Housekeepers protest new demands by outsourcing company at Harrah's Laughlin on December 31st 2011.
Today is hundreds of Harrah's and Harveys employees in northern Nevada last day work for parent company Caesars Entertainment. They will be let go and immediately re-hired to do the same job at the same hotels, but they will work for someone new: The Service Companies (TSC), a one-stop shop for cleaning at hotels. Experts say it is a significant shift in Caesar’s employee relations and corporate strategy. Some employees are grumbling, and in some cases protesting where they suddenly find themselves working longer hours and paid vacations gone.
“We have been looking at ways to cut costs and focus on things that we excel at as a company,” said Gary Thompson, spokesperson for Caesars Entertainment Corporate.
He says there are a couple of reasons, one being cost. The other is to focus on their primary business, entertainment.
“That explanation is right on. Our business is providing as good service as possible to our customers. I am talking about hotel, gaming and food and beverage. We do outsource a lot of things that aren’t our focus and our focus is not the cleaning business. These people are good at what they do.”
The Service Companies, also known as TSC, has handled janitorial services for Harrahs in Reno for a decade, according to Tom Crist, Entertainment and Public Relations Manager for Harrahs Reno.
“We have 50 plus properties. This is an overall slow process,” Crist said.
Both Thompson and Crist declined to say what properties would be next or how many will eventually outsource housekeeping. But, as of February 1st the outsourcing will be at 8 properties: Harrah’s in Reno, Laughlin, Tahoe and Louisiana Downs, Harveys in Tahoe, the Imperial Palace in Las Vegas and the Horse Shoe in Tunica and Bossier City. That is hundreds of employees who no longer work for Caesars and now work for someone new, doing the same job.
“Well, there has been some opposition to it, which is understandable. People are always defensive about change,” Thompson says.
This isn’t just change, it’s a shift in traditional Caesars employee-relations according to Bill Eadington, Professor of Economics and Director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada Reno. He says the cost cutting effort is inspired by Caesars’ billions in debt that is incurring hundreds of millions in interest every year.
“So what the company did was move into very aggressive cost cutting, which is somewhat ironic because Harrah’s (Caesars Entertainment) had a reputation among the gaming industry for customer service and using their employees as a major marketing tool, encouraging them to be very friendly,” Eadington said. “They had a very customer-centric culture, while the rest of the companies were much more oriented to buildings and facilities. Wynn, Bellagio, Palazzo, all beautiful facilities. Harrah’s had chosen a different approach, but it was an expensive approach.”
One example of the expense he says was big bonuses for employees with the highest customer satisfaction ratings. Now, under the cost cutting, he says management has been slashed, which Thompson confirms. Eadington gave another visual example of the cuts that actually made it to customers: “in the VIP rooms they cut the sandwiches and had store bought cookies, and that brings us to the current situation.”
“The only reason to replace their housekeeping is to get rid of the benefits costs that you are incurring,” he says. “There are not a lot of cost savings there. It might be an indication of how desperate they might be.”
Letting employees go and hiring them back under a new company has already cut one expense: Vacations.
“Some of them have lost PTO time, which is vacation time, which they have saved up,” Thompson said, and that could be the same for hundreds of Harrah’s employees in northern Nevada. “It may come out that they will end up losing it. I don’t know what the resolution will be. TSC (The Service Companies) have to run their company as they see fit and there may be some things that employees won’t like.”
But there are some other things that employees don’t like. Some of them spoke out publicly when Harrah’s Laughlin made the switch. They walked off the job and protested out front of the hotel. Sylvia Nunez who said she worked there for two and a half years was one of them. She was paid $9.53 and hour, cleaned 18 rooms a day and worked from 8 to 4 with an hour paid lunch.
“We were told that the salary and the number of rooms we were cleaning would not change,” Nunez said. “On December 1st we started working for the new company. 7 days later the number of rooms went up to 19.”
She also said the hours were extended 30 minutes and the paid hour lunch was cut in half. With each employee cleaning more rooms, it didn’t take as many employees to do the same work.
“So they were robbing of us a half hour and making us do an extra room and that didn’t seem just,” she said. “We all told them what our needs were and they said, ‘if you don’t like it, then go.”
The situation came to a head on one critical day, December 31st, New Year’s Eve. Nunez says dozens of housekeepers walked off the job and protested out in front Harrah’s Laughlin. The workers were coaxed back in, but on January 2nd she says some of them were fired and she was one of them. She said some of those workers had been there a lot longer than she was, and she was fired for organizing the protest.
“I am stressed out. It was the best job that I had had. After this, I don’t want to work for them.”
Her efforts didn’t go unnoticed and did have an impact.
“We actually changed that back to the way that it was,” said Mike Rosenow, Senior Vice President of Human Resources for The Service Companies. “Based on employee feedback we changed it back. So now their schedule is 8 hours, paid for 8 hours and the number of rooms to be cleaned are back to 18.”
“Here is the thing,” says Rosenow. “Our agreement with TSC is that employees receive the same pay, the schedule stays the same and they have some of the same benefits. If there are issues that prove problematic such as employees loosing PTO (paid time off), we will work with them. But the decision is ultimately up to them about what they are going to do. They (TSC) don’t have any interest in having disgruntled employees. I think they know disgruntled employees are bad for business.
“We are not in the business of trying to upset employees and have employees quit. If we were, we would not have grown at this rate,” Rosenow said adding that they are a learning company.
The Service Companies has nearly tripled its employees in three years to now more than 6,000. “As we develop, we have become pretty good at what we do,” Rosenow says, because, “we have experts in the areas.”
While outsourcing allows Caesars to focus on marketing and cut costs, it also frees up another department.
“These brands get stretched for human resources,” Rosenow says, adding that he has a massive human resources operation.
“It takes a tremendous amount of resources to recruit the talent to work in the ‘back of house’ positions. They are difficult to recruit for because they are physically demanding positions. Our housekeepers, public area attendants, exterior high-rise window cleaning are very, very hard. It takes a special person to be up there in the air cleaning these windows.”
To find these special people TSC partners with unemployment and job centers, recruiting through Hire Vets First and Catholic Charities. “They are the primary contact for people who have come from a war-torn country,” Rosenow says adding that in Florida, they also work with a Cuban refugee program.
For employees who will be making the switch Caesars to TSC, this focus on cleaning and human resources may have a silver lining.
“It is interesting, because one of the things that our Caesars HR (Human Resources) folks said is that people who have transitioned (to TSC) is that they do have access to better supplies and training than we were able to provide,” Thompson said. “So I think that over time employees will be able to understand that there are some real benefits to this transition.”
While the employees of Harrah’s and Harveys in northern Nevada and other cities may lose their Paid Time Off, The Service Companies has its own vacation, a 401k plan with a dollar-for-dollar match up to 4 percent, college scholarship programs, tuition reimbursement and health benefits program.
The 401k is something Caesars employees have gone without recently, but will get back this year according to Crist.
Regardless, The Service Companies will be adopting employees that are accustomed to that old fashioned Caesars employee culture. Rosenow said it is important to have your finger on the pulse of employees. Having been in northern Nevada already for a decade, they are already in-the-know.
“One of the things in northern Nevada, it is a group of very, very good long-term employees that have been with Harrah’s and Harveys for quite a long time,” Rosenow said. “Part of the reason they become upset is that they feel like they are no longer going to be part of the family and nothing can be further from the truth.”
One thing is for sure, they will be part of a growing family of outsourced housekeepers nation-wide. The Culinary Union in Las Vegas is watching this wide-spread rise of outsourcing very closely. It is seeing a share of backlash from workers in other outsourcing companies backed by groups called Unite Here and Hotel Workers Rising. Some have filed wage lawsuits. It is one of many complaints against multiple companies.
Rosenow has some advice for those other companies. “I have heard of those practices occurring in other companies and we are constantly audited by the brands we service. That is the best demonstrated practice for brands is to conduct internal audits,” Rosenow says. “One example: I just went through an extremely comprehensive audit with one of our brands and it was a full-on wage and immigration audit. We e-verify in every state we are in and we have been rolling that out over the year. They did a full on OSHA audit and at the end of the audit, we are still with that brand and it still looks like we may be getting more business from that brand.”