Top 5 Legal Trends For Hospitality Employers

by Fisher Phillips
Contact

There is much to be learned from 2013. Below are five legal topics that made headlines last year, and should provide valuable guidance for managing labor and employment law issues in 2014.

The Rising Minimum Wage

Hospitality employers should be prepared for minimum-wage increases and take note of whether these increases affect their tipped workers’ wages. Thirteen state legislatures have voted to raise the minimum wage, many of which are in effect now. For some states, like Massachusetts and California, employers have until July 1st to make adjustments to their pay plans. President Obama recently proposed that Congress vote to increase the federal minimum wage from $7.25 per hour to $10.10 and thereafter to link it to increases in the Consumer Price Index.

According to a recent litigation-trends survey (www.nortonrosefulbright.com), employers faced more wage-hour lawsuits than any other area of employment law. The popularity of wage-hour class actions among plaintiffs’ lawyers remains a real concern for employers. Also, one of the U.S. Labor Department’s (DOL) continuing enforcement initiatives is to target the hospitality industry, which they view as presenting a “high risk” for non-compliance. Last year the DOL announced five-figure settlements paid out by hotel and motel employers for failing to pay required overtime premiums.

Given the present legal climate, and the continually changing legal standards, it makes good sense to conduct your own audit to make sure that your internal procedures contain the necessary safeguards with regard to minimum wage, overtime payments, and other Fair Labor Standards Act (FLSA) compliance.

Hiring Interns

Last year, a New York federal court held that an employer’s unpaid interns should have been classified as employees, and were thus entitled to minimum wage and overtime requirements under the FLSA. Not surprisingly, more former interns are bringing lawsuits in the wake of this ruling seeking backpay.

Before you consider utilizing interns, whether paid or unpaid, consider the federal guidelines from the DOL. The Wage and Hour Division of the DOL issued a six-factor test to determine if a person who participates in “for-profit” sector internships may do so without compensation.

These criteria examine whether the internship experience is geared to providing a more educational environment that primarily benefits the intern’s academic pursuits, or if the intern is used as a substitute for regular paid workers. If considered a mere substitute for paid workers, the DOL requires employers to pay no less than the federal minimum wage and overtime.

Companies often bring interns into the workplace with the thought that internship programs have a mutual benefit to them and the intern. The idea is that interns gain valuable experience in the industry in which they hope to work and thereby become more marketable. The employer sees the benefit in that it can obtain needed labor, at little or no cost, without having to comply with onerous employment laws and regulations, such as wage and hour laws, workers’ compensation, and the payment and reporting of payroll taxes.

Cases from last year also indicate that employers could have exposure to harassment or discrimination lawsuits under federal law. The bottom line is that an internship program can be a risky proposition if not implemented properly.  Our advice to hospitality employers is to seek legal counsel before setting up an internship program.

Class-Action Waivers In Arbitration Agreements

Following the U.S. Supreme Court’s landmark decision in AT&T Mobility v. Concepcion, employers defending class actions have succeeded in preventing class claims. Concepcion marked the beginning of a new wave of Supreme Court decisions which have significantly reduced the ability of individuals to pursue collective or class actions. In Concepcion, the Supreme Court upheld the enforceability of class-action waivers in arbitration agreements. In addition, through this case, the Supreme Court significantly limited the power of state courts to use state statutes and public policy considerations to both invalidate class-action waivers and challenge arbitration agreements.

Last year, the Supreme Court continued its support of enforcing arbitration agreements in American Express v. Italian Colors. Although having class claims reduced to individual ones does not necessarily eliminate the problem of litigation costs, it may go far in limiting the soaring exposure that typically arises from class-action litigation.

Arbitration agreements can provide valuable benefits for employers defending class-based claims.  But hospitality employers should evaluate the potential impact of seeking to enforce arbitration versus fighting multiple claims individually.

This includes consideration of the merits of the employees’ claims, the amount of possible liability (globally and individually), the potential costs of facing numerous individual actions, the cost of arbitration, and the likelihood of achieving a broad-based resolution at a discounted value. Nonetheless, an arbitration agreement can serve as a powerful tool for protecting your company from expensive class litigation.

Social Media And Employee Protected Speech

Social media is a useful tool for any company seeking to attract new business, advertise a property’s amenities, and receive feedback from guests. But social media and the policies that govern them are not immune from regulation.

A “trending topic” in the labor and employment legal community has been the National Labor Relations Board’s (NLRB) aggressive approach to protecting employee speech in social media. This protection extends even to non-unionized employees. While limiting what your employees say or “tweet” about the company may help your business from a public relations standpoint, it can also create new legal woes.

Several NLRB decisions have caused employers to reexamine their policies to ensure that they are not too restrictive toward employees complaining about working conditions on social media. Thus, it’s important to carefully craft any social-media policy to make sure employees understand that their “protected” behavior is not prohibited.           

One case is illustrative of this issue. After work, an employee posted a comment on her Facebook page complaining about a coworker and asking other people to chime in about their feelings toward this coworker. Four other employees commented under the status and berated the coworker. The employer found out about this incident and immediately fired the employee who posted the comment, and the four other employees who commented, stating that their remarks violated the company’s anti-bully and harassment policy.

Upon review by the NLRB, the Board determined that the terminated employees were engaging in protected and concerted activity on Facebook. Despite the company’s anti-harassment policy, the NLRB held that employees could speak about their coworker on Facebook because they were discussing working conditions.

Before accessing an employee’s social-media account, always consult legal counsel. Some states have limited the type of social-media content employers can access. For example, employee privacy in online accounts was deemed so important by the California legislature that it passed a law prohibiting supervisors and managers from requesting user names and passwords from employees. Although specific to California, all employers should be cautious before accessing employee social media.

Background Checks

Guest safety is a paramount concern for hospitality employers and it’s common for employers to conduct background checks to ensure that their employees do not have a criminal history. Indeed, certain employees may have access to guest credit card numbers, personal belongings, and other confidential information. While screening new hires through background checks may seem like the best way to limit your liability and protect your guests, blanket disqualifications may be viewed as an indirect form of race discrimination.

A 2011 Equal Employment Opportunity Commission (EEOC) study found that the use of criminal-background checks has a disparate impact on African Americans and Hispanics. As a result of the study, the EEOC issued enforcement guidance on April 25, 2012, related to the use of arrest and conviction records by employers in making hiring decisions.

The EEOC is now recommending that employers go through an extensive individualized screening process to ensure that the criminal-background information is job related and consistent with business necessity. For example, the EEOC suggests employers allow applicants to explain why their conviction should not preclude them from employment and further suggests that any adverse employment decision based on criminal-background checks be sufficiently tied to the job duties of the employee.

In a victory for employers, federal courts recently dismissed three EEOC cases against employers based on the theory that general-background checks in hiring create a race bias. Nonetheless, hospitality employers should proceed with caution in conducting background checks and avoid implementing a blanket policy that rejects applicants with criminal backgrounds.

Conclusion

To ensure that 2014 is a successful year, it is important for hospitality employers to take note of these recent trends. Whether ensuring wage-hour compliance, implementing a new internship program, or conducting a background check, employers must always be aware of the legal pitfalls.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Fisher Phillips | Attorney Advertising

Written by:

Fisher Phillips
Contact
more
less

Fisher Phillips on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.