Four Seasons Miami hit with a suit alleging perpetual furlough
The lawsuit could have implications for the hotel chain's employment practices liability insurance coverage.
The Four Seasons Miami has become embroiled in a lawsuit that could cost the luxury hotel and resort tens of millions of dollars. Six former employees filed a class-action lawsuit in federal court alleging that the Four Seasons violated the federal Worker Adjustment and Retraining Notification (WARN) Act.
The complaint alleges the hotel chain kept thousands of workers on an indefinite furlough, beginning at the onset of the coronavirus pandemic, without providing the required advanced warning. It claims the move was a tactic to avoid providing severance pay. The case could have implications for the Four Seasons’ employment practices liability insurance (EPLI) coverage.
Angeli Murthy, a shareholder at Morgan & Morgan in Fort Lauderdale who is not involved in the litigation, said labor and employment attorneys will closely watch this case in part for its sheer magnitude.
“This is certainly the first large-scale case involving WARN Act violations for laying people off for over six months,” Murthy said. “If this case gets some traction, people are going to start looking for other companies with similar violations.”
It is unclear whether or not the Four Seasons has an EPLI policy, but if the company does have such coverage, it could trigger the insurer’s duty to defend. When unemployment rises, there tends to be a corresponding increase in the number of EPLI claims filed.
Freddy Perera, the lead attorney in the litigation and a shareholder at Perera Barnhart Aleman in Coral Gables, did not respond to a request for comment. He represents the six former Four Seasons employees.
The ex-employees allege the Four Seasons permanently eliminated their positions in a scheme to force these workers to resign and strip themselves of money they were entitled to under the company’s severance policy, according to the complaint.
The employees argued defendant Four Seasons Miami Employment Inc.’s alleged conduct was a “severance siphoning scheme,” which did not account for a provision of the WARN Act that stipulates a furlough lasting more than six months is considered an employment loss as a matter of law. And since the workers have been on furlough for 14 months, they were entitled by law to a 60-day employment loss notice, they argued.
The employees also argued that their WARN Act claims do not fall within the category of “arbitrable issues” — employment discrimination, harassment, wage and hour violations, and termination — as designated in the company’s arbitration policy.
But it is the last area, “termination,” which Murthy said the Four Seasons attorneys would focus on in their arguments to avoid protracted litigation in federal court. Murthy said the luxury hotel giant would convey that an extended employee furlough is effectively a termination, which then falls within the scope of the arbitration policy.
Now, the case is set to go before U.S. District Judge Joan A. Lenard in the Southern District of Florida. And the first issue that Lenard will likely address is whether this dispute will proceed in the federal district court or before a panel of arbitrators.
The public relations and communication manager at the Four Seasons declined to comment.
The lawsuit under the WARN Act could potentially include a class size consisting of more than 50 employees in Miami and thousands throughout the country who were furloughed by Four Seasons hotels, according to the complaint.
The class members are seeking payment of several contractual obligations for the first 60 days of their furlough, such as wages, salary, and bonuses; pension, 401(k) contributions, health and medical insurance, and other fringe benefits; along with medical expenses incurred that the defendants’ health insurance plans would have covered and paid during this period.
Allison Kahn, a shareholder at Carlton Fields’ West Palm Beach office who is not involved in the litigation, pointed to the over two-page introduction in the complaint as a strategy to pressure Four Seasons to reach a deal so that the hotel chain could avoid spending time and resources in defending drawn-out litigation.
According to that introductory section of the lawsuit, the employees asserted that the Four Seasons “historically created the illusion of job protection,” and the coronavirus pandemic exposed the hotel chain “for what it has been all along — a company out for its own interests.”
“The introduction in the complaint was meant to have a bullying approach to pressure Four Seasons to settle regardless of merit,” Kahn said. “The formatting of how complaints are usually done, you don’t usually begin with an almost three-page statement listing grievances that you have against another party if they don’t have anything to do with the lawsuit. That was meant to add pressure on the hotel to settle.”
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