.Oakland Hotel Approved Despite Minimum Wage Violations

A politically-connected attorney for a hotel company that violated Oakland's minimum wage law is pressuring the city to withdraw its investigation.

Last month the Oakland Planning and Building Department gave final approval for the Patel family, operators of two East Bay hotels, to build a new seven-story, 114-room hotel in downtown Oakland, despite the fact that city investigators recently concluded that the Patels violated Oakland’s minimum wage law at one of their existing hotels, Holiday Inn Express by the Oakland Airport. Employees of the Holiday Inn Express (which isn’t unionized) and a labor union representing workers at other Oakland hotels, asked city planning staff to deny the application for the hotel on the grounds that the Patels at the time were under investigation by the city, and also because the new hotel is unlikely to provide living wage jobs with health insurance based on job conditions at the other hotels they run. But city planning officials contend that they weren’t allowed to consider labor practices and job quality when deciding on the project. And even after city investigators sustained allegations of minimum wage law violations, planning officials still approved the new hotel.

The Patels deny violating Measure FF, Oakland’s minimum wage law that was approved by voters in 2014. City records obtained by the Express through a Public Records Act request show that the Patels hired attorney Zack Wasserman — who is also a major fundraiser for several city councilmembers — to pressure city staff and elected officials to withdraw the final report concluding that the Patels had violated the minimum wage law at the Holiday Inn Express.

On the other side, hotel workers and the union UNITE HERE 2850 are pressuring the city to block the new hotel. The union has filed a formal appeal to the Planning Commission that will be heard next month.

The controversy began last year when employees of the Holiday Inn Express, located near the Oakland Airport, complained to city investigators that the Patels were failing to pay the minimum wage, unreasonably interfering with workers’ use of sick leave, removing unused vacation days in retaliation, and failing to provide adequate time for breaks. Deborah Barnes, the director of contracts and compliance for the City of Oakland — the office responsible for enforcing Oakland’s minimum wage law — issued a report in February sustaining the allegations and requiring the Patels to pay $6,999 in restitution to 37 employees.

Former employees of another hotel owned by the Patels have made similar accusations. Francisco Coronado worked at the Hampton Inn & Suites Oakland Airport, which is located in the City of Alameda, for nine months before he was laid off in 2010. Coronado said in an interview that while he was employed there he noticed discrepancies in his pay stubs. Coronado said he kept a notebook to keep track of the precise times he clocked in and out. When he compared his log to what appeared on his pay stubs, he said the differences showed he was being under-paid. After he was laid off, he got an attorney who requested payroll records, but the hotel never responded, said Coronado.

Coronado also said he was not provided with a health insurance plan and was offered no vacation days. “I have worked in restaurants, a warehouse for shoes, a food services company at the Oakland Airport, and other places,” said Coronado, who moved to Oakland in 1985 from Mexico. “I never had such a bad experience with an employer.”

“We were never asked for these records by Mr. Coronado or his attorney,” said Dan Cohen, a spokesman for the Patels. “Mr. Coronado worked for us and left his employment with us many years ago. We are confident that he was paid fully for his time on the job.”

Teresa Cheng, an organizer with UNITE HERE 2850, said that other former Patel employees have complained to the union. Cheng and Cohen both said that the Patel’s hotels are not unionized, and that UNITE HERE 2850 is not currently trying to organize them. Nevertheless, the union has gotten deeply involved in the matter of whether or not the Patels will be allowed to build a new hotel downtown.

In August of last year, Taylor Hudson, a research analyst with UNITE HERE 2850, wrote to Oakland city planner Peterson Vollman that the Patel’s proposed hotel “failed” in several ways to uphold the city’s development policies. Hudson cited a specific section of Oakland’s Planning Code that states that approval for hotels should depend upon whether “the proposal considers the impact of the employees of the hotel or motel on the demand in the City for housing, public transit, and social services.” Hudson wrote that wages paid by the Patels at their other hotels are “nowhere near what would be required to meet a family’s basic needs,” and that the new hotel’s workers would be unable to afford housing and health insurance, putting burdens on Oakland and Alameda County’s social services.

“All of the hotels want to bring in low wages, no benefits,” said Aida Gonzalez, an employee of the Oakland Marriott City Center, where UNITE HERE 2850 represents the workers. Gonzalez said she currently lives in Oakland, but might become displaced if her income drops and rents keep rising.

“I’m concerned approval of this hotel would give other hotels a reason not to accept our union, or give us a bad contract,” said Sylvia Stollger, another worker at the Marriott City Center.

Despite these protests, and despite the findings of the city’s minimum wage investigation, officials in the Oakland Planning and Building Department approved the new downtown hotel on March 15. The approval letter stated, “the proposal will create new jobs that would be available to existing Oakland residents,” and that these jobs “can help to reduce the unemployment rate within Oakland that is still higher than the California state average.”

In an email to the Express, Oakland Zoning Manager Scott Miller said that planning department staff weren’t allowed to take into account the issues that were raised about job quality and Measure FF violations at the Patel’s other hotels when making a decision. Miller did not respond to a follow-up phone call and email seeking further clarification.

The hotel workers and their union disagree. On March 24, UNITE HERE 2850 filed an appeal with the Planning and Building Department seeking to overturn approval for the new hotel, again on the grounds that the approval runs against the city’s interests in creating living wage jobs. The appeal will be heard at the May 4 meeting of the Oakland Planning Commission.

In the meantime, the Patels have hired Wasserman, the politically-connected attorney, to try to get the minimum wage investigation report concerning the Holiday Inn Express withdrawn.

Wasserman is political fundraiser with close ties to Oakland’s elected officials. According to city records, Wasserman has contributed $2,650 to sitting members of the city council since 2013, including $500 to Abel Guillen, $500 to Rebecca Kaplan, $700 to Annie Campbell Washington, $250 to Dan Kalb, and $450 to Lynette Gibson McElhaney. Wasserman was the finance chair of council President Gibson McElhaney’s 2014 campaign.

The Patels are also major political contributors. Since 2012, Pravin and Sima Patel, their son Dhruv, and companies they control, have contributed at least $7,320 to current members of the city council. Sima and Pravin Patel also made a $700 contribution to Mayor Libby Schaaf’s 2014 mayoral campaign.

In comparison, the union UNITE HERE 2850 and its employees have contributed $2,500 to current members of the city council since 2014, including a $100 contribution to Abel Guillen by research analyst Taylor Hudson. UNITE HERE 2850 also spent $5,218 supporting Measure FF in 2014.

According to city email records, Wasserman contacted Deborah Barnes of Contracts and Compliance on February 16, shortly after Barnes released her office’s report. Wasserman requested a meeting at which he and the Patels could review the city’s investigative records and offer their own evidence. But Wasserman wrote that the meeting could only happen after “the Report your office issued on February 3 is withdrawn.”

In a letter attached to his email, Wasserman wrote that the city’s investigation “had not been conducted in a manner that was adequate or fair.” Wasserman added that the city’s investigators relied on “distorted facts.”

Wasserman attached a second letter written by the Patel’s other attorney, Robert Jones of Ogletree Deakins. Jones, who was previously a deputy secretary in the California Department of Labor, wrote that the city’s minimum wage investigation and report overreached by considering legal issues outside of the city’s jurisdiction such as whether the biometric time clock used by the Patels at the Holiday Inn Express improperly rounds off minutes when employees clock in and out, thereby reducing their take home pay. Jones said the rounding method is legal under state and federal law, and that the city has no authority to investigate it.

Jones called the city’s investigation and report biased, and wrote that the Patels are very disappointed in the city for not allowing them an opportunity to respond to the allegations of former employees.

In his email to Barnes, Wasserman copied every member of the Oakland City Council and Mayor Libby Schaaf, but it’s unclear why. Wasserman did not respond to an email seeking comment.

Erica Derryck, spokeswoman for Mayor Libby Schaaf, said the mayor’s office has not made any attempt to influence the minimum wage investigation. “The City Administrator provides staff with freedom to exercise objectivity in investigations in order to reach a conclusion that is [fairest] and equitable regardless of interest groups or politics,” wrote Derryck. “Furthermore, no elected officials have attempted to influence the outcome or direction of the investigation.”


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