At V.I. Superior Court on Wednesday, Judge Denise Francois heard opposing arguments from the V.I. Government and Sugar Bay Resort disputing whether or not a wave of employee terminations at Sugar Bay since the beginning of the year qualify as a “mass layoff” under Virgin Islands law.
In January and February, Sugar Bay laid off 47 employees citing financial struggles and an unprecedentedly low occupancy rate, less than 30 percent, during the peak of tourist season. The resort’s economic crisis followed management company AMResorts’s removal of its Dream-brand status from the hotel at the end of December 2015 and Sugar Bay’s loss of longstanding EDC tax benefits in May 2015.
If what occurred at Sugar Bay qualifies as a mass layoff, as the government contends, the resort acted illegally by not giving employees 30 days notice before termination and denying many of them severance packages – one week’s pay for each year worked – guaranteed by the V.I. Plant Closing Act.
Sugar Bay alarmed the V.I. Department of Labor in January when it laid off 23 of its employees in quick succession. When the resort laid off another 24 people in February, the government began to suspect the hotel was staggering terminations in a way that would prevent them from being legally defined as a mass layoff.
The Plant Closing Act’s definition of a mass layoff is the termination of 25 full-time employees or more in any 30 day period. The act also requires the terminated employees to have worked for their employer for at least 12 consecutive months.
“Sugar Bay is playing a numbers game,” said Assistant Attorney General Hugh Greentree, who is representing the government in the case with Assistant Attorney General Carol Thomas-Jacobs.
A graphic timeline created by the Department of Labor, presented as evidence Wednesday by Thomas-Jacobs, demonstrated that Sugar Bay’s 47 layoffs were spread out over 60 days. She argued that the resort’s lay-off schedule was a purposeful and shrewd attempt to circumvent the law and avoid paying former employees what they are owed.
Whether by coincidence or design, at no point in January and February 2016 can a 30-day period be identified in which over 25 employees were let go.
Sugar Bay’s first layoff occurred on Dec. 24, 2015, followed by five more on Jan. 5, 2016. Sixteen layoffs followed on Jan. 8. On Feb. 5, one more person was laid off. Five employees were laid off on Feb. 9, followed by 13 on Feb. 10. One person was laid off each day on Feb. 11, 12, 13 and 21.
Sugar Bay’s human resources director, Carrie Combs, testified that the layoff schedule appears odd because it wasn’t planned at all. She said upper management at Sugar Bay only had one conversation in which the existence of the Plant Closing Act was mentioned and that conversation was insignificant enough that she doesn’t recall its content.
Combs said the January layoffs were mostly a result of fallout from Sugar Bay’s loss of its former Dream-branding, while the February layoffs were due to the resort not making payroll for the second half of January. The financial state of Sugar Bay made it impossible for management to give terminated employees much notice, she said.
In its analysis of the Sugar Bay layoffs, Labor found that if it were to apply the Plant Closure Act to the resort’s actions, 28 terminated employees would be owed a total of $47,710 in severance.
But that analysis appeared to be weakened during Labor Commissioner Catherine Hendry’s examination by Sugar Bay’s legal counsel Helen Kim.
On the witness stand, Hendry acknowledged that three of the employees on her submitted report had worked for Sugar Bay for less than a year and thus would not be guaranteed severance under the act. She also admitted she could not be sure how many employees on the list had been part-time because Labor never requested that information from Sugar Bay.
A similar analysis by Combs found that 23 employees laid off my Sugar Bay in 2016 would qualify for severance pay under the Plant Closing Act, a moot point, the resort maintains, since the act doesn’t apply.
In court on Wednesday, the V.I. Government called five Sugar Bay employees laid off in 2016 to the stand. Their ages ranged widely and they had worked in a variety of positions at the hotel: supervisor, concierge, night steward, pantry cook, delivery driver.
But they did have at least one thing in common. All said they had been informed of their termination on the day it occurred. All but one also remain unemployed.
Only one former employee who appeared as a witness, Vernice Webster, said she was offered severance pay by Sugar Bay, but she said she was not satisfied with the amount.
Webster said she had worked as a food and beverage supervisor at Sugar Bay since 1996 but was offered a severance package of just four weeks pay when she was terminated in February. With help from the Department of Labor, Webster bargained the hotel’s offer up to eight weeks pay, but she said she still feels entitled to the 20 weeks pay she would receive under the Plant Closing Act.
“To me, I was betrayed,” said Webster. “It really damaged my reputation since everyone knew I was laid off. Like I said, I was a loyal employee.”
Combs said Sugar Bay chose to offer some employees severance pay, while others went home empty-handed. Most who were offered severance, she said, were salaried managers. A few, like Webster, were non-salaried employees who had worked for Sugar Bay for many years, long enough that “management felt it was the right thing to do.”
Sugar Bay remains under a temporary restraining order to cease laying off employees without 30 days notice. On Wednesday the resort agreed to follow that mandate through April 1, even though the restraining order will expire before then, while the court continues to hear evidence.
The court has ordered further payroll documents to be handed over to the government by March 28.
Any new evidence gathered will be presented at a hearing in Superior Court at 11 a.m. on April 1.
