The Seventh Circuit Court of Appeals has upheld an arbitration ruling against Elmar Hotel Management, LLC, and its affiliates, confirming that they violated a collective bargaining agreement (CBA) by not employing union workers at the Inn of Chicago. This decision, issued on July 17, 2026, affects the hotel management industry and labor relations, particularly in how businesses engage with unions and handle employee agreements.
The case, Elmar Hotel Management, LLC v. Unite Here Local 1, was filed under docket number 25-2307. It centers on the use of the Inn of Chicago to house displaced migrants without employing union-represented workers. The ruling reinforces the importance of adhering to collective bargaining agreements and the rights of unions in labor disputes.
Background
The parties involved in this case are Elmar Hotel Management, LLC; Allegiant Equities, LLC; Social Club Management, LLC; and Remo Polselli, who are collectively referred to as the Employers. They were challenged by Unite Here Local 1, a labor union representing hotel workers. The dispute arose when the Employers decided to operate the Inn of Chicago, which had been temporarily closed due to the COVID-19 pandemic, and began housing migrants without utilizing union members for operations.
In March 2021, Remo Polselli signed a purchase agreement for the Inn, which included a CBA that required the Employers to use union workers. After the Inn was purchased, it remained closed for several years until the city of Chicago requested that it be used to house migrants. Polselli signed a Group Sales Agreement to facilitate this arrangement, but the Employers did not use union employees for the necessary operations, leading to grievances filed by the union.
The Ruling
The Seventh Circuit, led by Circuit Judge Maldonado, affirmed the district court's confirmation of the arbitration award against the Employers. The court ruled that the Inn was operating as a hotel when it housed migrants, thus the CBA was applicable. The arbitrator found that the Employers had violated the CBA by failing to use union workers and not providing the union with notice or bargaining over the transfer of work to non-union employees.
The court stated, “the Employers participated in the arbitration without reserving the right to later object to arbitrability.” This indicates that the Employers cannot now claim they were not bound by the arbitrator's decision.
Judge Maldonado emphasized that the arbitrator's decision was rooted in the CBA and that the Employers had effectively submitted to the arbitration process. The court found no evidence that the Employers questioned the arbitrator’s authority during the proceedings.
Impact
This ruling has significant implications for hotel management and labor relations. It reinforces the necessity for businesses to adhere to collective bargaining agreements and ensures that unions have a voice in labor disputes. The decision also clarifies that companies cannot evade their responsibilities under a CBA simply by changing ownership or management structures.
The ruling serves as a reminder to other businesses in similar situations that they must engage with unions and honor existing agreements, especially when their operations involve union-represented employees. Failure to do so may result in legal challenges and arbitration awards against them, as seen in this case.
What's Next
While the Employers may seek to appeal the decision, the court’s ruling strongly affirms the arbitration process and the authority of arbitrators in labor disputes. Details regarding any potential appeal were not available in the court filing.