In the Red Zone
ESPN Zone employees, abruptly laid off three years ago, get meager payday
Published: November 20, 2013
More than three years after losing her job in the ESPN Zone kitchen, Janice Watson is getting a sizable chunk of money.
“I guess it’ll be around $2,500,” Watson says after a short victory celebration in front of the Federal District Court on Lombard Street.
After three years in federal court, Watson and 139 fellow workers just finalized a $230,000 settlement from their former employer, The Walt Disney Co., which violated the Worker Adjustment and Retraining Notification (WARN) Act when it abruptly laid them off on June 16, 2010.
Making between $8 and $12 an hour, with irregular hours, staff from the iconic Inner Harbor eatery were given small severances and told they were “on leave” for the following 60 days. The fictional designation apparently was meant to cover the company’s flank under the law, but it also prevented the workers from easily qualifying for unemployment benefits. “Disney kept saying I was on a leave of absence,” says Watson, a chef who ran the crepe station for more than eight years.
The settlement is not even a rounding error on the quarterly balance sheet of Disney Corporation, which owns ESPN and its subsidiaries. And the workers aren’t getting all that much either—it varies, amounting to a few thousand dollars at best. But the ESPN Zone story illustrates something bigger about Baltimore, its labor market, and the Inner Harbor development model that has driven city policy for nearly four decades.
Last week the mayor’s office proposed “Inner Harbor 2.0,” an ambitious plan for a beach, pedestrian bridge (which, by itself, would cost $30 to $60 million), and bigger and better attractions in the space that was first redeveloped 40 years ago. Nowhere in the plan is any mention of wage standards for workers there, although boosters claim the harbor area generated $2.3 billion in economic activity in 2012.
The City Council has offered support for “living wage” laws elsewhere, but a 2011 resolution calling for a wage assessment of the Inner Harbor employers failed.
“It’s not really about the money. It’s the principle,” says Emmanuel McCray, who worked as a DJ and host at ESPN Zone in the Power Plant complex on the Inner Harbor. McCray is now an activist for fair development. He thinks Power Plant developer Cordish Co. has a responsibility to the workers on its properties to fill the place with responsible employers. Since losing the ESPN job, he says, “I’ve pretty much been educating myself on the issue of unfair development.”
On June 16, 2010, the kitchen and other staff were told not to come to work anymore and not to speak to the media or they would lose their severance payments. They defied orders, eventually setting up a picket (and getting hassled by security guards hired by the Cordish Co.). The workers also called United Workers, an organization of low-wage workers.
United Workers had been organizing low-wage day labor downtown for nearly a decade, nearly tripling the wages of the workers who cleaned Orioles Park at Camden Yards while calling out a tourist-centered development model that seemed to rely on very low-wage, temporary workers to serve well-to-do tourists and convention-goers. A 2011 report by the group “revealed a culture where workers were forced to work off-the-clock, accept unlawful tipping arrangements, work through injuries and illness, go without health care, endure sexual harassment, and apply for public assistance because of low wages and work hours,” says Michael Fox, a United Workers spokesperson. He says that, as far as he knows, Baltimore’s were the only ESPN Zone workers to fight for their rights under the law.
“United Workers came before it even closed,” says Leonard Gray, who worked at ESPN Zone for six and a half years and is now at the Holiday Inn downtown. “The managers didn’t want us to speak to them,” he says, so when ESPN Zone closed, he called United Workers. Gray became the lead plaintiff.
Before long, lawyers for Brown Goldstein and Levy determined that the layoffs violated the WARN Act. The suit was filed on Oct. 25, 2010.
The WARN Act requires companies with 50 or more employees to give at least 60 days notice to their workers—and pay them “the full amount” of their regular wages—before either a plant closing or a mass layoff. Enacted in 1988 as a response to deindustrialization, it was aimed at factory owners who abruptly closed or outsourced their work to Mexico and other cheap-labor countries. But the law also applies to service workers—though many don’t realize it. WARN Act notifications are routine; in Maryland 25 notices have been given so far in 2013, affecting more than 3,000 workers.
Disney knew it was closing down five ESPN Zones, including the Baltimore store, by at least early March. Watson and other line workers were kept in the dark until the day the place shut down, however. Many said they learned about it on the TV news.
“People were called back the next day and got an envelope with a number on it,” Watson says. “The check was mailed later.” She says she got $2,400.
The company based the payouts on the shorter off-season work hours instead of the summer season hours the employees were missing out on. The statute requires the average of the past three years’ pay or the “final regular rate”—whichever is higher.
But the Disney Corporation’s severance policy was part of a larger strategy to short the workers.
The company’s written severance policy contemplated violating the WARN act and said that in such a circumstance, the employee’s severance payment would be reduced by the amount of money paid under the WARN act’s 60-day notice requirement. In effect, the judge said in her decision, Disney wrote down exactly how it intended to violate labor law, violated the law just so, and then argued in court that, because it had a written policy designed to abrogate the law, it should be allowed to do so.
An ESPN spokesperson declined to comment on the case. In the past, the company told other media outlets it thought it followed the law. A lawyer for the company did not return a call from City Paper.
To support its severance policy in court, Disney invoked a case from another state, Braden vs. LSI Logic, Corp. And here’s the rub: In the case Disney cited, the judge held that doing what Disney subsequently tried to do would be illegal, because reading the law that way, according to the judge, “would actually give [the employer] an incentive not to comply with the provisions of the WARN Act . . . it could realize savings under the [Severance Plan] by not paying duplicate benefits.”
With its severance policy in place and its ex-employees on “leave,” Disney then fought against their attempts to get unemployment, Watson says.
Watson eventually got unemployment and collected that for more than a year, she says, before getting another job: “I have a cooking degree, so I’m lucky.” Watson says a fellow chef, Winston Gumpton, had to pack up and move back to New Jersey. “I’ve got to call him and tell him about the settlement,” she says as the short demonstration winds down.
The settlements get the workers about what they should have gotten in 2010, says Andrew D. Freeman, the workers’ lawyer. He says he wishes it were more.
“One of the things that struck me in this case,” Freeman says. “When we started, there were 30 workers [sitting] in a circle. Added up all together, they made about as much as I make in an hour. Now, I know lawyers are overpaid, but when a group of 30 hard-working people make only as much as one lawyer, something’s wrong.”
In addition to the $230,000 to be paid to the 140 former employees, Disney also must pay Freeman’s law firm, Brown Goldstein and Levy. The fees and expenses sum to $250,000.
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