Kahler Hotel Employees Still Awaiting Wage Arrears Awarded to Them in 2016 – Post Bulletin
ROCHESTER — In 2016, the National Labor Relations Board ruled that employees of Kahler Hospitality hotels owed back wages due to “unfair labor practices” by management.
Six years later, the more than 200 employees have seen none of the money promised by the decision, due to appeals, delays and changes in management.
“They’re paying lawyers to help them steal money from people…and take it out over a long period of time, hoping a lot of people will go away and the whole situation will go away,” said Scot Timm, a server at the Kahler Grand Hotel and the Marriott Hotel for 39 years. “It’s just kind of a heartless strategy. It fundamentally harms people’s lives. »
The situation dates back to when Richfield Management and Unite Here Local 21 were negotiating a new contract to replace the one that expired on February 28, 2015.
Local 21 represented 260 members who worked for the four downtown hotels run by health manager and real estate investor Javon Bea of Oronoco. After a few fruitless negotiating sessions, Richfield Management and the hotels declared the talks at an “impasse” and unilaterally instituted a new contract which, among other things, drastically changed the pay of many hotel employees.
In 2016, the National Labor Relations Board found the company managing Rochester’s Kahler hotel properties guilty of unfair labor practices and engaging in “superficial negotiations” with the union. Part of this decision and other related actions is to reimburse employees for money that the 2015 contract promised them, but which Richfield and Kahler Hospitality unilaterally withdrew in 2016.
This decision means that eligible Kahler employees must pay back wages for the period from 2015 to the date the parties agreed on salaries in the “new” contract in 2019. This contract lasted until the end of 2021.
The backlog of wages could run into thousands of dollars for most of Kahler’s longtime employees, especially people who organize large special events, banquets and meetings at hotels. Event staff saw their salaries drastically cut when hotel management stopped sharing a percentage of the “service charge” charged to guests with the staff. This represented the majority of their income. The change reduced their pay to an hourly rate.
Kathy Prouty, who worked as a banquet waitress at Kahler hotels for 45 years, estimates she may be owed $75,000 in back pay. She remembers the day her employer illegally altered her earnings.
“I went to a friend’s house and sat there and completely cried. It really hurt when they took our money. It was really, really difficult,” said Prouty, who is 65. “I’m getting old, and I just want my full settlement. Let’s leave that behind us.
Leah Riley, a Kahler banquet server for 18 years, shares that frustration.
“They reduced my income by 75%. The court judge said he (Javon Bea) was supposed to get us back. … He spent millions of dollars on lawyers. He chooses to put the money anywhere other than where he should put it,” she said. “You know, the guy is more than capable of settling the settlement and chooses not to. That’s the most frustrating thing. The NLRB ruled in our favor.
The resolution was delayed for several reasons. Management’s appeal of the NLRB’s decisions took years to resolve. Ultimately, the courts ruled that the decision should stand.
The general manager of Kahler Hotels has changed several times since the situation began in 2016. Daniel Krahn, regional general manager for a few months, was asked why it took so long to pay employees.
Since Krahn just inherited the situation, he checked out the Kahler Hospitality property.
“I have been advised that we are in discussions with the NLRB and have no further comment at this time,” he replied via email.
Richfield Hospitality, which was in charge in 2016, was later replaced as the hotel management company. Iowa’s Kinseth Hospitality took over.
Renowned labor attorney Arch Stokes, of Atlanta, Georgia, represented Kahler Hotels throughout the NLRB’s original complaint. In the rulings, Judge Keltner Locke described Stokes as a lawyer who muddied the waters using an avalanche of pie charts as “a figurative smoke bomb”. Stokes is no longer involved in the case.
Meanwhile, Rochester’s Unite Here chapter, Local 21, disbanded in 2020, and Minneapolis-based Local 17 took over management of the southeast Minnesota market.
These transitions mean that the only people directly involved in the Kahler Hotels labor issues in 2016 who are still linked to the dispute are Javon Bea and the employees.
Bea was the face of the $230 million purchase of Rochester’s four hotels, anchored by the Kahler Grand Hotel, in 2013. Many believe it to be the biggest real estate deal in Rochester’s history.
While living in Oronoco, Bea is also President and CEO of Mercyhealth, which owns hospitals in Wisconsin and Illinois, including Javon Bea Hospitals in Rockford, Illinois.
In 2019, Bea’s compensation from Mercyhealth was $9.97 million, according to tax documents. That’s more than three times the $2.77 million paid to Mayo Clinic CEO Gianrico Farrugia in 2019.
Kahler employees point to Bea’s multimillion-dollar salary and business investments in Rochester, such as the Miracle Mile mall and Avani Living apartments, as evidence that could fix the back-wage issue.
Christa Sarrack, president of Local 17, said Bea is very active when it comes to talks with the union.
“Most employers would never sit down at a bargaining table or participate as actively in negotiations as Javon. Usually their operator (hotel management company) negotiates the contract,” she said.
Sarrack made the issue of wage arrears a priority when Local 17 took over the situation in 2020. However, progress has still been slow as employees and the union discuss with Kinseth and Bea the possibility of reimbursing the employees. After all this time, the identification of the employees liable and the calculation of the amount due have not been definitively settled.
“Even rough estimates are a bit difficult,” she said, though she believes more than 200 employees who worked for the hotel from 2015 to 2019 owe back wages.
Is it unusual for a case like this to take so long to resolve?
“The standout for me about this is that delay is normal, but this level of delay is not the norm. It’s not uncommon, but it’s definitely not the norm,” said
Jeff Hirsch, a professor at the University of North Carolina Law School, who focuses on labor and employment issues.
Hirsch, who is a former NLRB lawyer, said employers usually try to resolve these types of cases in a timely manner because interest accrues on money owed and legal fees are higher, which increases the final bill. .
“Work cases can get very, very personal. I’ve seen many, many employers spend a lot more money fighting something than it would cost to solve it,” Hirsch said. “Sometimes there are cases that don’t involve money at all and employers spend tens of thousands of dollars in attorney fees to fight back… just because they really don’t like the union or something like that better. Certainly not out of the realm of, you know, when that happens, of course.
In the end, he described the complexity of this case as “a hot mess”.
After 45 years working for hotels, Prouty still remembers his excitement at entering with a new degree in hospitality and getting a job at the prestigious Kahler Grand Hotel. She says her feelings for the hotels and the years she and her colleagues have given to them have kept her going.
“I really like my job. I really, really want to see the Kahler succeed. I have a special place in my heart for this place,” she said. “I just want my due for my job.”
Jeff Kiger tracks business action in Rochester and southeastern Minnesota every day in “Heard on the Street.” Send tips to
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