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Lawmakers Faulted on Plant-Closing Loophole

July 22, 2004 – Labor Commissioner Cecil Benjamin told members of the Senate Finance Committee on Wednesday that something must be done to close a legal loophole in the territory's plant closing act.
The comment came as lawmakers expressed dismay at the fate faced by nearly 300 soon-to-be terminated workers at the Grand Beach Palace Resort on St. Thomas, which has made the argument that it is exempt from provisions of that law because it has been in business in the territory for less than a year.
Benjamin said during Wednesday's hearing that this is not the first time V.I. workers have been treated that way.
The Grand Beach owners announced on July 1 that the property would close on Aug. 28 for major renovations and that all of its staff will be terminated at that time. The announcement came the day before organizers from the United Steelworkers of America were to appear at a National Labor Relations Board hearing to schedule a vote for Grand Palace workers to decide if they wanted to be represented by the union.
Benjamin told the lawmakers on Wednesday that because the Palace Resorts chain purchased the former Renaissance Grand Beach Resort only eight months ago, it apparently is not subject to the plant-closing act. As a result, all staff members are to receive one week's severance pay without regard to longevity, even though some have been working at the hotel under its various ownerships and managements for 20 years.
The plant closing act, Title 24, Chapter 18, section 471, subsection 4 of the V.I. Code, defines an employer covered by the act as someone who operates a business in the territory for at least one year.
"They are not obligated to give severance pay as the plant closing act provides — that's what they are saying to us," Benjamin said on Wednesday of Grand Palace management. Further, he said, the company contends that when the resort reopens, "they're not obligated to rehire those people as the plant-closing act provides."
Based on the Labor Department legal counsel's research, Benjamin added, "we tend to agree with them." The determination was made a few weeks ago during meetings held in the Labor Department offices with hotel management following the July 1 announcement, he said.
Around that same time, several legislators were meeting with Grand Palace hotel workers. According to one of those lawmakers, Sen. Celestino A. White Sr., the employees stand to lose not only severance pay but – assuming the hotel reopens – seniority, accrued vacation pay and 401(k) retirement plans maintained while they were employed at the Renaissance Grand.
"They want answers," White said. "So far there have only been meetings."
Benjamin said he has been unable to obtain records from the hotel's former owners and managers that could substantiate the workers' claims. The Labor Department will assist with the processing of unemployment claims and the search for new jobs, he said. But he did not say how employees' benefit entitlements would be calculated if their earlier hotel records cannot be obtained.
Sen. Roosevelt David was among those voicing concerns at the Finance Committee hearing. "I'm a big supporter of business," he said. "We've got to embrace businesses and give them the treatment they deserve. But on the other hand, there's got to be some balance to this, to make sure the people who do the work — work hard in these hotels — are treated fairly."
David asked Benjamin to use all the powers of his department to make sure the workers are protected.
It was at this point that Benjamin referred to a similar occurrence in 1994 involving a St. Croix hotel and the same provisions of the plant-closing act. In the years since, he noted with evident frustration, the Senate has done nothing to change the law.
"If we had a case against the government in 1994 concerning this particular issue, and we are so concerned about these workers in the private sector, how then this was not amended?" he asked. "How then was legislation not passed to amend so that this did not happen again? Ten years later the same thing has happened again!"
Benjamin vowed to lobby for changes in the plant-closing law. White pointed out that any changes will come too late to help the Grand Palace workers.
White said he expects that Benjamin, with his background as a longtime teachers union leader, will be able to articulate the needed changes.
On Aug. 16, the Senate Labor and Veterans Affairs Committee has scheduled a hearing on the resort's closing. White noted that witnesses will testify under oath.

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