Did UNITE-HERE Local 11 Skirt Rules On PPP Funding?

[This story originally appeared on Eyes on Local 11 on November 30, 2021] 

In March 2020, Congress passed the Paycheck Protection Program (PPP), unleashing billions in emergency loans for COVID-affected businesses – loans meant to help them keep their workers employed.

When PPP loans were originally introduced, labor unions were not allowed to apply. But, there was a loophole that allowed a union’s 501(c)(3) linked organization to apply for relief. (We have previously reported that several Local 11-linked nonprofits — including Los Angeles Alliance for a New Economy (LAANE) and Clergy and Laity United for Economic Justice (CLUE) — received almost $900,000 in PPP support.)

According to a new investigation, Local 11 used a creative workaround to skirt federal prohibitions on unions receiving PPP, laying off key organizers and then rehiring them at the union’s PPP-supported nonprofit — despite strong evidence the nonprofit should not have qualified for a PPP loan in the first place.

The story of Local 11’s latest scandal starts with the Hospitality Training Academy (HTA), a Local 11-linked nonprofit whose self-described purpose is to place “students in jobs in union hotels.” Once they’re employed at the hotel, the student must then pay an initiation fee and monthly dues to Local 11.

In May 2020, the HTA received nearly $260,000 in federal loans during the first round of PPP loans. At first glance, HTA’s application for a PPP loan seems curious (at best). PPP loans required applicants to attest that a loan was necessary because of “current economic uncertainty.” Yet according to the HTA’s 990 tax filing, revenue for 2020 was up more than 1800 percent in 2020 compared to the previous year, and the group finished 2020 with more than $4,500,000 in net income.

PPP loans also required applicants to promise funds would “be used to retain workers and maintain payroll.” But the HTA’s 990 filing shows that the group’s payroll increased by more than 30 percent in 2020: from $817,916 in 2019, to $1,085,787. Around the time that the HTA received hundreds of thousands in federal PPP money, many Local 11 employees coincidentally had a sudden career change.

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