Hospitality Labor and Employment Law Blog : Hotel, Restaurant, Resort & Spa Lawyers & Attorneys: Epstein Becker & Green Law Firm: Hospitality Law

By: Kara M. Maciel and Elizabeth Bradley

The U.S. Court of Appeals for the D.C. Circuit is rapidly becoming the champion of employers in the fight against the National Labor Relations Board’s (the “Board”) attempt to implement radical new rules governing the workplace.

Last month, on April 17, 2012, the D.C. Circuit enjoined the implementation of the Board’s rule requiring that employers post a notice informing employees of their right to join or form a union. Yesterday, the D.C. Circuit struck another blow to the Board by holding that its proposed union election rules are invalid. The Court reasoned that the Board did not have authority to issue the rule because it lacked the required three-member quorum when it was enacted.

In its opening sentences, the Court’s decision aptly quipped, “According to Woody Allen, eighty percent of life is just showing up. When it comes to satisfying a quorum requirement, though, showing up is even more important than that. Indeed, it is the only thing that matters – even when the quorum is constituted electronically.”

Although the National Labor Relations Act provides that “three members of the Board shall . . . constitute a quorum,” the December 16, 2010 final rule revising union election procedures was only voted on by Chairman Pearce and Member Becker. Member Hayes did not vote; nor did he affirmatively abstain from voting. In its decision, the Court held that Member Hayes could not be counted toward the quorum requirement because he took no affirmative action in response to his receipt of the final rule. Because the final rule was not acted upon by three members of the Board, the quorum requirement was not met and the Court held that the rule is invalid. 

The Court declined to address the other procedural and substantive challenges to the rule. While this decision does not prohibit the Board from properly constituting a quorum and voting on the proposed rule; for now, representation election will continue to proceed under the old procedures.

In response, the NLRB suspended the implementation of changes to its election representation case process, which had taken effect April 30.  The Board also withdrew the guidance to regional offices issued prior to the effective date and advised regional directors to revert to their previous practices for election petitions starting today.  About 150 election petitions were filed under the new procedures. Many of those petitions resulted in election agreements, while several have gone to hearing. 

For more information about what employers should do in response to the Court's decision, please see our Act Now Advisory.

By  Kara Maciel and Casey Cosentino

The restaurant and hospitality industries are no strangers to the tidal wave of wage and hour class action lawsuits. Restaurants and hotel operators located in states with employee-friendly laws like Massachusetts, New York, and California, are particularly vulnerable. This vulnerability was recently confirmed on April 30, 2012, when Texas Roadhouse, Inc. agreed to pay $5 million to settle a putative class action suit filed by wait staff employees from nine restaurants in Massachusetts.

In Crenshaw, et. al, v. Texas Roadhouse, Inc. (No. 11-10549-JLT), the plaintiffs alleged that Texas Roadhouse violated Massachusetts Tips Law by retaining and distributing proceeds from their gratuities to managers and other non-wait staff employees, including hosts/hostesses. Additionally, because the plaintiffs did not receive all of their gratuities, they asserted that Texas Roadhouse improperly claimed the tip credit against the minimum wage in violation of Massachusetts Minimum Wage Law. As such, Texas Roadhouse allegedly paid the plaintiffs less than minimum wage. The plaintiffs, therefore, argued that they were entitled to full minimum wage for all hours worked.

Under Massachusetts law, employees who receive at least $20 per month in gratuities may be paid $2.63 per hour (“tip credit”), provided that the gratuities and hourly pay rate when added together are equal to or greater than the state minimum wage of $8.00. If the employee does not receive the equivalent of the minimum hourly wage with his or her tips, the restaurant or hotel must pay the difference. Although restaurants and hotel operators are prohibited from retaining employees’ gratuities, they may distribute properly pooled tips. Accordingly, when the tip credit is claimed to satisfy the minimum wage, only employees who customarily and regularly receive tips are eligible to participate in the tip pool. These employees include wait staff employees (e.g., banquet servers and bussers); service employees (e.g. baggage handlers and bellhops); and bartenders. Conversely, employees not eligible for tip pool arrangements include kitchen staff, cooks, chefs, dishwashers, and janitors. Also, under no circumstances are employers, owners, managers, or supervisors permitted to share in the tip pool.  

The Texas Roadhouse settlement illustrates the importance of adhering to state and federal minimum wage laws. A violation of a tip pool arrangement can lead to high exposure for restaurants and hotels, not only with respect to money wrongfully withheld from employees, but also with potential tip credit violations. With the flood of class action suits, restaurants and hotel operators must continue to make compliance with wage and hour laws a top priority. As a best practice, restaurants and hotel operators should conduct regular self-audits of their wage and hour practices, in consultation with legal counsel. Identifying and correcting wage and hour mishaps before plaintiffs collectively seek action is the first defense to preventing class action suits and reducing legal liability.

By Jeffrey M. Landes, Susan Gross Sholinsky, and Jennifer A. Goldman, with Teiko Shigezumi

On April 25, 2012, the U.S. Equal Employment Opportunity Commission ("EEOC") issued an enforcement guidance document titled "Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et. seq." (the "Guidance"), with respect to employers' use of arrest and conviction information in connection with employment decisions.

Disparate Treatment v. Disparate Impact

Although Title VII of the Civil Rights Act of 1964 ("Title VII") does not prohibit employers' use of criminal background checks, the Guidance reaffirms the EEOC's longstanding position that employers may violate Title VII if they use criminal background information improperly. The Guidance, which updates and consolidates existing EEOC guidance documents on the subject that have previously been left unchanged since 1990, focuses on employment discrimination based on race and national origin.

According to the EEOC, there are two ways in which an employer's use of criminal history information may violate Title VII. First, Title VII prohibits employers from engaging in "disparate treatment" discrimination – that is, treating job applicants with the same criminal records differently because of their race, color, religion, sex, or national origin. Second, even where employers apply a criminal record exclusion under a neutral policy (e.g., uniformly excluding applicants based on certain criminal conduct), the exclusion may still operate to disproportionately and unjustifiably keep out people of a particular race or national origin. This is referred to as "disparate impact" discrimination. If the employer does not show that such an exclusion is "job related and consistent with business necessity" for the position in question, the exclusion is unlawful under Title VII.

Read the full advisory online

By Eric J. Conn and Casey M. Cosentino

In what has been good news for hospitality employers, the past month has been a rough stretch for OSHA in terms of Injury and Illness Recordkeeping enforcement.  As we reported last month on the OSHA Law Update Blog, in March, the Seventh Circuit beat back OSHA’s attempt to expand the meaning of “work related” for purposes of determining whether an injury or illnesses is recordable.  Then last month, the District of Columbia Circuit further and dramatically limited OSHA’s authority to cite Recordkeeping violations, by insisting that the injury that is the subject of the recordable case actually have occurred within 6-months and 8 days of the citation. 

In this most recent development, the U.S. Court of Appeals for the D.C. Circuit strictly applied the 6-month statute of limitations for issuing violations under the Occupational Safety and Health Act (“OSH Act”). See AKM LLC, d/b/a Volks Constructors v. Sec’y of Labor, No. 11-1106 (D.C. Cir. Apr. 6, 2012).  By way of background, the OSH Act states that “[n]o citation may be issued . . . after the expiration of six months following the occurrence of any violation.” 29 U.S.C. § 658(c).  The OSH Act further provides that “[e]ach employer shall make, keep and preserve” records of workplace injuries and illnesses “as the Secretary . . . may prescribe by regulation.” 29 U.S.C. § 657(c)(1).  Pursuant to this delegated authority, the Secretary of Labor has issued regulations that require employers to:

1.      Record work-related injuries and illnesses on OSHA’s 300 Log and 301 Report “within seven (7) calendar days of receiving information that a recordable injury or illness has occurred;”

2.      Prepare a year-end summary report of all recordable injuries during the calendar year on OSHA’s 300A Summary Form; and

3.      Maintain or save the 300 Logs, 301 Reports, and 300A Summary Forms for 5 years.

In the Volks case, OSHA issued Volks Constructors (“Volks”) citations on November 8, 2006, for allegedly failing to maintain complete injury and illness records from 2002 through 2006.  Volks was not cited, however, for failing to save the logs and forms for the requisite 5 years.  Rather, the violations related to Volks not recording or not properly recording individual recordable injuries or illnesses on the 300 Log.

Volks moved to dismiss the citations as untimely because none of the referenced injuries occurred within the 6 months preceding the citations.  In opposition, OSHA contended that Volks’ duty to maintain injury and illness logs and forms for 5 years tolled the 6-month statute of limitations.  The administrative law judge assigned to the case sided with OSHA, and the Occupational Safety and Health Review Commission (“OSHRC”) later affirmed the ALJ’s decision. OSHRC concluded that because of the duty to preserve the log for 5 years, Volks’ failure to record the employee injuries and illnesses constituted “continuing violations,” which extended the 6-month statute of limitations until six months after the end of the 5-year retention period.

On appeal, the D.C. Circuit reversed and vacated the citations. In doing so, the D.C. Circuit found that the OSH Act’s express language rendered the citations untimely because every alleged failure-to-record violation and every workplace injury that gave rise to the violations “occurred” more than 6 months before the citations were issued.  The Court stated that, under the Secretary’s argument, “the statute of limitations Congress included in the Act could be expanded [infinitely] if, for example, the Secretary promulgated a regulation requiring that a record be kept of every violation for as long as the Secretary would like to be able to bring an action based on that violation. There is truly no end to such madness.”  The Court further noted that “[n]othing in the statute suggests Congress sought to endow this bureaucracy with the power to hold a discrete record-making violation over employers for years, and then cite the employer long after the opportunity to actually improve the workplace has passed.”

Under the Volks decision, OSHA may only cite employers for failing to record a work-related injury from the 8^th day after an unrecorded injury occurred until 6-months and 8 days after the injury.  The precedential value of the Volks decision is significant because the decision was issued by the D.C. Circuit, which has jurisdiction to hear any case appealed from the OSH Review Commission.

The timing of the decision is also noteworthy because it coincided with the expiration of OSHA’s two and a half year long Recordkeeping National Emphasis Program, an enforcement program that resulted in hundreds of Recordkeeping-focused inspections.  Alleged Recordkeeping violations were found and cited by federal OSHA in two-thirds of the inspections carried out under the Recordkeeping National Emphasis Program, and yielded nearly 1,000 total Recordkeeping violations.  At the time the inspections were conducted and citations issued, OSHA was continuing its practice of citing employers for Recordkeeping issues as old as five years.  We understood that OSHA had intended to renew the Recordkeeping NEP.  Perhaps the Volks decision lead to an early retirement (or temporary hold) on that program.

Regardless of the expiration of the NEP and this new time crunch imposed by the Volks decision, hospitality employers should expect OSHA to find new ways to continue citing Recordkeeping violations, such as by amending its regulations or requiring electronic submission of Injury and Illness records to OSHA.

By Michael Kun

Yesterday, only weeks after its long-awaited Brinker v. Superior Court decision, the California Supreme Court issued another important ruling on California meal and rest period laws. 

In Kirby v. Immoos Fire Protection, Inc., the Supreme Court ruled that neither party may recover attorney’s fees on claims involving meal and rest periods.  The Court analyzed the legislative history of the meal and rest period provisions and concluded, “We believe the most plausible inference to be drawn from history is that the Legislature intended [meal and rest period] claims to be governed by the default American rule that each side must cover its own attorney’s fees.” 

Although plaintiffs’ counsel throughout the state have tried to put a happy face on this decision, claiming a victory because plaintiffs cannot be made to pay an employer’s attorney’s fees should the employer prevail, the decision is plainly a victory for employers.  Rarely, if ever, are plaintiffs made to pay an employer’s attorney’s fees in a meal and rest period case, while employers are routinely asked to do as part of the resolution of such cases.  And as employers who have faced meal and rest period class actions know, the resolution of those cases has often turned on disputes over plaintiffs’ counsel’s fees, where it has not been unusual for plaintiffs’ counsel to seek fees that dwarf the recovery they seek for the employees themselves. 

While Kirby will have a great impact on meal and rest period cases, it is unlikely to spell the end of those cases.  Instead, employers can expect that plaintiffs’ counsel will include claims for which attorney’s fees can be recovered, such as claims for unpaid overtime or claims under the Private Attorneys General Act, and that they will later contend that most of their time was devoted to those claims, not the meal and rest period claims.

Additionally, employers should be aware that the Supreme Court all but invited the state legislature to add an attorney’s fees provision for meal and rest period violations: “it is up to the Legislature to decide whether [minimum wage law’s] one-way fee-shifting provision should be broadened to include [meal and rest period] actions.”

by Carrie Corcoran, Matthew T. Miklave, and Susan Gross Sholinsky

 The U.S. Equal Employment Opportunity Commission ("EEOC") has issued a long-awaited final rule ("Final Rule"), which amends the regulation on the "reasonable factors other than age" ("RFOA") defense available under the Age Discrimination in Employment Act ("ADEA"). The Final Rule is available at 29 C.F.R. Part 1625. The EEOC previously published proposed rules regarding the RFOA defense on March 31, 2008, and then on February 18, 2010. The Final Rule takes into account public comments received on those proposals.

Unfortunately for employers, the Final Rule was not worth the wait. The revised regulation, which takes effect on April 29, 2012, imposes rigorous procedural and factual requirements for employers when attempting to establish the reasonableness of a policy or practice that causes an age-based adverse impact.

Read the full advisory online

By Eric J. Conn and Casey M. Cosentino

For years, OSHA’s Hazard Communication Standard (“HazCom”) has been the standard most frequently cited against hotel and other hospitality employers.

In FY 2011 37 hotel companies were cited for violations of the HazCom Standard, including, primarily, alleged failures to:

(1) maintain a written Hazard Communication Program;

(2) ensure each container of hazardous chemicals (such as cleaning agents) is labeled, tagged, or marked;

(3) maintain a complete set of Material Safety Data Sheets (“MSDS’s”) for each hazardous chemical at the workplace; and

(4) train employees in the written program and how to use MSDS’s

This important OSHA Standard, that has long impacted hospitality employers, received a major facelift last month. On March 26, 2012, OSHA issued a final rule that integrates the United Nations’ Globally Harmonized System of Classification and Labeling of Chemicals (“GHS”) into OSHA’s Hazard Communication Standard (“HazCom”). 

The new HazCom Standard requires employers to classify chemicals according to their health and physical hazards, and to adopt new, consistent formats for labels and Safety Data Sheets (“SDS’s”) for all chemicals manufactured or imported in the United States. According to Assistant Secretary Michaels, “OSHA's 1983 Hazard Communication Standard gave workers the right to know . . . this update will give them the right to understand.”

In preparing to implement the new HazCom Standard, below is a list of 10 important things employers need to know about the final rule. Look out for our article coming soon in EHS Today Magazine for a more detailed review of these 10 issues.

1.       Hazard Classification: The new HazCom Standard has specific criteria for classifying health and physical hazards into a hazard class and hazard category. The hazard class indicates the nature of hazard (e.g. flammability) and the hazard category is the degree of severity within each hazard class (e.g. four levels of flammability).

2.       Mixtures: Evaluating health hazards of mixtures is based on data for the mixture as a whole. If data on the mixture as a whole is not available, importers and manufacturers may extrapolate from data on ingredients and similar mixtures. 

3.       New Label Requirements: For each hazard class and category, chemical manufacturers and importers are required to provide common signal words, pictograms with red borders, hazard statements and precautionary statements. Product identifiers and supplier information are also required.  

4.       Safety Data Sheets: SDS’s replace MSDS’s, and the new Standard requires a standardized 16-section format for all SDSs to provide a consistent sequence for organizing the information.          

5.       Non-Mandatory Threshold Limit Values in SDSs: Employers are required to include in SDS’s the non-mandatory threshold limit values (TLV’s) developed by the American Conference of Governmental Industrial Hygienists, in addition to OSHA’s mandatory permissible exposure limits (“PEL’s”).

6.        Information and Training: Employers are required to train employees on the new label elements (e.g. signal words, pictograms, and hazard statements) and SDS format by December 1, 2013. 

7.       Other Effective Dates:  The table below shows the rolling effective dates of the new Standard:

8.       Hazards Not Otherwise Classified: Hazards covered under the old HazCom Standard but not addressed by GHS are covered under a separate category called “Hazards Not Otherwise Classified” (“HNOC”). HNOC’s need only be disclosed on the SDS and not on labels.Notably, pyrophoric gases, simple asphyxiants, and combustible dust are not classified under the HNOC category. Rather, these chemicals are addressed individually in the new Standard. 

9.       No Preemption of State Tort Laws: The new HazCom Standard does not preempt state tort laws, which means that it will not limit personal injury lawsuits regarding chemical exposures, inadequate warnings on labels, and/or failure to warn. 

10.    Combustible Dust:  The final rule added combustible dust to the definition of “hazardous chemicals,” and thus, combustible dust hazards must be addressed on labels and SDSs. Although the new HazCom Standard expressly states that combustible dust is covered, OSHA failed to define combustible dust, which will likely create substantial confusion and uncertainty for employers.

By: Kara M. Maciel and Matthew Sorensen

Social media has become an increasingly important tool for businesses to market their products and services. As the use of social media in business continues to grow, companies will face new challenges with respect to the protection of their confidential information and business goodwill, as several recent federal district court decisions demonstrate.  

Christou v. Beatport, LLC (D. Colo. 2012), Ardis Health, LLC v. Nankivell (S.D. N.Y. 2011), and PhoneDog v. Kravitz (N.D. Cal. 2011) each involved former employees who took the login credentials for their employers’ business social media accounts when they left their employment. In each case, the companies alleged that the removal of the login credentials for their social media accounts by their former employees had significant negative consequences on their ability to effectively compete and market their products and services.

Earlier this year, the U.S. District Court for the District of Colorado addressed whether a nightclub owner’s MySpace page and its connections could constitute a protectable trade secret. In Christou v. Beatport, LLC, Bradley Roulier, a former partner in a business that ran two Denver nightclubs kept the login credentials for the clubs’ MySpace pages when he left the partnership to start his own competing nightclub. According to the complaint, the nightclubs’ MySpace pages each had over 10,000 “friends.” After leaving to start his own competing club, Mr. Roulier used the login credentials that he had taken to post updates to his former partner’s MySpace pages promoting his new night club. His former partner then sued him for misappropriation of its trade secrets – namely the login credentials for its MySpace pages and the “friend” connections for those pages. On Mr. Roulier’s motion to dismiss, the court found that the MySpace login credentials and the “friend” connections could constitute protectable trade secrets. The court concluded that the MySpace pages were password protected, that the “friend” connections for the clubs’ MySpace pages were more than just lists of potential customers, they also provided personal information about the “friends” and their preferences, and the clubs’ lists of “friends” could not be duplicated without a substantial amount of effort and expense.

In a similar case, Ardis Health, a former employee effectively froze her former employer out of its business social media websites by taking the login credentials for the accounts and refusing to return them to the former employer. The employee had formerly been responsible for creating and updating the company’s social media websites and was in sole possession of the login credentials for those websites at the time her employment was terminated.  Accordingly, when she refused to return the login credentials after her termination, the employer could no longer access or update its websites. The employer was ultimately able to obtain a preliminary injunction requiring the former employee to return the login credentials for its social media websites based on the theory that the former employee’s unauthorized retention of that information constituted conversion. In finding that the company owned the rights to the login credentials for its social media sites, the court noted that the former employee had entered an agreement in which she had agreed that any work she created or developed during her employment would be the property of the company.

Finally, in PhoneDog, a former employee who had been responsible for establishing and operating a Twitter account for his employer that was designed to increase traffic to his employer’s website kept the login credentials for the account after he terminated his employment with the company, renamed the account, and kept its Twitter following. PhoneDog alleged its Twitter following was the equivalent of a proprietary customer list. PhoneDog also alleged that, by taking the account, the employee effectively decreased the number of visitors to the company’s website and thereby reduced the number of advertisers who were willing to purchase space on its website. On the former employee’s motion to dismiss, the U.S. District Court for the Northern District of California held that the Twitter account, its login credentials, and its followers could potentially constitute protectable trade secrets and that the unauthorized taking of the account and its login credentials constituted misappropriation. 

It should be noted that the courts in both PhoneDog and Christou did not find that the plaintiffs had established that their social media accounts were trade secrets. Rather, the courts simply held that they had alleged sufficient facts to state a claim that those accounts were trade secrets. The question of whether the employers will be able to prove the facts necessary to prevail on their claims was left open and both plaintiffs may very well encounter difficulties in proving the facts necessary to prevail on their trade secrets claims later in their respective cases.

These cases demonstrate the importance of careful planning to protect a company’s social media presence and its business connections. Employers should ensure that they maintain a log of their social media account login credentials and that the log is appropriately updated. Further, companies are well advised to require employees who establish and maintain such accounts on behalf of the company to enter agreements that provide that the accounts and their login credentials are the sole property of the company. Departing employees should also be interviewed in connection with their exit to ensure that all company social media login credentials to which they had access have been returned. Finally, in the event that an employee takes the login credentials for the employer’s social media accounts when he or she leaves the company, it is essential for the employer to take prompt action to recover the information. Delay can result in the loss of legal protections for the accounts and any connections that they hold.

By Michael Kun

This morning, the California Supreme Court has just issued its long-awaited decision in the Brinker case regarding meal and rest period requirements.   It is largely, but not entirely, a victory for employers.  A copy of the decision is here.

A few highlights of the decision:

On rest periods, the Court confirmed the certification of a rest period class because Brinker’s written policy arguably did not comply with the law as to the second rest period in a day.  In so doing, it clarified when employees are entitled to rest periods:

• Employees are entitled to 10 minutes’ rest for shifts from three and one-half to six hours in length, 20 minutes for shifts of more than six hours up to 10 hours, 30 minutes for shifts of more than 10 hours up to 14 hours, and so on. (page 20)

On meal periods, the Court confirmed that meal periods need not be “ensured,” and that employers have no obligation to “police” them:

• An employer’s duty with respect to meal breaks under both section 512, subdivision (a) and Wage Order No. 5 is an obligation to provide a meal period to its employees. The employer satisfies this obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so….. On the other hand, the employer is not obligated to police meal breaks and ensure no work thereafter is performed. Bona fide relief from duty and the relinquishing of control satisfies the employer’s obligations, and work by a relieved employee during a meal break does not thereby place the employer in violation of its obligations and create liability for premium pay under Wage Order No. 5, subdivision 11(B) and Labor Code section 226.7, subdivision (b). (page 36)

The Court also rejected the plaintiffs’ argument in favor of “rolling” meal periods (i.e., the argument that an employee who takes an early meal period is entitled to another meal period within the next five hours, even if he or she works less than 10 hours):

• We conclude that, absent waiver, section 512 requires a first meal period no later than the end of an employee’s fifth hour of work, and a second meal period no later than the end of an employee’s 10th hour of work. (page 37)

Unfortunately, confirming that meal period claims will continue to be litigated in California for years to come, the Court added the following caveat:

• What will suffice may vary from industry to industry, and we cannot in the context of this class certification proceeding delineate the full range of approaches that in each instance might be sufficient to satisfy the law.   (page 36)

A more comprehensive analysis of the decision and its impact upon California employers – and the meal and rest period class actions that have besieged California employers – will be forthcoming. 

By: Jay P. Krupin and Dana Livne

Historically, the United States has continuously attracted international commerce and investment. In recent years, in spite of a challenging economic situation, international hospitality groups continue to seek opportunities in the US for financial growth, promotion, and strategic reasons. When they do so, they must comply with unfamiliar and complex labor and employment laws which are constantly changing. In the US especially, the increasingly litigious environment can affect every step of the enterprise – right from the start. Particularly, in a presidential election year, international hospitality groups that are planning to hire and employ a workforce in the US are advised keep apprised of legal shifts in these three important areas:  

Health Care Reform

The Patient Protection and Affordable Care Act, also known as “Health Care Reform,” was enacted into law to extend and amend health insurance coverage to employees in the United States. Earlier this month, the U.S. Supreme Court heard oral arguments on the law’s validity, and a decision is expected in June 2012. Hospitality groups, in particular, will need to plan ahead in light of the decision and prepare to manage significantly increasing costs of coverage.

Management-Labor Relations

In the United States, trade unions have reemerged as a power base to ostensibly represent employees’ interests.  The current state of the US economy, concerns about job security, the critical status of pension funds, and recent health care reforms will continue to collectively strengthen the unions’ hands in 2012 and 2013.  Unsurprisingly, there have been recent waves of pressure from the National Labor Relations Board (“NLRB”) on employers.

A number of updates in this area will have major implications for hospitality providers in the US, including:

•           New notice posting requirements obliging employers to display posters informing workers of their right to unionize.

•           The appropriate standard to be applied in determining the scope of a bargaining unit is undergoing radical changes.

•           The NLRB amending its rules to make it easier for unions to organize employees through changing its election process.

Social Media

No business sector is immune to the profound impact social media is having on the workplace. Hospitality employers seeking to hire may be tempted to base employment assessments on data attained through social media.  However, there is a very thin line that must be carefully navigated when basing employment decisions on information gathered through the use of social media. Any social media policies an employer may wish to enforce on its workforce in the US will also need to be crafted creatively and be cognizant of content which is legally protected “concerted activity.” Such a policy will ensure that seemingly disproportionate social media policies do not result in charges of discrimination on the basis of union membership, while effectively protecting the valid business interests of the employer.  

It is no surprise that international hospitality groups can become the target of government scrutiny, especially in the run-up to the Presidential Elections.  When setting up operations in a new country, hiring and employing a new workforce is a crucial process.  Early planning and preparation will put the employer in a much stronger position to steer these upcoming waves of change and ensure the success of the operation in the US. Doing it right – from the start – will have positive consequences for business productivity and, ultimately, the bottom line.

by Amy J. Traub, Anna A. Cohen, and Jennifer A. Goldman

Effective April 3, 2012, the Equal Employment Opportunity Commission ("EEOC") extended its existing recordkeeping requirements under Title VII of the Civil Rights Act of 1964 and the Americans with Disabilities Act to employers covered by Title II of the Genetic Information Nondiscrimination Act of 2008 ("GINA"). The burden on employers to comply with the recordkeeping requirements under GINA will likely be minimal, as employers should already have recordkeeping policies in effect for personnel and other employment records pursuant to these and other employment laws with the same or more stringent requirements. This Act Now Advisory should serve as a reminder of those recordkeeping requirements, which now apply under GINA as well.

Read the full advisory online

By Matthew Sorensen

Wage garnishment can pose a number of potential problems for hospitality businesses. This is particularly true where the employee whose pay is subject to garnishment receives tips. 

Garnishment is a legal procedure in which an employee’s earnings must be withheld by an employer for the payment of a debt under a court order. When faced with a garnishment order involving a tipped employee, the employer must determine whether all or part of the employee’s tips must be included in the amounts withheld under the garnishment order. This question turns on whether or not the employee’s tips may be characterized as “earnings” under the applicable garnishment statute. A mistake by the employer could lead to significant liability. Many state and federal laws concerning garnishment contain provisions that allow for direct employer liability for failing to timely respond to or follow a garnishment order. On the other hand, federal and state wage and hour rules can create liability for wrongfully withholding an employee’s tips. A recent Tennessee Appellate court ruling provides some additional guidance in this area that will likely have broader application to hospitality businesses around the country. 

In Erlanger Medical Center v. Strong, the Tennessee Court of Appeals relied on guidance found in the U.S. Department of Labor’s Field Operations Manual and a Wage and Hour Opinion Letter to hold that tips are not “earnings” that may be garnished. Specifically, the Court noted that “garnishment is inherently a procedural device designed to reach and sequester earnings held by the garnishee (usually the employer).” The Court went on to note that tips paid to an employee by a customer (including those paid by means of a credit card) are not “earnings” that may be garnished because they do not pass to the employer (the garnishee). Rather, tips are direct payments from customers to employees and are the property of the tipped employee. 

This ruling is consistent with a recent decision by the Appellate Division of the New Jersey Superior Court which held that tips are not “earnings” subject to garnishment under New Jersey law. It is also bolstered by the U.S. Department of Labor’s 2011 amendments to its rules defining the general characteristics of “tips.” In those revised rules, the Department of Labor has stated that the Fair Labor Standards Act prohibits employers from using an employee’s tips for any reasons other than as a credit against the minimum wage or as part of a valid tip pool.

Although each state’s garnishment laws are different, many states have defined “earnings” that may be subject to garnishment in a manner that is similar to the Tennessee statute at issue in Erlanger Medical Center v. Strong. As such, the Tennessee Court of Appeals’ decision and the U.S. Department of Labor guidance documents on which it relied may serve as strong persuasive authority in other jurisdictions. Nevertheless, hospitality employers should remain mindful that some states, including Colorado, expressly include tips in their definitions of “earnings” subject to garnishment. 

When served with a garnishment order, hospitality employers should act promptly to determine their obligations under both state and federal law, particularly where the order involves a tipped employee. Garnishment orders often set out specific timelines for the employer to respond and comply. Failure to appropriately or timely respond to the order can put the employer on the hook for its employee’s debt. To avoid such undesirable consequences and ensure that no improper deductions or withholdings are made from an employee’s tips under applicable wage and hour laws, it is best practice to consult with an attorney immediately upon receipt of a garnishment order.

By:  Paul Rosenberg

The National Labor Relations Board (“NLRB”) seems intent upon helping unions organize employees.  It continues to pass rules, issue decisions, or announce new policies which will almost certainly facilitate union organizing.  The latest example occurred on March 22 when the NLRB announced that in the next two weeks it is launching an “educational” website aimed at informing non-union employees of their rights under the National Labor Relations Act (“NLRA”).   In conjunction with this unprecedented website the NLRB is preparing brochures which will provide “real life” cases to inform non-union workers of their legal rights.   The NLRB has yet to determine the distribution mechanism for the brochures.

The NLRB’s latest unprecedented initiative comes on the heels of the new notice posting rule which will be in effect beginning April 30.  That rule requires that employers post a notice informing employers of their rights under the NLRA.  The notice must be posted in all locations in which the company traditionally posts similar notices, such as wage and hour and discrimination posters.  The required poster size is intentionally larger than that of other bedrock employment notices such as minimum wage, family medical leave, and equal employment opportunity rights.    

The dissemination of information to employees will inevitably lead to employees questioning existing policies and/or seeking out union representation.  Consequently, in the coming weeks you should review all your policies and procedures.  This review should extend beyond the typical legal audit.  You should consider whether there are new policies which can be administered to help create an employee-centric environment less susceptible to unionization.  Further, because the NLRB’s purported educational efforts will likely result in an uptick in union organizing, all managers should be trained on the “do’s and don’ts” of how to respond if a union comes knocking. 

By:   Jordan Schwartz

Like many attorneys, I spend a significant amount of time traveling, whether it is to meet with clients, take depositions, or conduct training sessions. Business-related travel certainly is not unique to the legal industry. In fact, more and more employees in other industries, including the hospitality industry, are spending a greater amount of time traveling for work than ever before. Such travel typically includes attending out-of-state trade shows, recruiting visits, job fairs, and sales calls. As an exempt employee, compensation for travel time is cut and dry – an employee simply continues to receive his or her salary. For non-exempt employees, however, determining proper travel-time compensation is not nearly as straightforward.

The Fair Labor Standards Act (“FLSA”) governs the payment of wages, and requires that employees be compensated for all work performed. Yet, two common questions surface routinely concerning the compensability of travel time:

(1)   Is a non-exempt employee’s travel time for business-related events, whether as a passenger on an airplane, train, boat, bus, or automobile, compensable?; and

(2)   If so, and as a result the travel takes them over 40 hours in a workweek, must that employee be paid overtime for those additional hours?

The answer, as is often the case in the legal profession, is “it depends.” Under the FLSA, time spent traveling during normal work hours is considered work time. Therefore, since a non-exempt employee is essentially substituting travel for other duties he or she would have been performing, that employee must be paid for travel time occurring during his or her normal work hours. The employee is not, however, entitled to be paid for time traveling outside of regular working hours. Thus, if an employer requires an employee who typically works from 9:00 am to 5:00 pm Monday through Friday to travel to a conference and such travel occurs on Wednesday from 3:00 pm to 7:00 pm, the employer is only required to pay the employee for a typical eight hour day ending at 5:00 pm. Because the additional two hours of travel are not “working time,” no additional pay (and thus no overtime) would be required. 

Where this gets confusing, however, is that an employee’s “normal working hours” also applies to corresponding hours on weekends or other non-working days. Thus, if the same hypothetical employee is required to travel back home on Saturday from 3:00 pm to 7:00 pm, he or she must be compensated for two additional hours (corresponding to 3:00 pm to 5:00 pm), even though that employee would not otherwise have been required to work on a Saturday. Assuming that employee had already worked a full 40-hour workweek, he or she would thus be entitled to overtime for these additional two hours. 

There are several other important issues employers should keep in mind regarding travel time:

·         Employees are not entitled to be paid just for the time they are “in the air” on a flight. Rather, time spent in the airport on layovers also constitutes travel time. 

·         Generally, travel time on work-related day trips is counted as time worked, except for meal times, which may be deducted.

·         Typically, time spent commuting is not work time. Just as employees are not compensated for the time it takes to drive to and from work on a typical non-traveling work day, the time spent commuting to and from the airport or train station does not constitute work time. Rather, the work time would start when the employee arrived at the airport, train or bus station.

In this day and age, with business travel becoming the norm as opposed to the exception, it is essential for hospitality employers to recognize and be aware of these rules relating to travel time. Indeed, it would be a shame if an employee’s otherwise productive business-related trip resulted in a major expense due to non-compliance with the FLSA.