Settlement for workers impacted by Covid-19 at Blackstone’s Servpro worksites  

Workers have finally reached a settlement in a lawsuit alleging that a Servpro franchise and its contractors did not provide protective equipment or implement other safety measures during the first months of the Covid-19 pandemic, allegedly violating public health orders and eventually forcing workers to travel while infected. The lawsuit included allegations of negligence, fraudulent misrepresentation, public-nuisance claims, violations of wage and sick-leave protections, and labor trafficking.

Servpro is a disaster restoration company with headquarters in Gallatin, Tennessee. In 2019, private equity firm The Blackstone Group acquired Servpro for $1 billion. With locations across the United States and Canada, SERVPRO celebrated the opening of its 2,000th franchise in June 2022. The company has grown 12% over the past three years.

In spring 2020, many workers were sent home while companies and governments implemented mitigation measures. Disasters did not stop, however, and workers at restoration companies continued to show up for communities in need. After floods in Michigan impacted a Midland hospital, more than 100 workers were hired by subcontractors of Blackstone-backed Servpro franchises to support cleanup efforts, allowing the hospital to continue functioning during the height of the pandemic. 

A few months later, 17 of these workers filed a lawsuit against multiple Servpro franchises and the corporate office, alleging that they were infected with Covid-19 due to lack of protective equipment and adequate, socially-distanced housing. Last month’s confidential settlement highlights the significance of protecting worker health and safety. Saket Soni, executive director of Resilience Force, an organization that advocates for these and other disaster recovery workers, called the settlement “a bright spot for workers at a difficult time,” as many workers in the industry take difficult and dangerous jobs due to precarious immigration status, further threatened under the current Trump administration. At Servpro locations, workers have reported wage theft, resulting in franchisees paying back wages. 

The workers, who traveled from as far as Florida and Texas to work at the site, told The New Yorker in 2021 that “they had not been tested for Covid and were not made to wear a mask… They were taken to a local hotel, where they learned that they’d be sleeping four to a room, two to a bed.” The close quarters were especially troubling in a pandemic when no vaccines were available, threatening the health of the workers, their families, and the communities in which they live and work.

Resilience workers depend on the companies that hire them for transportation to the site, both from their home states and daily from the local hotel, which is also arranged by the employer. In the recently settled lawsuit, workers alleged that despite the fact that the companies had full control over the travel schedule and conditions,they did not get paid for this time, which in some cases was more than 24 hours. Furthermore, the lawsuit alleged that company transportation did not allow for social distancing, with workers loaded into vans indiscriminately. 

Later, the workers claim, employers took advantage of their control over transportation and lodging, threatening to abandon workers that tested positive for Covid-19 if they did not use company-provided travel to return home the next day. Michigan public health officials say they instructed the Servpro subcontractors to have the impacted workers to isolate or quarantine according to the recommendations at the time. As no one in the department spoke Spanish, the employers were responsible for communicating guidance to the predominantly Hispanic workers – the lawsuit alleges that the employer instead told workers they could go home.

John Philo, a lawyer at non-profit Sugar Law Center, explained the severe medical issues and associated financial costs for those who contracted the virus: “We have two folks who were put on ventilators, and one who has over $300,000 in medical bills. Folks did have very real costs that they were paying for through medical care and testing. And they do want to be paid back for what they have been put through because of what these defendants did.” The plaintiffs alleged that the employers did not provide evidence of any comprehensive Covid-19 policy implementation.

While Servpro does not publish an employee count, the company ultimately profits from the labor arranged through franchisees, which often use subcontractors to hire additional workers. This franchising and subcontracting method can cause problems for workers – when workers face a problem on the job, it can be difficult to identify which company is accountable. Servpro in Tennessee (as a franchisor) successfully removed itself as a defendant from this lawsuit, avoiding legal responsibility as the parent company. For more on how private equity profits from disaster, see our September 2023 report.

Blackstone acquired SERVPRO through its Core Equity Partners Fund, which is designed for longer-term investments of up to 15 years. With potentially eight more years left owning SERVPRO, Blackstone must ensure that its portfolio companies and their subcontractors abide by the firm’s own workforce principles, which include complying with state mandates and prioritizing worker health and safety.