Guest Services Unlawfully Denied Termination Pay to Ex-Employees, Class Action Claims

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Guest Services, Inc. (GSI) faces a proposed class action filed by over two dozen ex-workers who claim the hospitality management organization wrongfully denied them termination pay.

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The 28-page case says that GSI, one of the longest-running federal government contractors, had since 1995 offered employees a terminal leave pay plan that entitled them to a payout on the last day of their employment as long as they weren’t fired for cause before retiring. However, the defendant, without notifying any plan participants, amended the plan eligibility criteria in July 2019 to drastically reduce the amount workers would receive when its government contract at the facility would eventually end in 2021, the lawsuit contends.

According to the complaint, the 2019 amendments, implemented 24 years after the initial policy went into effect, stated that employees could receive payouts only if they permanently retired after leaving GSI, were at least 55 years old, and had continuously worked at the company for 10 years, among other requirements.

The suit goes on to explain that GSI’s new eligibility requirements would apply retroactively, meaning that employees who previously qualified for terminal leave pay would not receive their benefits if, for example, they planned to continue working after GSI’s contract ended, or otherwise did not meet its updated standards.

Per the filing, the application of retroactive amendments is a violation of the federal Employee Retirement Income Security Act’s (ERISA) “anti-cutback rules,” and as such the changes are unenforceable.

The case claims that GSI, to fund the plan, took deductions from employees’ paychecks even if they were no longer eligible for the payout and wanted to opt out. The suit alleges that these deductions, which the defendant marked as “deferred pay” deductions on their paystubs, were not held in trust but instead went to GSI’s corporate account to pay for expenses unrelated to the plan.

When questioned by employees about these deductions in a May 2021 meeting, former GSI CEO and defendant Gerard Gabrys claimed that workers had not been contributing to the terminal leave pay plan before 2019, the suit says. When asked where the deferred pay deductions went prior to 2019, Gabrys “had no answer for them,” the filing alleges.

As the case tells it, the defendants breached their fiduciary duties under ERISA by refusing to pay plan benefits, misrepresenting their plan terms to employees, and failing to invest retirement plan assets appropriately. The suit also accuses GSI of unlawfully withholding wages from employees and neglecting to pay the plaintiffs fringe benefit payments at a rate of over $4 per hour, as promised.

The lawsuit looks to represent any former Guest Services, Inc. employees who were covered by the 1995 terminal leave pay plan, had money withheld as “deferred pay” and/or did not receive fringe benefit payments at a rate of over $4 per hour.

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