Playing with Employees' Hours Could Get You in Hot Water under the ACA and FLSA

By:  Kara Maciel, Adam Solander and Lindsay Smith

As the Employer Mandate compliance deadline looms for employers under the Affordable Care Act (“ACA”) and employers are closely monitoring employee hours, it is critical that employers take appropriate and lawful steps to record all hours worked by an employee.  If employers try to play games and manipulate how time records are maintained, they could find themselves in hot water under both the ACA and the Fair Labor Standards Act (“FLSA”). 

In what appears to be one of the first lawsuits challenging how hours are recorded under the ACA, an employee filed a putative collective action against Sun Holdings, LLC, a fast food franchisee.  The employee, a busboy at a Golden Corral restaurant, alleged that his managers required him to work under his real name and an alter ego to avoid paying him for all hours worked.  This set-up allegedly was designed to avoid having to pay overtime compensation under the FLSA and to count him as a full-time employee eligible to receive health benefits under the ACA.   

Accurate calculation and recording of the total number of hours worked by an employee is essential to compliance with the provisions of both the FLSA and the ACA.  Under the FLSA, an employer must pay an employee at least the minimum wage for all hours worked.  An employer must also provide overtime compensation at one and a half times the employee’s regular rate of pay for any hours worked in excess of 40 hours per week, unless that employee is classified as exempt.  Therefore, if an employer attributes some amount of time worked by one employee to an alter ego through which the employee cannot claim his time, the employee may be deprived of the overtime compensation he has earned.

Additionally, the ACA only provides benefits to employees who reach a certain amount of hours and binds employers with a certain amount of employees meeting that hour threshold.  The ACA applies to employers with 50 or more employees working 30 or more hours per week.  Only those employees working 30 hours or more per week are entitled to the health care coverage required by the ACA.  Therefore, an employee may lose the benefits to which he would otherwise be entitled if a portion of his hours worked is attributed to someone else, causing him to fall below the 30-hour minimum.  Furthermore, an employer may avoid the obligations of the ACA if it records 30 hours or more of work time for less than 50 of its employees. Although the Employer Mandate, which puts the employer-provided coverage into effect, does not kick in for large employers until January 1, 2015, applicability of the ACA depends upon the size of the affected workforce during the prior calendar year.      

A claim of this kind could be very costly for an employer because, as is the case here, such claims are often brought as collective actions.  In this case, the employee filed his claim on behalf of himself and all others similarly situated.  Although the amount of unpaid wages and liquidated damages he seeks only amounts to approximately $15,000.00, the franchisee owns roughly 400 restaurants in Texas and Florida.  Thus, a court award, or even a settlement, could be quite significant.

These allegations demonstrate the importance of correctly tracking employee hours and ensuring that an employee receives compensation and benefits in accordance with the total amount of hours worked.  Often times, this may mean training your managers as to the correct protocol for recording and compensating hours worked and monitoring to ensure managers are following that protocol. 

Importantly, this case forecasts what could be an emerging and growing area of litigation under the ACA, so employers must be ever vigilant about putting into practice protocols that ensure they are complying with the ACA and not manipulating hours to avoid the Employer Mandate’s requirements.  Considering that an analysis under the Employer Mandate’s look-back methodologies should be done this year, any changes to employees’ hours should be closely reviewed with legal counsel.  Although overtime compensation and benefits coverage can create increased financial burdens on employers, the cost of not complying can be even greater. 

Epstein Becker Green to Participate in the 8th Annual National HR In Hospitality Conference & Expo

Epstein Becker Green is pleased to be participating in the 2014 National HR In Hospitality Conference & Expo at the Aria Hotel in Las Vegas on April 28-30, 2014.  EBG is sending two of its hospitality industry experts to represent the Firm, Kara M. Maciel and Jeffrey H. Ruzal.

Kara, a Member of the Firm in its Washington, DC office, is Chair of the Hospitality Employment and Labor Law Outreach Group.  Kara’s practice is concentrated on issues related to the hospitality industry where she has represented national hotel chains, hospitality management groups, restaurants and spas. Kara also counsels employers on compliance with the Affordable Care Act, including the Employer Mandate for unionized and non-unionized employers. In 2013, she was appointed Chair of The Affordable Care Act and Wellness Interest Group of the HRA-NCA's Legislative Committee.

Jeff, a Senior Counsel in EBG’s New York office, is a member of the Hospitality Employment and Labor Law Outreach and Wage and Hour groups.  Jeff’s practice is focused on wage and hour compliance and litigation related to the hospitality industry.  Jeff has represented national restaurant chains, hotels and country clubs.  Prior to joining EBG, Jeff was a trial attorney with the U.S. Department of Labor, Office of the Solicitor where he was responsible for FLSA enforcement investigations and trials.  Jeff regularly handles frequently litigated wage and hour issues in the hospitality industry, such as misclassification, tip pool and credit issues, and recordkeeping and notice violations.

Kara and Jeff look forward to sharing their expertise in hospitality law and discussing best practices to avoid many of the recurring legal issues plaguing the hospitality industry.  You can reach Kara at (202) 861-5328 or at Kmaciel@ebglaw.com, and Jeff at (212) 351-3762 or at Jruzal@ebglaw.com.          

Penalties Rise for ADA Noncompliance

By Andrea R. Calem

Noncompliance with the Americans with Disabilities Act just became costlier. Pursuant to an inflation-adjustment formula, on March 28, 2014 the Department of Justice (“DOJ”) issued a final rule raising the civil monetary penalties assessed or enforced by the Civil Rights Division, including those assessed under Title III of the ADA (“Title III”).

Title III prohibits public accommodations from discriminating against disabled individuals with respect to access to goods, services, programs and facilities, and (with limited exceptions) requires public accommodations to make reasonable accommodations so that disabled individuals may equally access these goods and opportunities. Accommodations may include modification of physical space in order to remove physical barriers, the provision of auxiliary aids for communication (such as sign language interpreters, closed captioning, written materials in Braille), and a wide variety of other, context-specific adjustments to the way business is conducted or services are offered.

With the upward adjustment, the maximum civil penalty for a first violation of Title III rises from $55,000 to $75,000, and the maximum civil penalty for a second violation rises from $110,000 to $150,000. The new maximums apply to violations that occur on or after April 28, 2014. The last time these penalties were adjusted for inflation was in 1999.

These penalties can be consequential for small businesses or those with thin profit margins, and can accrue to significant levels for businesses of all sizes if the DOJ finds evidence of repeated violations of Title III. The DOJ’s current ADA enforcement environment is an aggressive one, consistent with the aggressive positions recently taken by many other federal agencies which protect workers’ and civil rights, such as the National Labor Relations Board, the Equal Employment Opportunity Commission, and the Office of Federal Contract Compliance and Programs. The retail and hospitality industries continue to provide inviting targets for the DOJ, particularly high-profile businesses such as top restaurants with celebrity chefs.

The increased penalties are one more reminder that the costs associated with ADA compliance should not be postponed until enforcement – in the form of a civil lawsuit or the DOJ – is knocking at your (hopefully accessible) door.

NLRB Receives Spirited Debate Over Ambush Election Rules During Public Meeting

For 2 days, the National Labor Relations Board (NLRB) heard from speakers on its proposed rules to accelerate the processing of union representation petitions and quicken the timing of elections. The speakers ranged from several labor unions, including the UFCW, SEIU, CWA and AFL-CIO as well as a number of trade associations, including National Federation of Independent Businesses, Coalition for a Democratic Workplace, National Association of Manufacturers, U.S. Chamber of Commerce, and EBG client, National Grocers Association (NGA). The positions of the parties were largely split between the labor unions applauding the NLRB’s proposed rule on making elections faster; whereas, the trade associations and management attorneys emphasizing that the NLRB’s proposed rule was unnecessary and a solution in search of a problem.

EBG attorney, Kara M. Maciel, represented the voice of NGA on three separate panels. First, she argued that the NLRB’s proposed rule requiring employers – for the first time – to submit a written position statement within 7 days of the union’s petition setting forth the employer’s entire legal argument, or risk waiver later, is unduly burdensome and risks that the process leading to a pre-election hearing will become more adversarial and less focused on reaching a negotiated pre-election stipulation. Under current procedures, over 90% of petitions are stipulated to without a pre-election hearing, but under the NLRB’s proposed rule, employers could feel pressured to go to a hearing in light of the written position statement requirement.

Second, Maciel testified that the election date should not be accelerated from the current 34 day median to 10-21 days contemplated by the rule. “Hasty decisions are not good decisions” and she noted that “common sense dictates that the greater the time an individual has to inform himself, and to reflect upon and consider all aspects of a decision, the more likely the decision will be a true reflection of the individual’s interests.” NGA is concerned about the due process rights impairing an employer’s protected 8(c) rights under the National Labor Relations Act if there is not sufficient time to communicate with employees about a union petition for representation.

Finally, Maciel expressed concern over the proposed rules compulsory disclosure of employee’s personal and confidential e-mail accounts and phone numbers on voter lists. The non-consensual disclosure constitutes a gross invasion of employees’ privacy and opens employees up to potential use and abuse of their personal information.

The NLRB will now consider all the written and oral comments submitted by the public on the proposed rules; however, it is widely expected that the NLRB will adopt the rules as proposed. Following the rule-making process, it is likely that trade associations could seek to enjoin implementation of the rule through a court challenge. In the meantime, all employers should brace themselves for the rule and implement training and education for their management team on how to respond to union organizing.

For more information on NLRB's two-day public meeting, please click here.

Are your Golf Courses Compliant with the ADA?

 By: Jordan Schwartz

As the calendar moves into spring, it is once again time for recreational golfers to start dusting off their clubs and begin to prepare for the golfing season. Unlike recreational golfers, however, owners and operators of golf courses have hopefully spent the off-season ensuring that their golf courses are compliant with the accessibility standards of the Americans with Disabilities Act (“ADA”).

Many resort owners and operators mistakenly believe that golf courses are exempt from the requirements of the ADA. While this may have been true in the past, new ADA regulations were promulgated in March 2012 mandating that golf courses comply with the ADA. Pursuant to these regulations, golf courses must have accessible routes that serve teeing grounds, practice teeing grounds, putting greens, practice putting greens, teeing stations at driving ranges, course weather shelters, golf cart rental areas, bag drop areas, and course toilet rooms. The new ADA regulations also require at least one 48-inch pathway providing an accessible entrance to at least one tee box on each hole. Additionally, each putting green must be designed and constructed so that a golf cart can enter and exit.

A common question I receive from golf course owners and operators is whether these new ADA provisions prevent a golf course from instituting a “cart path only” policy, which prevents golf carts from driving on fairways. Like many aspects of the ADA, there is not one simple answer to this question. As an initial matter, it certainly is permissible for a golf course to institute rules to alleviate dangerous situations. Therefore, a decision to designate a particular day as a “cart path only” day due to slippery and muddy conditions from heavy rain the prior night likely would not run afoul of the ADA, as there clearly are legitimate safety reasons for such a rule. It is less clear, however, whether a course’s decision to impose a permanent “cart-path only” rule solely so that it could better preserve and maintain its grounds and fairways would violate the ADA. 

The ADA provides that accommodations are not required if they are not “readily achievable,” meaning that they are not accomplishable without much difficulty or expense. If a plaintiff were to claim that a permanent “cart path only” rule violated the ADA, a golf course could assert that allowing golf cars on the course was not “readily achievable.” But, the “readily achievable” defense can be difficult to prove and will likely delve into a golf course’s particular facts and circumstances.  While it may be relatively easy for a course to demonstrate that its fairways would be virtually destroyed by having many carts drive on them, it may not be as easy for a course to show that its fairways would be similarly destroyed by permitting carts near the tee boxes and greens only for disabled golfers, which are likely a very small percentage of the total number of golfers. If a course can show that even one or two carts a day would destroy its fairways, then the “readily achievable” defense would likely hold. However, if, for example, up to 20 cars a day would not destroy the fairways, the “readily achievable” defense may not hold up in court. Ultimately, it is a balancing question between the actual damage to the fairways and the risks the owners and operators of a golf course is willing to take with regards to a potential violation of the ADA.

At a minimum, owners, operators, and managers of facilities with golf courses must be aware of the new ADA regulations and their potential far reaching impact. Moreover, golf course owners and operators should be proactive in remedying any potential barriers to access. Taking these simply steps would help reduce legal exposure to potential ADA claims, which would be particularly welcome news with the heart of the golf season rapidly approaching. 

 

 

 

 

 

 

NLRB Public Meeting: Kara Maciel to Speak on Ambush Election Rules

Our colleague Kara Maciel will speak on behalf of EBG client, National Grocers Association (“NGA”), at the National Labor Relations Board’s public meeting, scheduled for April 10-11, 2014 regarding the Notice of Proposed Rulemaking (“NPRM”) on the “ambush election” representation procedures.

The panels will address the following topics:

  • Panel B.2: Requirement for written statement of position
    Address issues related to the proposed requirement for a written statement of position.
  • Panel E.1 & E.3: Election date
    Please describe the standard to be applied for scheduling an election. The proposed rules state that the regional director should select an election date which is “as soon as practicable.” If you disagree with this standard, please describe the standard you would apply. Specify whether you think the rules should include a minimum or maximum time between the filing of the petition and the election, and, if so, how long this time should be. Also address whether the proposed rules adequately protect free speech interests; if you believe they do not, please state specifically how the proposal can be adapted to adequately address the matter.
  • Panel C: Voter lists
    Address whether or how the rules should address voter lists.

During the open meeting, April 10 and 11, catch the live stream at http://www.nlrb.gov/openmeeting.
 

Webinar, April 8: OSHA's Temporary Worker Initiative

Our colleague Eric Conn, Chair of Epstein Becker Green's OSHA Practice Group, will present a complimentary webinar on April 8, at 1:00 p.m. EDT: OSHA's Temporary Worker Initiative. Topics include enforcement issues and data related to this work relationship, and recommendations and strategies for managing safety and health issues related to a temporary workforce.

Companies are expected to employ many more temporary workers as the Affordable Care Act is implemented, particularly when the "Employer Mandate" kicks in, which will require employers with 50 or more workers to provide affordable coverage to employees who work at least 30 hours per week. With this anticipated increase in the use of temporary workers, along with recent reports of temporary workers suffering fatal workplace injuries on their first days on a new job, OSHA will make temporary worker safety a top priority in 2014 and has already launched a Temporary Worker Initiative.

This webinar is the first of a five-part series for employers facing the daunting task of complying with OSHA's numerous federal and state occupational safety and health standards and regulations.

Read more about the webinar and the series, or click here to register.

President Obama's Announcement Regarding Overtime Regulations: If It Is As Big Of A Deal As They Say It Is, Beware Of A New Wave Of Class Action Lawsuits

 By Aaron Olsen

President Obama’s announcement last week that he was ordering the Labor Department to revise the regulations concerning who can be classified as “executive or professional” employees has created a buzz about what this will mean for both employers and employees.  The fact that the President specifically identified concerns about managers in the fast-food industry suggests that the Department of Labor will be looking for ways to change how employees in the hospitality industry are classified. 

However, there have been very few details about what any of this will actually mean for employers.  The President trumpeted the request to review the regulations as a way to help make sure “millions of workers are paid a fair wage for a hard day's work.” But, the President’s memorandum simply instructed the Department of Labor “to update regulations regarding who qualifies for overtime protection. In so doing, the Secretary shall consider how the regulations could be revised to:

• Update existing protections in keeping with the intention of the Fair Labor Standards Act.

•Address the changing nature of the American workplace.

•Simplify the overtime rules to make them easier for both workers and businesses to understand and apply.”

Not much detail there.  

The Secretary of Labor’s press release referred generally to the low salary threshold of $455 per week, but did not give any other specific details as what to expect other than to say that it “will give millions more people a fair shot at getting ahead.”

Whether the President’s directive will lead to any real changes is anyone’s guess. (For a discussion by our colleague, Mike Kun, suggesting that there may be no real impact, see his blog entry.)  However, the rhetoric surrounding the announcement suggests that the new regulations could impact “millions” of employees.  If that is the case, employers must be very careful to stay informed of those changes and make the necessary adjustments.  Plaintiffs’ lawyers will undoubtedly be studying the changes carefully to look for a way to bring claims on behalf of the “millions” of employees who will supposedly be affected. 

How Hoteliers Must Comply With WARN

By Kara M. Maciel

When hoteliers are considering purchasing, selling or remodeling hotels, one of the most overlooked issues during the due diligence and planning phases relates to the Worker Adjustment and Retraining Notification Act.

This statute requires covered employers to provide 60 days’ notice to employees, union representatives, state agencies and localities before carrying out plant closings or mass layoffs.[1] Congress intentionally devised WARN to provide affected employees adequate time to prepare for employment loss, seek and obtain alternative employment, and/or arrange for skill training or retraining to compete successfully in the job market.

Accordingly, hotel buyers, sellers, owners and management companies should be mindful of WARN’s obligations and be aware of potential liability for failure to provide written notice.

WARN’s Threshold Requirements

To fall under WARN, a hotel must employ at least 100 full-time employees, or employ 100 or more full-time and part-time employees who work at least 4,000 hours per week (exclusive of overtime). In determining whether a hotel has the requisite number of employees, hotels must count temporary employees and individuals who are temporarily laid off or on a leave of absence but who have a reasonable expectation of recall toward the threshold number of “full-time” employees.

In contrast, part-time employees are excluded from determining if a hotel satisfies the threshold levels. Part-time employees are individuals who work on average fewer than 20 hours per week, or who have been employed fewer than six of the 12 months preceding the date on which notice is required (e.g., recent hires working full-time schedules and seasonal workers).

Covered Employees and Content of Notices

Hotels covered by WARN must provide 60 days’ notice of a qualifying termination event to each hourly and salaried employee, manager and supervisor who may reasonably expect to experience employment losses. This notice requirement applies to both full-time and part-time employees.

Although temporary employees are counted for purposes of determining coverage under WARN, they are not entitled to advance notice so long as they were hired with the clear understanding that their employment was limited in duration.

The required content of written WARN notifications vary depending on whether the hotel is notifying employees, union representatives or government entities. Nevertheless, common to all notifications are (1) a description of the termination event and a statement as to whether the event is expected to be permanent or temporary; (2) the expected date(s) when the layoffs will commence; and (3) the name and telephone number of a hotel official to contact for further information.

Triggering WARN Notice Requirements

Fundamentally, three types of termination events trigger WARN notification requirements where 50 or more full-time employees experience employment losses. Those events are:

  • A plant closing that is a permanent or temporary shutdown of a “single site of employment” or one or more facilities or distinct operating units within a single site of employment that results in an employment loss during any 30-day period for 50 or more full-time employees.
  • A mass layoff (exclusive of a plant closing) of at least 50 full-time employees where the employment loss consists of at least 33 percent of the full-time employees at the single site.
  • A mass layoff of 500 or more full-time employees at a single site of employment, regardless of its proportion of the total employment at the site or if the employment loss is part of a plant closing.

Additionally, WARN defines “employment loss” as involuntary separations of workers exceeding six months; or a reduction in hours worked of at least 50 percent during each month for a six-month period. Any employment losses during a 30-day period are considered a single event for the purposes of the WARN Act.

Notably, even if a hotel’s initial terminations during a 30-day period do not constitute a covered termination event, WARN may be retroactively applied under certain circumstances. If two or more groups of employees suffer employment losses at a single site of employment during a 90 day period, and each group alone does not meet the threshold employee levels, the groups can be aggregated and treated as a single event.

Thus, when smaller layoffs that occur within 90 days collectively satisfy the WARN threshold level, each affected employee must receive 60 days’ notice prior to his or her date of termination. To avoid treating group terminations as a single event, hotels must establish that (1) the employment losses are unrelated and distinct; and (2) they have not structured or phased the terminations to avoid the WARN requirements.

Additionally, if a hotel announces a non-WARN covered layoff of six-month or less but subsequently extends the layoff past six months, the hotel may have WARN notification responsibilities. Unless the hotel can establish that the layoff extension was due to unforeseeable circumstances at the time of the original layoff, the matter is treated as if notice was required for the original layoff.

Finally, plant closing or mass layoff stemming from a relocation or consolidation of all or part of a hotel’s business is not considered an “employment loss,” if before the event (1) the hotel offers to transfer an employee to another site within a reasonable commuting distance and not more than a six-month break in employment occurs (regardless of whether the employee accepts or rejects the offer); or (2) the employee accepts a transfer to another site (regardless of distance) with no more than a six-month break in employment, within 30 days of the hotel’s offer or the closing or layoff, whichever is later.

Notification Exceptions

The WARN Act specifies exceptions in which hotels may provide less than 60 days’ notice to employees, state agencies and localities affected by an employment loss. The primary exceptions are:

  • Faltering Company Exception. Hotels can provide reduced notice for plant closings — but not mass layoffs — where they are actively seeking new capital or business to prevent the closing, have a realistic chance of obtaining sufficient funds or new business, and believe in good faith that giving notice would prevent it from obtaining the necessary capital or business to remain open.
  • Unforeseeable Business Circumstances Exception. Hotels can provide reduced notice where plant closings and mass layoffs are caused by business circumstances that were not reasonably foreseeable at the time notice would otherwise have been required (e.g., swift onset of a deep economic downturn, a nonnatural disaster).
  • Natural Disaster Exception. Hotels can provide reduced notice if a natural disaster, such as hurricane, flood or earthquake, directly causes a plant closing or mass layoff. Although this exception does not apply when the natural disaster indirectly causes the closing or layoff, the unforeseen business circumstances exception above might.

If the hotel provides less than 60 days’ notice under one of the aforementioned exceptions, it must explain in the notice the reason for the reduced notice period.

Who Must Give Notice in Shutdown: Owner or Operator?

Although hotel owners more often decide to shut down operations permanently rather than the managing entities that operate the hotels, the managing entity bears the primary responsibility for giving WARN notices.[2]

Accordingly, in negotiating management agreements, prudent hotel managers should secure protection from the owner against WARN liability for a permanent shutdown. That protection may be requiring the employer to notify the manager of a shutdown with sufficient time for the manager to comply with the WARN Act and securing indemnification against WARN liability if the owner gives insufficient notice to allow for WARN compliance.

Sale of Hotels

The general rule under WARN is that the responsibility to notify affected employees of a mass layoff or plant closing shifts at the time of sale. In this regard, when part or all of a business is sold and WARN’s threshold requirements are satisfied, the seller is responsible for providing notices to affected employees for any closing or layoff, up to and including the effective date of the sale. After the effective date of the sale, however, the buyer is responsible for providing notice for any such event.

Under WARN, however, employees who are merely transferred from the seller to buyer as part of the sale are not deemed to have suffered an employment loss.[3] In other words, the obligation to notify affected employees of a mass layoff is not triggered by the actual sale but by the employment loss.

The U.S. Department of Labor’s corresponding regulations further provide that employees who remain the sellers’ employees until the effective date of the sale and then are terminated, even if on account of the sale, will be treated as if they are employed by the buyer thereafter.

Thus, as the seller’s employees are treated as employed by the buyer after the sale, the seller will have no WARN responsibilities in connection with the post-sale termination of employees incident to the sale. The buyer will be responsible for WARN compliance if it elects not to retain those employees.[4]

If the seller has knowledge that a significant number of employees might be terminated within the first 60 days after the sale is consummated and the seller can identify those affected employees, the seller, although not required to do so, may send WARN notices to the affected employees as the agent of the buyer.[5] The regulations also encourage the parties to discuss and arrange who will bear the WARN obligations and include the specifics in the purchase agreement with appropriate indemnity language.

For the seller to avoid WARN obligations and liabilities, the seller should, to the extent possible, postpone any terminations incident to the sale until after the effective date of the transaction. In addition, a seller should notify employees who are laid off prior to completion of the transaction if their layoffs are temporary, (i.e., expected to be for less than six months), and that the buyer expects to hire some or all of them.

Under these circumstances, short-term layoffs incident to the sale do not constitute an employment loss under WARN and do not trigger WARN notice requirements. The notice obligations would only arise if the buyer fails to rehire a sufficient number of the seller’s employees. In this case, however, the buyer is solely responsible for giving any WARN notices.

It would therefore be prudent for the seller to obtain a provision in the purchase agreement that indemnifies the seller and obligates the buyer to comply with WARN under such circumstances. If, of course, the seller assumes WARN obligations, then it must also comply with WARN’s specific notice requirements.

Enforcement and Penalties

Federal courts enforce WARN through private right of actions, as the U.S. Department of Labor lacks investigative and enforcement authority for the act. Since district court lack injunctive authority to stop a plant closing or mass layoff, a plaintiff’s remedies are limited to statutory damages, attorneys’ fees and costs, and/or civil penalties.

In sum, in light of WARN’s potential for significant financial exposure, hoteliers should carefully plan in advance any notice requirements prior to the purchase, sale or remodel of a hotel.

[1] See 29 U.S.C. §§ 2101-2109 (1988). Many states have mini-WARN laws which may provide more generous notice to employees; therefore, it is critical that hoteliers check state law in addition to the federal notice provisions under WARN.

[2] See Local 217, Hotel and Restaurant Employees Union v. MHM Inc., 976 F.2d 805 (2d Cir. 1992) (finding the hotel’s management company to be liable under WARN for firing its staff in the wake of the hotel’s closing, even though the hotel owner ordered the shutdown).

[3] See Wiltz v. MG Transport Servs., 128 F.3d 957 (6th Cir. 1997) (holding that the actual sale was not a WARN event and that employees who the buyer retained did not fall under WARN).

[4] See Local 54, Hotel Employees International Union v. Elsinore Shore Associates, 724 F. Supp. 333 (D.N.J. 1989) (holding that whoever is the employer at the time of the plant closing or mass layoff is responsible for notifying the employees 60 days in advance).

[5] 29 C.F.R. § 639.4(1).
 

Arbitration in Multiemployer Withdrawal Liability Disputes

Most unionized hospitality employers have collective bargaining agreements which require contributions to multiemployer pension funds. In recent years, many of these pension funds have slipped into “endangered” or even “critical” status, and employers who have exited these funds have been hit with substantial assessments of withdrawal liability. These assessments often amount to millions of dollars in withdrawal liability.

Many employers are unfamiliar with the complicated procedures for contesting an assessment of withdrawal liability from a multiemployer pension fund. As a result, pension funds win a substantial percentage of litigated cases on procedural technicalities.

EBG partner Mark M. Trapp recently wrote an article entitled “Going Through Withdrawal: A Step-By-Step Guide to Arbitration in Multiemployer Withdrawal Liability Disputes” which appears in the current issue of the ABA Journal of Labor & Employment Law (members only).

Mark’s thoroughly researched and straightforward article sheds some light on a process unfamiliar to most employers, and provides a step-by-step guide to challenging assessments. Going Through Withdrawal can be used as a reference guide to ensure that hospitality employers faced with an assessment of withdrawal liability avoid missteps that could cost millions. As Mark notes in his article:

Successfully challenging an assessment of withdrawal liability is difficult enough without making any unforced errors. By avoiding procedural mistakes, a knowledgeable employer can keep the focus of the proceedings on the merits of the fund’s assessment and maximize its chances of prevailing.

The full article can be accessed here.

Persuader Rule Postponed: Employers Get Temporary Reprieve from Assault on Attorney-Client Privilege

On Epstein Becker Green’s Management Memo blog, our colleague Adam C. Abrahms writes about the Department of Labor’s delay, once again, of its timeline for finalizing the Persuader Rule.

Below is an excerpt from the blog post:

As we noted in “First Kill All The Lawyers,” last November the DOL announced its intention to move forward this month with the Administration’s Proposed Rule change which would eviscerate the Advice Exemption to the Persuader Rule . Yesterday, the DOL again delayed its timeline for finalizing the Rule.

In November the DOL’s announcement asserted that it intended to publish a Final Rule in March. On March 6, according to Bloomberg BNA, a DOL spokesman asserted that the Proposed Rule would NOT be made final this month. The DOL did not give a new target date for finalizing the Rule, rather it stated it would provide a new date in its Spring Regulatory Agenda which is not scheduled to be released for some months.

Read the full blog post, “Persuader Rule Postponed: Employers Get Temporary Reprieve from Assault on Attorney-Client Privilege.”

 

ACA Surcharge on Your Dining Bill? Some Restaurants Are Using New Methods to Help Defray the Cost of Health Reform Compliance

By: Barry Guryan

As widely reported, employers of all sizes are challenged in complying with the myriad of complex regulatory and compliance obligations under the Affordable Care Act (“ACA”). As our blog readers are well aware, certain large employers, as defined in the ACA, must provide “essential health benefits” that meet the law’s standards to full time employees under the Employer Mandate by 2015 or face penalties. Companies have spent time and money on consultants and lawyers to understand how the ACA impacts their business and their bottom line.

In response, some restaurants are finding unique ways to pay for the costs of compliance required by the ACA. According to a recent CNN article, many restaurants, primarily in Florida, have added an “ACA Surcharge” (typically 1%) to the food and beverage purchases in the bill to cover these costs. Even though the “pay or play” provisions of the ACA do not take effect until 2015, or 2016 for small employers, these restaurants are starting to create a fund which will continue annually. According to the report, customers have been paying the surcharge without protest.

If restaurant owners decide to implement this surcharge, it is best to let patrons know about it either on a sign or verbally by their servers, rather than having them discover the surcharge when they get the bill. Other restaurants may decide it’s better to increase food costs in order to recoup the increase in compliance costs. Even more just may consider it to be the cost of doing business.

Hospitality Employers: The Future Of Your Wellness Program

Our colleagues Kara Maciel, Adam Solander, and Lindsay Smith have co-authored a Bloomberg BNA article titled, "Future New Year's Resolutions: Will Your Wellness Program Still Be There to Help?"

Following is an excerpt:

With the New Year squarely in the rear view mirror, now is the time when many of our grandiose resolutions to get healthy may run out of steam. For individuals who are relying upon their employer's wellness initiative to provide them with the resources they need to succeed in their resolutions, recent regulatory and legislative changes could jeopardize their ability to rely on their employers in the future.

 I. A New Year Means New Costs

II. Dealing with the 2013 Hangover—Complexities of the Final Rule and Related Regulations

III. Potential Threats to Your Wellness Program

IV. EAPs May Help Keep the Cost of Coverage Lean in 2014

V. Conclusion

Download a PDF of the full article here.

Addressing ADA Issues In Hotel Management Agreements

By Kara M. Maciel

When acquiring or managing a restaurant or hotel, many owners and operators overlook the significant and costly implications that compliance under the federal Americans with Disabilities Act could have on the hotel’s bottom line in the future. Because of the proliferation in drive-by lawsuits from professional plaintiffs and U.S. Department of Justice investigations across the country, any hospitality company considering a new ownership or management agreement of a lodging or restaurant facility should closely evaluate and consider the state of ADA compliance within the facility to determine how best to protect their asset.

The 2010 ADA Standards

Generally, Title III of the ADA prohibits discrimination against individuals “on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages or accommodations of any place of public accommodation.”[1] Thus, restaurants and hotels are legally required to make goods and services available to and usable by individuals with disabilities on an equal basis with members of the general public.

In so doing, they must comply with specific requirements set out in the U.S. Department of Justice regulations, which include detailed architectural requirements known as the ADA Standards for Accessible Design (ADA standards).[2]

In 2010, the DOJ revised the ADA standards, which contain new architectural requirements and involve the modification of business policies and procedures when necessary to serve customers with disabilities. The revised regulations contain the 2010 Standards for Accessible Design, which revise the 1991 standards, and require that places of public accommodation remove physical barriers for individuals with disabilities to the extent that it is readily achievable to do so.

Notably, pursuant to the ADA’s “safe harbor” exemption, elements of existing facilities that comply with the 1991 standards are not required to comply with the 2010 standards until such facilities are subject to future alterations. Any renovations and alterations after March 15, 2012, must be done in accordance with the 2010 standards, to the maximum extent feasible.

1. Readily Achievable Standard

The ADA does not require existing buildings built prior to Jan. 26, 1992, to meet its stringent standards for newly constructed/altered facilities. Rather, such buildings are required to take certain limited steps to improve access to individuals with disabilities, including the obligation to remove architectural barriers when it is readily achievable to do so; in other words, when barrier removal is “easily accomplishable and able to be carried out without much difficulty or expense.”

The decision of what is readily achievable is made considering the size, type and overall finances of the hotel and the nature and cost of the access improvements needed. Barrier removal that is presently difficult may be readily achievable in the future as finances change.

Many building features that are common in older facilities such as narrow doors, a step or a round door knob at an entrance door, or a high guest check-in counter are barriers to access by people with disabilities. Removing barriers by either ramping a curb, widening an entrance door, installing visual alarms, or designating a lower counter for guest check-in is often essential to ensure equal opportunity for people with disabilities.

Because removing these and other common barriers can be simple and inexpensive in some cases and difficult and costly in others, the regulations for the ADA provide a flexible approach to compliance. This practical approach requires that barriers be removed in existing facilities only when it is readily achievable to do so.

2. Maximum Extent Feasible Standard

On the other hand, any “alterations” made to a facility since 1992 must be made in full compliance with the ADA standards, to the maximum extent feasible. The ADA does not expressly define the term “alteration;” however, the DOJ defines “alteration” to mean any change to an existing building that affects or could affect the usability of a facility or any part thereof.

Alteration includes remodeling, renovation, rearrangements in structural parts, and changes or rearrangements of walls and full-height partitions or making other changes that affect (or could affect) the usability of the facility. The ADA does not consider normal maintenance, re-roofing, painting, wallpapering, or changes to electrical and mechanical systems to be alterations unless they affect usability of the building.

The phrase “to the maximum extent feasible,” applies only to the occasional case where the nature of an existing facility makes it virtually impossible to comply fully with the ADA standards through a planned alteration. In all other cases, the alterations that can be made accessible must be made accessible.

Furthermore, when a facility undertakes an alteration that affects or could affect the usability of or access to a “primary function area,” an accessible path of travel to the altered area must be made accessible to and usable by individuals with disabilities to the extent that the added accessibility costs are not disproportionate to the overall cost of the original alteration. Pursuant to the ADA, the added accessibility costs will be considered disproportionate if they exceed 20 percent of the original alteration.

Key Revisions to Architectural Requirements

In conducting an audit or inspection of a property, some of the key architectural requirements under the ADA for newly designed and constructed places of public accommodations to be accessible to and usable by individuals with disabilities, involve the following:

1. Accessible Entrances

Understanding how guests arrive at and move through hotels and restaurants is the best way to identify any existing barriers and set priorities for their removal. The 2010 standards provide the following priorities for barrier removal:

  • Providing access from public sidewalks, parking areas and public transportation;
  • Providing access to services (e.g., restaurants and spas);
  • Providing access to public restrooms; and
  • Removing barriers to other amenities offered to guests (e.g., drinking fountains, elevators and ATMs).


Consequently, efforts should be made by owners and operators to ensure that:

(1) there is an obvious accessible path from the street sidewalk to the entry;

(2) a portion of the check-in counter in the main lobby of the hotel is appropriate for use by an individual who uses a wheelchair;

(3) restaurants and bars have accessible pathways and accessible seating;

(4) conference/meeting room entrances are wide enough for wheelchair passage; and

(5) the main lobby has at least one fully accessible restroom.

In particular, if the main entrance cannot be made accessible, alternate accessible entrances can be used. If a restaurant or hotel has several entrances and only one is accessible, a sign should be posted at the inaccessible entrances directing individuals to the accessible entrance. This entrance must be open whenever other public entrances are open. The 2010 standards require that 60 percent of all public entrances be accessible.

2. Swimming Pools, Wading Pools, Spas, Saunas and Steam Rooms

Accessible means of entry/exit are required for all swimming pools and hot tubs. In particular, the 2010 standards require at least two accessible means for entry for larger pools (300 or more liner feet) and at least one accessible entry for smaller pools. At least one entry must be a sloped entry or pool lift; the other could be a sloped entry, pool lift, a transfer wall or a transfer system.

Wading pools must provide a sloped entry into the deepest part of each wading pool. If a property has one spa, it must be accessible. Thus, it must provide a pool lift, transfer wall or transfer system.

If there is more than one spa, 5 percent of the total must be accessible. Further, at a resort property, for example, if there is more than one cluster of whirlpools, 5 percent of each cluster must be accessible.

The ADA 2010 standards for pool lifts require lifts to be fixed and to meet additional requirements, including location, size of the seat and lifting capacity. Thus, to the extent it is “readily achievable,” a pool owner and operator must provide a fixed lift that meets all of the 2010 standards’ requirements.[3] Notably, one such requirement is that the pool lift remains in place and be operational during all times that the pool is open to guests.

Saunas and steam rooms also must be accessible, having appropriate turning space (a minimum of 60 inches in diameter), doors that do not swing into the clear floor space, and, where provided, an accessible bench. A readily removable bench is permitted to obstruct the turning space and the clear floor space.

3. Parking

Pursuant to the 2010 standards, hotels must provide a sufficient number of parking spaces for cars and vans if it is readily achievable to do so, depending on the total number of parking spaces available. One of every six spaces must be van accessible. An accessible parking space must have an access aisle, which allows a person using a wheelchair or other mobility device to get in and out of the vehicle.

4. Exercise Rooms

The 2010 standards dictate that at least one of each type of exercise equipment must provide 30 by 48 inches of clear floor space positioned for transfer by someone using a wheelchair and be on a 36-inch wide accessible route. For machines on which individuals have to stand up, the clear floor space can be in the accessible pathway route.

Thus, once satisfied that a hotel’s fitness center is in compliance with the ADA, trainers and other fitness room staff must be instructed not to move exercise equipment, as such rearrangements could impede an individual’s access and result in noncompliance with the ADA.

Considerations between Managers and Owners for ADA Compliance

Since hospitality owners and operators are jointly and severally liable for noncompliance with the ADA, they should proactively and cooperatively work together to ensure that their restaurants and hotels are legally compliant to minimize vulnerability to “drive-by” lawsuits and DOJ investigations.

Navigating the ADA requires careful consideration and advanced planning; therefore, prudent owners and operators must work together to chart an effective compliant course when drafting management agreements to ensure legal compliance.

Particularly, even before signing a management agreement, a manager should conduct due diligence of the property early in the process that includes:

(1) an on-site survey of the facilities;

(2) review of any operational policies and procedures, construction history, prior ADA surveyor reviews, and history status of the properties; and

(3) determining if the property has been or is likely to be in the crosshairs of “drive-by” plaintiffs and government enforcement agencies.

Prudent managers should also ensure indemnification provisions are included in the agreements for any ADA noncompliance issues. Likewise, the agreement must clearly set forth each party’s defense and remediation responsibilities with respect to the ADA.

Throughout the ownership and management of a property, operators should modify their policies, practices and procedures to ensure that disabled guests have equal opportunities to enjoy the facility’s accommodations and services.

At the direction of legal counsel, and thus under the protection of the attorney-client privilege, owners and operators should conduct regular inspections of their properties. Special care should be made to areas that the general public easily sees, utilizes and accesses, such as parking lot, entrance, lobby, service counters, dining and bar areas, and public bathrooms.

Finally, a critical and often overlooked component of ensuring success is comprehensive and ongoing staff training about the ADA’s requirements. Although established good policies are a necessary first step, problems can still arise if front-line staff members are not aware of them.

Thus, managers should ensure that their staffs understand the requirements on communicating with and assisting customers and are trained in handling accessibility-related requests. All too often, lawsuits are commenced because of an employee’s lack of knowledge and/or lack of courtesy in handling a request for an accommodation.

In short, because failure to comply with the ADA can cost significant monetary sums, hospitality owners and operators should not overlook and/or discount their statutory obligations at any point in their business relationship.
 

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[1] 42 U.S.C. § 12182(a). 
 
[2] See 28 C.F.R. Part 36, Appendix “A.” 
 
[3] There is, however, a “safe harbor” for hotels that purchased a portable, nonfixed lift prior to March 15, 2012. Because of a misunderstanding by some pool owners regarding whether the use of portable pool lifts would comply with barrier removal obligations, the DOJ has confirmed that as a matter of prosecutorial discretion, it will not enforce the fixed elements of the 2010 standards against those owners or operators of existing pools who purchased portable lifts prior to March 15, 2012, so long as those lifts otherwise comply with the requirements of the 2010 standards.

 

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In a complimentary webinar on February 20 (1:00 p.m. ET), our colleagues Frank C. Morris, Jr., and Adam C. Solander will review the ongoing impact of the Affordable Care Act (ACA) on employers and their group health plans.

The Treasury Department and the Internal Revenue Service recently issued highly anticipated final regulations implementing the employer shared responsibility provisions of the ACA, also known as the employer mandate. The rules make several important changes in response to comments on the original proposed regulations issued in December 2012 and provide significant transition relief.

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