They’ll be jobless - should tycoon share?

By Brendan Buhler

Wednesday, June 27, 2007 | 7:20 a.m.

Mary Dean Burns

Job: Uniform attendant.

Years at the Frontier: 35

Plans: Doesn't know. "It's going to be scary for me, leaving here ...

On the Frontier: "We've given blood, sweat and tears to this casino. Whatever sacrifices they needed to keep this casino open, we made. When the Frontier closes, it'll be like my husband dying again.

Talk to the Boss: "I always say that Mr. Ruffin was my granddaddy. It was so long with the strike, and then he opened it up and he was like a father figure. I would thank him for buying the Frontier and getting us out of the strike line. And I'd thank him for the chance to know him and his family. I'd ask him to reconsider giving severance pay. It'll be really hard to get started again ...



Shirley Sarlo

Job: Cocktail waitress in the casino

Years at the Frontier: 38

Plans: Considering a couple of job offers.

On the Frontier: She met her husband , Joey Sarlo. here. He was a shift boss and they were married for 20 years. He died six years ago. She'll miss her co - workers, but most of all she'll miss her regular customers.

"It'll just be really hard for me not to come here every day. There's been a lot of changes we've seen since Howard Hughes owned it."

Talk to the Boss: "Mr. Ruffin has been good to us and we've all enjoyed working with him. If he opened up another hotel here, I'd like to work for him again."



Jack Grimberg

Job: Bartender in the casino

Years at the Frontier: 29

Plans: Retire

On the Frontier: "It's sad for me. After 30 years you make a lot of relationships here and it becomes like family. To me, anyway."

Talk to the Boss: "We've made a lot of concessions for the owner. Our pay scale was always lower than the rest of the Strip ... I feel that Mr. Ruffin is a fair man. He's a businessman. He knows the sacrifices we both had to make. I feel he'll do the right thing."



Tenna Nash

Job: Maid for the penthouses on the 16th floor of the Atrium Tower.

Years at the Frontier: 18

Plans: "Be a maid again. I'm in no rush."

On the Frontier: "I'm going to put my queen crown on my head that last day, because I am the queen up here ... For 18 years, I was the queen up here and I had wonderful guests and they treated me well."

Talk to the Boss: "This one time, give me something and let me know I was someone up here."

Kansas industrialist Phil Ruffin bought the New Frontier nine years ago for $165 million, a tidy sum at the time for a fading, low-rent casino in the midst of a bitter labor dispute.

Now Ruffin is selling the property for $1.2 billion. It's the most expensive land sale in Las Vegas history, and it will put about 900 employees out of work.

So here's a question: Should Ruffin give them severance pay?

He has said no. As far as Ruffin is concerned, he has fulfilled the terms of the union contract, which does not include a severance clause. Furthermore, he said he awarded back pay to striking workers when he took ownership of the New Frontier in 1998 and made the casino's payroll by siphoning profits from his other businesses for the first few years of his tenure.

But the debate, it turns out, doesn't end with that answer.

Some business and ethics experts interviewed by the Sun agreed with Ruffin. Others, as well as the owners of some Las Vegas casinos, say Ruffin could be guided by more than legal or contractual obligations. He could see a moral reason to grant severance packages.

Companies should view employment as a social contract, with certain obligations when employees lose their jobs through no fault of their own, said Lance Compa, a senior lecturer at Cornell University's School of Industrial and Labor Relations.

"Certainly the employees have built up a moral equity in the years they've devoted to working for this company," Compa said. "There ought to be reciprocal action in the form of severance pay."

Other businesses and business experts sided with Ruffin, arguing that he should weigh financial considerations and nothing more.

Bill Thompson, a professor of public administration at UNLV who has studied the gaming industry, said Ruffin's profit is his alone. "I think there's a limit to our moral obligation," he said.

All of this has taken Las Vegas labor unions by surprise. After all, Ruffin ended an epic six-year strike with his purchase in 1998, and was widely seen as a friend of organized labor.

The New Frontier's new owners, a group of New York real estate investors, plan to demolish the property to make way for a replica of their hometown's storied Plaza Hotel. The casino will close July 15.

Business ethicists and casino industry observers are split over how Ruffin should handle the closing.

Geoffrey Heal, professor of public policy and corporate responsibility at Columbia Business School, said severance pay is often part of a larger financial calculation, namely maintaining labor peace in companies with heavily unionized workforces.

In the case of the New Frontier, however, Ruffin is a single operator and has no immediate plans for the Las Vegas market.

Still, the social impact of severance payments should weigh heavily on Ruffin's conscience, said David Hames, a professor of management and labor relations expert at UNLV.

Corporate scandals, skyrocketing executive compensation and declining consumer confidence in big business have resulted in the recent rise of the field of corporate social responsibility in the nation's leading business schools.

No longer is the guiding principle Milton Friedman's maxim - that a business's only social responsibility is to increase its profits, said Craig Barkacs, a professor of business law and ethics expert at the University of San Diego's School of Business Administration.

Today academics are more likely to focus on stakeholders over shareholders, he said, teaching a concept known as the "triple bottom line:" people, planet, profits.

Barkacs cites the example of Aaron Feuerstein, owner of Malden Mills in Massachusetts.

When a fire ripped through his textile operation in 1995, Feuerstein kept hundreds of employees on the payroll and maintained their health care benefits for three months while the facility was rebuilt.

Business schools are not alone in that assessment.

A recent national survey, commissioned by the National Consumers League and the Fleishman-Hillard public relations firm, found that a company's treatment of its employees was the single most important factor to consumers when evaluating a company's social responsibility, trailed by commitment to the environment and customer service.

For his part, Ruffin told the Sun in a brief interview that he considered his debts paid.

"It cost us a lot of money," Ruffin said of signing two five-year union contracts. "We kept them employed for nine years."

Mike Nelson, vice president of human resources at the New Frontier, said the company was taking steps to help employees find jobs and provide additional training. The casino hosted a job fair this month where about 350 workers found placement, he said.

"We don't want to walk away from these people," Nelson said. "We want to make this as easy a transition as possible. We have a lot of respect for them and the unions."

The New Frontier, he said, is complying with the WARN Act, a federal law that requires large employers to give workers at least 60 days' notice of a mass layoff.

As for severance pay, Nelson cited Ruffin's initial investment in the property. "Mr. Ruffin kind of paid it in advance," he said. "A lot of our employees have already enjoyed that benefit."

Beyond that, employees will be paid for unused vacation time, in addition to being eligible for unemployment compensation, Nelson said.

Culinary Secretary-Treasurer D. Taylor said he hopes Ruffin will reconsider.

The union, which represents about 500 New Frontier employees, seeks the same kind of severance package Boyd Gaming Group Chairman Bill Boyd gave his workers after the Stardust was imploded to make room for the $4.8 billion Echelon Las Vegas megadevelopment.

Stardust workers with more than 20 years of service received $10,000, with payments declining on a sliding scale to $1,000 for those employed less than a year.

"What Mr. Boyd has done has sort of set the bar as how long-term employees should be treated in a respectful way," Taylor said. "If the closing of the New Frontier occurred without workers receiving the kind of generous and magnanimous package that Mr. Boyd gave his workers, I think that would be tragic, given the history of those workers."

Although Boyd wasn't the first casino operator to offer severance packages, it did lay claim to the largest payout, likely in the millions of dollars, to union and nonunion workers.

In the past, MGM Mirage awarded severance checks and paid medical coverage to about 100 employees when it closed the nonunion Boardwalk.

Smaller operators, including the Riviera, have also offered severance payments when they've closed parts of their properties.

In the case of the Stardust, Boyd spokesman Rob Stillwell said the decision to award severance packages, while helpful to labor relations, was largely based on the company's long history in Las Vegas and its commitment to the community.

"At the end of the day, it was just the right thing to do," Stillwell said. "That's the way we've always done things and that's the way we'll continue to do things."

Stillwell added: "Giving the employees 60 days and then closing would have been the easier way to go, but that was never part of the conversation."

The Culinary, the largest of the four unions seeking severance packages, seeks a meeting with Ruffin. Casino spokesman Nelson said the company is open to talking - just not about severance pay. That point, Nelson said, is off the table and non-negotiable.

Taylor said he doesn't believe that those advising Ruffin have given him the full story about the plight of his workers.

"When he is made fully aware of the facts and is reminded of the long-term sacrifices of those workers, I'm very confident that Mr. Ruffin will do the right thing," he said.