The Washington Post - USA (2020-07-28)

A20 EZ SU THE WASHINGTON POST.TUESDAY, JULY 28 , 2020

BY HANNAH DENHAM

Google won’t bring its 200,

employees back to the office until

July 2021, pushing past its Janu-

ary timeline as coronavirus cases

surge across the country and a

vaccine remains months away.

That makes the parent compa-

ny, Alphabet, the first major U.S.

firm to push its office comeback

into the second half of next year.

Google spokesman Jason Post

confirmed the decision, first re-

ported by the Wall Street Journal,

on Monday.

The move illustrates how cor-

porate America is writing its own

guidebook for managing the so-

cial, economic and public health

byproducts of the pandemic —

from enforcing mask mandates to

retaining employees to mitigat-

ing the safety risks for consumers

and staff. But each decision con-

tingent on the nation’s return to

normalcy, or what passes for it

now, is tentative.

Chief executive Sundar Pichai

announced the new timetable in

a companywide email to “give

employees the ability to plan

ahead.”

Pichai made the decision last

week. He was partly influenced

by the differing approaches to

schools reopening across the

country, the Journal reported.

The work-from-home option ap-

plies to 200,000 full-time and

contract employees attached to

the company’s headquarters in

Mountain View, Calif., as well as

offices in other parts of the Unit-

ed States, the United Kingdom

and India.

Google’s move could motivate

other corporations to reevaluate

their timelines, especially as the

numbers of confirmed novel cor-

onavirus cases, hospitalizations

and deaths continue to rise in the

United States. Over 4.2 million

cases and 145,000 deaths have

been reported in the United

States.

Business and political leaders

are eagerly waiting for a vaccine

to help get the economy back on

track after pandemic-fueled stay-

at-home orders upended busi-

ness and social activity and

launched the United States into a

recession. Last week, 1.4 million

Americans filed new jobless

claims, the highest number since

March. Economists and federal

officials have publicly encour-

aged mask-wearing as states have

reopened their economies in

phases.

The federal government has

invested billions of dollars in

biotechnological and pharma-

ceutical companies in the race to

develop a vaccine, promising fast-

track approval from the Food and

Drug Administration. Monday

marked a milestone, with large-

scale clinical trials launching to

gauge the effectiveness and safety

of biotech firm Moderna’s vaccine

candidate. But inoculations are

months away even with the accel-

erated timeline. Public health ex-

perts don’t expect to see broadly

accessible vaccinations until De-

cember, a wait that could stretch

into spring 2021.

Silicon Valley has taken vary-

ing approaches to lessen the

health risks for its workers. Re-

mote work was widely adopted in

March, and many companies

have signaled plans to reopen

offices in January.

Facebook’s current plan is to

keep its 48,000 workers at home

through the end of the year,

though CEO Mark Zuckerberg

said in May that he expects as

many as half of them to perma-

nently transition to remote work

in the next decade. Amazon’s cor-

porate employees also are expect-

ed to telecommute through 2020.

Snap recently extended its time-

line from September to January.

[email protected]

Google pushes back return to office

Company’s 200,

employees will work

remotely until July 2021

BY PETER WHORISKEY

If the name of the Paycheck
Protection Program didn’t make
its purpose clear, its key sponsors
spelled it out.
Sen. Marco Rubio (R-Fla.) ex-
plained that the program “was
designed as an alternative for un-
employment and to prevent un-
employment.” Treasury Secretary
Steven Mnuchin and the director
of the Small Business Administra-
tion announced that the “over-
arching focus” of the effort was
“keeping workers paid and em-
ployed.”
But a closer look at three large
companies that received millions
from the $517 billion program
shows that some companies have
not retained most of their staff on
the payrolls.
The Fairmont Grand Del Mar in
San Diego, a luxury hotel owned
by a group led by Richard Blum, a
private equity chief and the hus-
band of Sen. Dianne Feinstein (D-
Calif.), received $6.4 million from
the program. The hotel has been
closed and most of its hundreds of
workers are unemployed and un-
paid, union officials said. To main-
tain their health insurance, work-
ers send money back to the com-
pany.
A large group of restaurant
companies operating under the
umbrella of Orlando-based Earl
Enterprises — including Planet
Hollywood International, Bertuc-
ci’s and Buca di Beppo — similarly
received loans in amounts rang-
ing from $26 million to $54 mil-
lion, according to the federal data,
but in the places most affected by
the coronavirus pandemic, the
restaurants employ only limited
crews. The rest of the staff is un-
employed and unpaid, employees
said.
And Omni Hotels & Resorts,
owned by Texas billionaire Robert
Rowling, was approved for multi-
ple loans from the program — one
for each of 15 hotels — totaling
$30 million to $71 million. But
seven remain closed, and at those,
most workers are on unpaid fur-
loughs, union officials said. The
company also has declined union
requests to continue to pay health
insurance for furloughed workers,
union officials said.
The companies say they can’t
rehire many people because they
can’t fully reopen properties when
a government pandemic order
limits guests. But their decisions
to withhold the money from pay-
roll have left employees to rely on
government unemployment
checks, which in some states have
been difficult to obtain and, for
many, will soon stop when the
benefit expires. Other furloughed
employees are getting kicked off
company health insurance be-
cause employers are not funding
their premiums.
“It was a rotten move,” said
Nazareth Reza, a 33-year-old
mother who for eight years had
been a banquet server at the Fair-
mont Grand Del Mar. “They have
the money.”
“It makes me mad that the com-
pany got the money but we are still
out of a job,” said Tomas Garcia,
26, formerly a server at Buca di
Beppo in Albuquerque.
“It’s pretty cruel kicking people
off of their health insurance in the
middle of the pandemic,” said
Christopher Cook, 47, who has
worked 22 years at the Omni Prov-
idence in Rhode Island, mostly in
the purchasing department. His

family lost the company insurance

on June 1. “If they received that

[government] money — that’s

mind-blowing to me.”

What portion of the Paycheck

Protection Program has gone to

affected employees is unknown.

The Trump administration has

said that 51 million jobs were “sup-

ported” by the program, but a

Washington Post analysis of data

on 4.9 million loans shows that

the Small Business Administra-

tion reported that many compa-

nies had “retained” more workers

than the companies said they em-

ployed. Academic efforts to exam-

ine whether the program boosted

employment have shown mixed

results.

Research by economists from

the Massachusetts Institute of

Technology and the Federal Re-

serve estimated that the program

boosted employment at eligible

firms between 2 percent and

4.5 percent. A study by a team of

Harvard economists concluded

that the program had “little mate-

rial impact on employment at

small businesses.”

The hotel and restaurant com-

panies that have received the

loans but have yet to rehire say

they are operating within the

rules of the Paycheck Protection

Program. Eventually, the compa-

nies say, they could use the money

to pay employees. If they don’t, the

companies will be required to pay

the money back to the govern-

ment in what amounts to a low-in-

terest loan. The interest rate on

the loans is 1 percent.

“Any amount that’s not forgiven

will be repaid with interest,” Omni

officials said in a statement.

“We’re grateful to have participat-

ed in the PPP loan program, and it

is instrumental to our survival

during this pandemic....

Throughout this global crisis, our

greatest concern has been the

hardship it placed on our Omni

family, and we have diligently

worked to minimize the impact.

COVID-19 has placed heavy bur-

dens on many, and all parties are

having to navigate unfortunate

circumstances.”

Earl Enterprises, the Orlando-

based umbrella for Buca di Beppo

and Bertucci’s restaurants, said it

is trying to hire people. So far,

about 5,000 restaurant employees

have returned to work out of more

than 9,000 who were employed

before the pandemic.

“We are bringing back our staff

as quickly as we can and we are

committed to keeping our opera-

tions running while adapting to

the ever changing landscape,”

company spokeswoman Amy Sad-

owsky said in a statement. “We are

not up to pre-Covid staff levels,

nor is anyone else that we know of

in the restaurant industry.... We

have experienced severe down-

turns in our dine-in business, even

in areas in the Northeast where

the virus seems to be in retreat,

our customers’ habits have

changed.”

About 12 million more people

were unemployed in June com-

pared with February, according to

government figures, and an esti-

mated 5 million workers lost their

health insurance coverage be-

tween February and May, accord-

ing to Families USA, a nonparti-

san consumer advocacy group.

“By design, PPP is a historic

pro-worker relief program that

has kept tens of millions of work-

ers connected to employment,”

Rubio said in a statement. “If em-

ployers have not used funds to

keep workers on payroll, they will

be required to pay that money

back to the Treasury.”

Treasury officials did not re-

spond to requests for comment.

When Congress approved the

Paycheck Protection Program in

March as part of the pandemic

relief legislation, it was presented

to the public as a measure that

would help maintain jobs and that

would be limited to small busi-

nesses.

The program issued money to

businesses as loans, but to encour-

age employers to keep workers,

the loan was “forgiven” — it did

not have to be repaid — if a compa-

ny retained most of its employees

and spent most of the money on

payroll. The size of the loan, ac-

cording to the legislation, was to

be based on the size of the compa-

ny’s payroll.

To direct the loans to small

businesses, the program limited

the size of those that could apply

— generally, none could have more

than 500 employees.

“This legislation provides small

business job retention loans... t o

keep workers employed,”

Mnuchin said in a statement after

the bill’s passage. “The loans will

be forgiven as long as the funds

are used to keep employees on the

payroll and for certain other ex-

penses.”

But after pressure from busi-

nesses — particularly hotel and

restaurant lobbyists — the pro-

gram was altered in key ways that

received relatively little attention.

The first key move came late in

the drafting of the bill, when a

clause was added that allowed

some big firms — mainly hotel and

restaurant chains — to apply. The

added language said that big hotel

and restaurant companies would

be eligible as long as their individ-

ual locations had fewer than 500

employees.

“We were able to get it [the

program] applicable to individual

properties... r egardless of how

many properties you operate,” Jon

Bortz, chair of the American Hotel

and Lodging Association, said in a

video chat for the group. “I think

that was great.”

The change opened the pro-

gram to big operations, according

to federal figures: The Omni ho-

tels received 15 separate loans; 11

loans were approved for Silver

Cloud Inns; the Benihana restau-

rants were approved for 19 loans

valued at $6 million to $16 mil-

lion, although the company said it

ultimately did not accept the mon-

ey. There were many more recipi-

ents of similar scale. The largest

request may have come from the

Ashford Group, an outfit whose

companies used more than 100

filings to seek $126 million total

and received $76 million, accord-

ing to a Post review of securities

filings, although it later returned

the money.

The next critical set of changes

came in May, with another round

of legislation that also responded

to requests from business groups.

Three tweaks in the program, little

noticed at the time, made it easier

for companies to get the loans

forgiven — that is, to transform

the government loan into a gift.

While the original legislation

had limited loan forgiveness if

companies did not rehire to pre-

pandemic staffing levels, the new

legislation weakened that rule.

Now companies that make what

the bill says are “good faith” efforts

to bring employees back could

have their loans forgiven.

The new legislation also ex-

tended the period of time that

businesses could use the money —

from eight weeks to 24 weeks — a

change that, combined with other

aspects of the program, meant

that employers could bring back

fewer workers and still win loan

forgiveness.

Finally, the new legislation

dropped the requirement that

companies should spend at least

75 percent of the money on payroll

to qualify for loan forgiveness.

The administration had added

that requirement to ensure that

the program was “devoted pri-

marily to payroll.” But some mem-

bers of Congress, including Fein-

stein, pushed for making that re-

quirement more flexible. Fein-

stein is married to Blum, who

leads the investment group that

owns the Fairmont Grand Del

Mar. A Blum family trust also

owns the Claremont hotel in

Berkeley, Calif., which received

about $6.4 million from the Pay-

check Protection Program. That

hotel is closed and most employ-

ees have not received paychecks,

workers said.

In a letter, Feinstein asked her

Senate colleagues to drop the

75 percent requirement because it

is “impossible” for businesses in

regions where rents are high.

“I ask that you ensure that the

threshold is appropriately flexible

to accommodate small businesses

in different situations, while still

maintaining the requirement that

small business receiving PPP

funds continue to pay their em-

ployees,” her letter said.

A hotel industry group also

wrote to ask for the same thing,

noting that mortgages and other

overhead are more burdensome to

hoteliers than payroll: “an average

hotel pays more in debt service

and real estate taxes than total

payroll expenses,” the group’s

April 8 letter said. To keep people

employed, the industry lobbyists

argued, hoteliers must be able to

pay their overhead.

One version of the bill dropped

the 75 percent requirement entire-

ly; ultimately there was a compro-

mise and the portion that had to

be allotted to payroll was dropped

to 60 percent.

Owen Blicksilver, a spokesman

for Blum, said that the hotel is

trying to bring furloughed em-

ployees back as soon as reopening

is allowed. However, some em-

ployees have received letters indi-

cating that there would be “per-

manent layoffs” and including

severance documents, according

to a copy of a letter reviewed by

The Post.

“The PPP funds will all be spent

on the employees and forgivable

items before year end for both

properties,” Blicksilver said.

Feinstein’s office also respond-

ed.

“The senator has no involve-

ment in her husband’s financial or

business decisions,” spokesman

Tom Mentzer said by email. The

senator supported the legislation

offering recipients more flexibility

“because she and her office re-

ceived numerous calls and letters

from local businesses asking for

changes to help them keep work-

ers on payroll. She has repeatedly

sought changes to the PPP pro-

gram to make it more efficient and

expand it to include nonprofits

and prioritize the smallest busi-

nesses.”

For some furloughed workers,

more galling than the absence of a

paycheck is the companies’ refusal

to continue health insurance cov-

erage. Under the rules for the pro-

gram, employers would be reim-

bursed for program money that

was spent on employee benefits.

The companies did not say why

they were not continuing to pro-

vide health insurance.

The Fairmont Grand Del Mar

will stop paying for health cover-

age for furloughed workers as of

July 31, Blicksilver said. Since

April, the company has paid a

portion of the cost but has re-

quired employees to send a check

for their own portion.

The Omni Providence stopped

paying for the health insurance of

furloughed workers as of June 1. A

spokesperson said furloughed

workers continue to have “access”

to the company health insurance

— but only if the employee pays for

it.

Marty Leary, research director

for Unite Here, a union that repre-

sents employees at many Omni

locations, dismissed the assertion

that the employees have access to

health insurance.

“That’s like saying they have

access to a Mercedes-Benz if they

have $50K to spend,” he said.

Cook, the Omni Providence em-

ployee, put it more strongly.

“What you see here is an utter

lack of compassion,” he said.

[email protected]

 M ore at washingtonpost.com/

business

Given millions from PPP, some firms fail to keep workers

DANIEL KNIGHTON/GETTY IMAGES

Omni San Diego Hotel honors coronavirus workers. The company, approved for loans for 15 hotels, has seven that remain closed. Most of

those workers are on unpaid furloughs, union officials said. “Any amount that’s not forgiven will be repaid with interest,” Omni has said.

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