Collective Bargaining Negotiations

To: Ms. Lucy Baldercash

From: Railin Isaac

Re: Collective Bargaining Negotiations

We would like to inform you that we were unable to reach an agreement with the Local H-56 Union. As you have previously stated, the profits from the hotel have been inadequate were felt that the demands made by the union were entirely too expensive. If we agree to their demands, this will jeopardized your ability to sell the hotel for a high price.

Our goal is to maintain labor costs as low as we possibly could. The union was requesting that the following settlement terms were met: 10% wages increase over the life of the contract; $3.25 contribution to health insurance with no co-pay; 401k plan with three (3) % or more matched contribution; overtime premium of 200%; vacation schedule increase by four (4) days to include workers with zero (0) years of service and three (3) additional sick days; 100% dental coverage including no co-pay and a discounted rate of 50% for family coverage; vision insurance free of charge for employees and 50% for family; allocation of funds for childcare expenses, $300 per employee. These demands would have increased the labor costs by as much as $604,370.06

The union initiated the collective bargaining by proposing an increase wages in order to keep up with the rising cost of living. The company offered a one (1%) increased on the 2nd year of the contract and another one (1%) increase on the 3rd year. The union demands a 10% increase over the life of the contract which the company counter-offered with a proposed six (6) % increase.

In reference to health insurance, the union desired contribution to be provided at the rate of $3.25 per hour without co-pay expenses. The proposed contribution offered by the company was $3.00 on the first year anniversary of the contract, with an increase to $3.15 on the second year. Additionally, employees would have to incur twenty dollars ($20.00) co-pay for each medical visit. This amount will allow an offset in the company’s cost.

The main item we were unable to agree on was retirement. The union demanded that their current DCRP accounts were rolled into a 401k based retirement plan with a company matched contribution of more than three (3) percent, with vesting after a year of service. Had the company agreed to their demands, it would have had a major impact on the labor costs of the company. Therefore, we refused to meet their demands on this item and decided not to replace the current retirement plan with the requested 401k.

The union stressed that most of employees work overtime and they should be rewarded for their extra efforts in the workplace. The current overtime premium is 150%. That should be increased to 200%. The company is willing to increase the current wages and will keep the overtime premium as 150%.

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