP loans were meant to cover payrolls for up to eight weeks. They can be forgiven if 60% of the money goes toward payroll. The William Penn said it would use the funds to retain 365 jobs. The Small Business Administration approved its loan April 5, according to federal documents.

But officials of the union Unite Here said none of the 262 service workers they represent at the hotel -- including restaurant and bar workers, housekeepers, and kitchen staff -- were ever paid.

“None of that money went to the workers, their paychecks are not protected,” said Nia Winston, manager of Unite Here’s Midwest Joint Board, which oversees Pittsburgh Local 57.  “It’s completely unacceptable.”

Workers who were not retained include Zebedee Williams, employed at the hotel as an overnight banquet houseman since March 2017. The Homestead resident made $17.25 an hour setting up and tearing down for weddings, parties and other events at the elegant Downtown hotel. It was enough to support himself, his partner and three daughters.

Three years to the month after he started work – and just weeks after the birth of his third daughter -- the pandemic shuttered the hotel. Williams qualified for unemployment, but in a few months his supplemental pandemic federal aid dried up. By fall, for the first time in his life, Williams applied for help at a food bank. Even so, some days he’s skipped meals so his children could eat.

“I would do it 10 times again if the situation happened,” he said. “I would make sure my children eat. I would make do.”

Will Arthur, a waiter at the hotel, also said he had not been paid since the hotel closed.

“To my knowledge, our workers haven’t seen a dime,” he said.

Dallas-based Omni Hotels, owned by oil billionaire Robert Rowling, is a national chain, and the PPP issue is not confined to Pittsburgh. Unite Here, which has 300,000 members in North America, used government data to calculate that 32 Omni hotels had received a total of $76 million in PPP loans.

The union said the William Penn is one of several Omni hotels where little or none of the money reached union members. Omnis in Providence and San Francisco also got PPP funds but failed to pay workers, says the union.

In a written statement, Omni confirmed the William Penn didn’t use its PPP loan to pay laid-off workers. It said it hadn’t done so because the hotel was closed. PPP rules allowed companies that are closed to use the loans to continue paying workers; the program was intended as an alternative to unemployment. But Omni opted instead to use the money for mostly non-payroll purposes, likely foregoing loan forgiveness. Now, said the chain, “any amount of the PPP loans that are not forgiven will be returned or repaid with interest per program terms.”

The decision is problematic, said Tim Stretton, a policy analyst with the Project On Government Oversight, a nonpartisan watchdog that has been tracking PPP outlays. The PPP was hastily implemented by Congress after the pandemic began and has been widely criticized for favoring large corporations over the small businesses it was nominally intended to assist. Moreover, the Department of Justice has filed more than 50 criminal fraud charged related to PPP loans, including allegations that funds were used to purchase luxury items or launder money.

“That’s frankly only the tip of the iceberg,” said Stretton. “We probably won’t know the true extent of the fraud in this program for several years.”

The Omni’s decision to use the funds to pay expenses other than payroll might be permissible as long as the funds are repaid, as the hotel has promised. But Stretton said it’s still inappropriate because the loans, which carry a below-market interest rate of just 1%, were intended mostly to help workers.

Stretton said he had not reviewed the loans to the Omni, but he said the unions “should report this. Because without that, law enforcement or even the agencies themselves, and the inspectors general, they won’t know where to start looking, because again, there are millions of [PPP] loans.”

On Dec. 8, Unite Here wrote to the SBA and the Department of the Treasury to demand scrutiny of the PPP loans to the Omni. “The failure of these hotels to rehire their employees has financially harmed our members and created great uncertainty for them and their families,” said the letter, signed by Unite Here executive vice president Carlos Aramayo.

The Omni William Penn remains closed indefinitely. Many employees are concerned they will not be recalled when it eventually reopens. Their fears were exacerbated by a July 8 letter to Unite Here from an Omni attorney, seeking wage rollbacks and benefit cuts, which he said would “facilitate the re-opening of the hotel.”

“I’d like them to, one, commit to honoring our recall rights,” said Arthur, the waiter. “I’ve worked there five years, I know people have worked there for decades and built their seniority, they’ve built this hotel, and they feel like they’re just being thrown away. I think that’s the biggest thing.”

Williams, the banquet houseman, noted that the Omni has an initiative called Say Goodnight To Hunger, through which it donates money to food banks.

“Their mantra is Say Goodnight to Hunger, and they have over 300-some people employed there that I’m pretty sure is going hungry,” he said.

“I would like my career back,” said Williams. “It would be nice if the Omni extended their hand to the families that they say they are part of, and try to help us.”

In its emailed statement, Omni said its charitable foundation “has provided over $3.1 million in grants to Omni associates affected by the COVID-19 crisis, including associates from Omni William Penn Hotel.”

But Unite Here Local 57 officials said they could identify only one of their members in Pittsburgh who had received such aid.