Marriott workers’ suit says credit union loans are predatory

Hourly Marriott workers in Philadelphia are in the midst of a class-action lawsuit against the Marriott Employees Federal Credit Union, saying that the credit union’s $500 mini-loans are predatory and lack transparency around their true cost.

The suit was filed on behalf of housekeeper Katherine Payne and busser Arthur Coates, both of whom work at Philadelphia Marriott Downtown in Center City, but seeks to include all Pennsylvania workers that have used the mini-loans. Ms. Payne and Mr. Coates are part of a group of workers at the Marriott Downtown seeking to unionize with Unite Here.

“By providing employees with quick cash when needed and indebting them to their employer, the mini-loan allows the Marriott to retain its workforce even while subjecting workers to unfair and unpredictable scheduling,” the lawsuit reads.

It’s a case that ties together two major topics facing workers.

Ms. Payne and Mr. Coates turned to the miniloans when their hours were cut, the lawsuit says. It’s a scheduling problem that causes them to make less money, even if their hourly rates are higher than the $15/hour that advocates are fighting for around the country.

Lekesha Wheelings, a chef at the Philadelphia Marriott Downtown who has also used the loans, made $39,500 in 2017, down from nearly $45,000 in 2016.

Retail workers and fastfood workers also face inconsistent scheduling issues: It’s why advocates fought for the Fair Workweek law that mandates more predictable hours and will be implemented in 2020. Philly’s Fair Workweek law is the only city law of its kind that also covers hotel workers. (Oregon’s state law also covers hotel workers.)

A majority of Americans would have trouble coming up with $1,000 to cover an emergency, a phenomenon some experts have dubbed “the $1,000 problem.” It was an issue that was front and center last month when TSA agents and other federal workers were forced to turn to food pantries and loans when they missed a paycheck during the government shutdown.

Researchers like Carmen Rojas of the Workers Lab and Rachel Schneider, author of The Financial Diaries: How American Families Cope in a World of Uncertainty, have advocated for new kinds of employee benefits that address problems that “show up earlier than retirement and more regularly than major health care emergencies,” they said.

And those benefits have started emerging, often with corporations championing them as payday loan alternatives: Walmart employees can now use an app to access their pay earlier, often with no fees. Comcast employees can take out $1,000 to $2,000 loans and pay it back through payroll deductions.

Regarding the Marriott credit union mini-loans, Betsy Edasery, program director at the Workers Lab, said they’re examples of “employers continuing to place the burden on working people to solve failures of our economy — persistent low wages, unstable scheduling, zero benefits.”

The Workers Lab, based in Oakland, Calif., is excited about solutions that “are actually trying to solve these issues by changing their business model by paying workers more and offering no cost cash advances or grants,” she said.

There’s nothing inherently problematic with an employer offering benefits to tackle cash-flow problems, said Rebecca Borné, senior policy counsel for the nonprofit Center for Responsible Lending based in Durham, N.C, but what is concerning about the Marriott situation is how the credit union’s $35 overdraft fees can interact with the mini-loans to keep workers in a cycle of debt. Ms. Wheelings, for example, got hit with $450 worth of overdraft fees in 2014 while she was paying back a mini-loan.