The Los Angeles hotel workers’ union is getting ready to take on a new incarnation of management: private equity.
Organizers are targeting the luxury resort Terranea, which was developed and is now controlled and operated by Lowe Enterprises, a real estate investment firm whose private equity arm manages more than $2.5 billion in assets. On Thursday, resort workers plan to confront their general manager and demand a fair process to unionize. They also plan to file a lawsuit accusing the company of failing to pay workers wages they’re owed -– the kind of illicit cost-cutting that they say exemplifies the worst practices of private equity -- and seek class-action status for the suit.
The union hopes Lowe’s investors -- which include insurance companies, international institutions, wealthy individuals and public pensions -- are paying attention, a growing consideration for labor organizers.
“All investors in this property -- or in other properties -- ought to be thoughtful about how their investments are achieving their gains or losses,” said Kurt Petersen, co-president of Unite Here Local 11, which has been organizing hotel employees. “All the stakeholders need to be considered in that.”
As private equity firms become more prominent as owners and bosses, labor organizers are tailoring their tactics to confront some of the world’s richest executives. The industry’s multimillionaires and “vulture” reputations make firms ripe targets for public shaming, said Stephen Lerner, a former strategist for the Service Employees International Union who now works with several unions on such campaigns. And because private equity firms court pension plans -- many of which are funded through union contracts -- they may be particularly vulnerable to pressure.
“Terranea Resort strictly adheres to and abides by all labor laws,” the resort said in a statement Thursday. “We value each of our associates and are committed to ensuring fair treatment and compensation for their time and dedication.” The resort said it hadn’t seen the lawsuit yet and can’t comment on its allegations.
Lowe Enterprises didn’t immediately respond to requests for comment.
‘A Calculus’
“It’s a calculus on both sides,” for pensions and private equity firms, said management-side attorney Marshall Babson. “The private equity funds are not going to thumb their noses at these pension funds,” said Babson, a former member of the National Labor Relations Board. However, he said, the high returns private equity can generate make pensions hesitant to actually cut ties.
In September, North America’s Building Trades Unions announced an agreement with Blackstone Group LP under which the firm’s new infrastructure business will manifest a “strong preference” for choosing contractors for its projects that pay for training, respect the right to unionize and comply with safety rules.