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Union urges Small Business Administration to take a close look at hotel chain’s post-PPP layoffs

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The Paycheck Protection Program (PPP) was supposed to keep small businesses from laying off workers during the coronavirus pandemic. (Disclosure: Kos Media received a Paycheck Protection Program loan.) It hasn’t always worked out that way. Trump and Kushner businesses got loans, as did predatory payday lenders, but many of the businesses that needed the loans most were left out

UNITE HERE, the union representing hospitality workers, has set its sights on a major hotel chain that got tens of millions of dollars in PPP loans but laid off the workers at many of its hotels. In a letter to the Small Business Administration (SBA), the union calls on the SBA to “closely scrutinize” the hotels and the lending banks.

Omni hotel affiliates got a whopping $76 million across 32 PPP loans, according to UNITE HERE. But in the cases for which the union has “direct knowledge,” five hotels got nearly $15 million in loans. Despite that, “Three of them—Omni Providence, Omni San Francisco and Omni William Penn—are temporarily closed, and none of our members have been rehired or paid by the hotel. The Omni New Haven and Omni Parker House only recently reopened without all of their facilities, and the hotels have failed to recall more than 80% of our members who work at the hotels.”

This is not what the PPP was supposed to do, and it’s directly harmful to the workers. “The failure of these hotels to rehire their employees has financially harmed our members and created great uncertainty for them and their families. So far, we have not received commitments from Omni to use the loans to fully rehire the workers we represent.”

The union also sent letters to the managers of the hotels in question, noting that they appear not to be in compliance with the PPP’s terms and calling on them to rehire workers, along with letters to the banks responsible for most of the loans, calling on them to take a very close look at whether the hotels qualify for forgiveness.

“It is time for the SBA to step up and ensure that money intended to help American workers actually benefits them,” said UNITE HERE Executive Vice President Carlos Aramayo. “It is unfathomable that massive corporations like Omni have access to millions of tax-payer backed loans, while hundreds of their workers remain without a paycheck heading into the holidays.”

Rep. Katie Porter previously called for an investigation into hotel layoffs in and around her California congressional district after those hotels received PPP loans.

This blog originally appeared at Daily Kos on December 15, 2020. Reprinted with permission.

About the Author: Laura Clawson has been a contributing editor since December 2006. Clawson has been full-time staff since 2011, and is currently assistant managing editor at the Daily Kos.


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Katie Porter called for an investigation into PPP layoffs. Under Biden, that could actually happen

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Back in October, a group of Democratic House members wrote to the Small Business Administration asking for an investigation how an owner of dozens of hotels had spent Paycheck Protection Program funding while laying off many of the workers whose paychecks the program was supposed to protect. Now, the signs are good that President-elect Joe Biden is going to take exactly that kind of oversight seriously.  (Disclosure:Kos Media received a Paycheck Protection Program loan.)

recent report from Bloomberg Law notes that, back in April, as the Trump Consumer Financial Protection Bureau was saying it would do basically nothing to enforce the provisions of the CARES Act, former CFPB head Richard Cordray called for tougher enforcement—and Cordray is reportedly under consideration to lead the CFPB again. Cordray’s former deputy director, who should have succeeded him as acting director, is heading up the Biden transition efforts on the CFPB.

That all means that hotel owners—and others—who took money intended to protect jobs only to lay off tons of workers, could face more consequences than they had anticipated.

“Congress passed the Paycheck Protection Program to help small businesses keep workers on payroll,” Rep. Katie Porter said in a statement at the time she joined with UNITE HERE Local 11, the hotel workers’ union, to call for an investigation into the hotel layoffs in her area. “Columbia Sussex received millions of taxpayer dollars, yet they continued to lay off workers in the middle of the COVID-19 crisis. We need a full audit to see whether this taxpayer-funded program is actually helping the American people—not big corporations.”

In the letter to the SBA, Porter and her colleagues noted that ”Columbia Sussex affiliates borrowed enough money under the PPP to retain more than half its total workforce, but there are reports of Columbia Sussex hotels in California and Alaska operating at 10 percent of normal staffing.” What’s more, “we are concerned that Columbia Sussex may have double counted’ employees as working at multiple affiliates tied to the same hotels, potentially inflating the total value of PPP loans.”

This wouldn’t be the first case of shady dealings around PPP loans, whether it’s predatory lenders getting the funds while some of the businesses that needed help the most getting left out, or applicants lying about why they needed the money and how they qualified for loans. The Biden administration can’t go back in time and make things better last summer, but it should make it a priority to ensure that the PPP gets tough oversight and enforcement.

This blog was originally published at DailyKos on November 18, 2020. Reprinted with permission.

About the Author: Laura Clawson is labor editor at Daily Kos.


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