Health fund key to Culinary talks

Wednesday, May 15, 2002 | 11:06 a.m.

In a bid to avoid the first strike on the Strip in 18 years, the Culinary Union and the hotel industry are essentially fighting over how best to keep the union's $300 million health and welfare fund afloat.

The 50,000-member union has told the hotels that they need to pump millions into the fund this year to preserve the free health care benefits for workers under the current five-year contract, which expires May 31.

Union leaders want a boost of 65 cents an hour per employee for health insurance costs the first year of a new contract. Hotels, so far, are about 15 cents lower in their position on medical benefits.

The union is voting Thursday to authorize a strike on June 1 if a new collective bargaining agreement with 35 properties can't be reached.

While other matters such as work load for housekeepers and wages are being negotiated, the employee medical care, which is covered by the hotels through the union fund, is the key issue.

"Protecting the employees' medical benefits through the labor-management welfare fund drives the union's economic proposal," Culinary leaders told casino executives in their original 12-page proposal for a new two-year agreement.

Both sides, however, still are apart on benefits as the strike deadline approaches.

A daylong negotiating session with Park Place Entertainment, one of the "Big Four" operators on the Strip, ended Tuesday without an agreement.

"We believe progress was made on a variety of issues at yesterday's talks," Park Place Senior Vice President Robert Stewart said this morning. "We will continue to work with the union with the hope of resolving these issues."

John Wilhelm, Culinary Union international president, called Tuesday's negotiations "constructive," but he added, "We're nowhere near a settlement.

"With every passing day, the possibility of a major strike in Las Vegas becomes greater," he said. "And I think that would be a terrible thing for Las Vegas, the casino industry and the workers."

Wilhelm said talks will resume with Park Place and another major Strip operator, Harrah's Entertainment, late next week. Both companies have publicly said they want to strike a deal with the union to avoid a walkout.

No talks, however, have been scheduled with the two other major companies, MGM MIRAGE and Mandalay Resort Group, which have taken a harder line on medical benefits.

The health and welfare fund was strained after Sept. 11 when casinos stopped contributing benefits to thousands of laid-off workers.

At the same time, many of those workers and family members who were eligible to receive benefits for four months after their termination submitted requests to the fund to pay for medical bills.

In a nutshell, the fund was taking in less money, but handing out more cash in the months following the Sept. 11 terrorist attacks.

To allow the fund to continue to provide free coverage for its members, the union originally proposed that casinos contribute an extra 70 cents for each hour its members worked during the first year of a new two-year contract.

The union has since scaled back that demand to 65 cents an hour after getting revised estimates on the financial condition of the fund.

For the second year of the contract, according to the union's proposal, it wants an additional increase of 75 cents an hour.

The union said it wanted the flexibility to allocate that increase to a combination of the health insurance fund, pension fund and wages.

"This is designed to permit a wage increase in the second year while addressing the uncertainty of welfare fund costs in that second year," the 12-page proposal said.

The union is not asking for a wage increase the first year of the contract.

The additional 65 cents obtained that first year would raise the employer contribution rate to $2.87 per hour for each worker and pump as much as $70 million more into the fund.

Three of the Big Four casino companies -- Park Place, MGM MIRAGE and Mandalay -- have come back with a counteroffer of 50 cents per hour for each employee the first year and 55 cents the second year. But all three want longer agreements. Park Place wants a 2 1/2 year contract, and the other two operators want a five-year deal.

Mike Sloan, Mandalay senior vice president and management trustee of the fund, said he believes union members still could preserve their benefits and have a "Cadillac" health plan with the 50- to 55-cent increase.

For that to happen, the fund needs to become more efficient in the delivery of its health care product and "tighten its belt one notch," he said.

"They could preserve their benefits in substantially the same form they are right now with 50 to 55 cents if they make the changes within the fund," Sloan said.

Wilhelm, however, responded: "That's a code language for cutting benefits. The approach of Mandalay Resort Group, joined by MGM MIRAGE, is to shortchange the welfare fund and thereby create a reduction in benefits."

Sloan said the union so far has resisted making the fund more fiscally responsible.

But in a cover letter attached to the union's original proposal, newly elected Secretary-Treasurer D. Taylor said the health and welfare fund has been a "community leader" in seeking cost containment.

"All of the valley's health plans have benefited from the fund's tough negotiations with vendors," Taylor said.

The union also has contended that it has returned $172 million in employer contributions to the fund over the past 10 years.