On April 18, 2017, the Equal Employment Opportunity Commission (“EEOC”) filed a putative class action against the SLS Hotel South Beach in Miami, Florida (“Hotel”), alleging that the Hotel violated Title VII by firing black Haitian dishwashers who worked in the kitchen and serviced several restaurants in the Hotel – including the Bazaar by Jose Andres, Katsuya and Hyde Beach – and replacing them with white and Hispanic workers, who were supplied by a staffing agency, National Service Group (“NSG”).

This case highlights one of the EEOC’s asserted priorities in its strategic plan for the next six years, to address discrimination in “complex employment relationships” focusing on “temporary workers, staffing agencies, independent contractor relationships, and the on-demand economy.” Here, although a staffing agency made the decision regarding who to hire to replace the terminated employees, the EEOC has stated that an employer may not shield itself from liability for discrimination simply by authorizing an agent to make its hiring or firing decisions, if those decisions are discriminatory.

The Complaint against the Hotel was filed by the EEOC after fifteen former employees lodged charges of discrimination with the EEOC based on their race, color and national origin, and the EEOC issued Letters of Determination after finding reasonable cause to believe that discrimination occurred. The Complaint asserts that black Haitian employees were treated worse than their Hispanic counterparts at the Hotel.  Among the allegations in the Complaint are that black Haitian employees were reprimanded for speaking Creole while Hispanic employees were not reprimanded for speaking Spanish; that black Haitian employees were referred to as “slaves” by other employees, including managers; and Haitian employees were forced to carry heavy items up the stairs, while Hispanic employees were not asked to perform those same tasks.  Further, the Complaint alleges that the Hotel decided to outsource staffing to NSG, but it did not encourage or notify its black Haitian employees to apply for positions with the agency.  Rather, according to the Complaint, black Haitian employees were provided a settlement agreement in English, though many cannot read the language, and were told they would only receive their final paycheck upon signing the agreement.  A press release from the EEOC further contends that the black Haitian workers were replaced “with light-skinned Hispanics.” For its part, the Hotel has spoken out against the allegations, contending that it conducted an investigation as soon as it received notice of the charges and found no evidence of wrongdoing.  Chief Legal Officer for the Hotel, James L. Greeley, stated that the Hotel has been cooperating with the EEOC, engaging in good faith attempts to resolve this matter, and will continue to fully defend the Hotel against false claims.

Our colleagues Patrick G. Brady and Julie Saker Schlegel, at Epstein Becker Green, have a post on the Retail Labor and Employment Law blog that will be of interest to many of our readers in the hospitality industry: “Beyond Joint Employment: Do Companies Aid and Abet Discrimination by Conducting Background Checks on Independent Contractors?

Following is an excerpt:

Ever since the National Labor Relations Board (“NLRB”) issued its August 2015 decision in Browning-Ferris Industries of California, Inc., holding two entities may be joint employers if one exercises either direct or indirect control over the terms and conditions of the other’s employees or reserves the right to do so, the concept of joint employment has generated increased interest from plaintiffs’ attorneys, and increased concern from employers. Questions raised by the New York Court of Appeals in a recent oral argument, however, indicate that employers who engage another company’s workers on an independent contractor basis would be wise to guard against another potential form of liability, for aiding and abetting acts that violate various anti-discrimination statutes, including both the New York State (“NYSHRL”) and New York City Human Rights Laws (“NYCHRL”) and the New Jersey Law Against Discrimination (“NJLAD”).

Read the full post here.

Our colleagues Brian W. Steinbach and Judah L. Rosenblatt, at Epstein Becker Green, have a post on the Heath Employment and Labor blog that will be of interest to many of our readers in the hospitality industry: “Mayor Signs District of Columbia Ban on Most Employment Credit Inquiries.”

Following is an excerpt:

On February 15, 2017, Mayor Muriel Bowser signed the “Fair Credit in Employment Amendment Act of 2016” (“Act”) (D.C. Act A21-0673) previously passed by the D.C. Council. The Act amends the Human Rights Act of 1977 to add “credit information” as a trait protected from discrimination and makes it a discriminatory practice for most employers to directly or indirectly require, request, suggest, or cause an employee (prospective or current) to submit credit information, or use, accept, refer to, or inquire into an employee’s credit information. …

Read the full post here.

Our colleague Linda B. Celauro, Senior Counsel at Epstein Becker Green, has a post on the Financial Services Employment Law blog that will be of interest to many of our readers in the hospitality industry: “Seventh Circuit Panel Finds That Title VII Does Not Cover Sexual Orientation Bias.

Following is an excerpt:

Bound by precedent, on July 28, 2016, a panel of the U.S. Court of Appeals for the Seventh Circuit held that sexual orientation discrimination is not sex discrimination under Title VII of the Civil Rights Act of 1964. The panel thereby affirmed the decision of the U.S. District Court for the Northern District of Indiana dismissing the claim of Kimberly Hively, a part-time adjunct professor at Ivy Tech Community College, that she was denied the opportunity for full-time employment on the basis of her sexual orientation.

The importance of the Seventh Circuit panel’s opinion is not in its precise holding but both (i) the in-depth discussion of Seventh Circuit precedence binding it, the decisions of all of the U.S. Courts of Appeals (except the Eleventh Circuit) that have held similarly, and Congress’s repeated rejection of legislation that would have extended Title VII’s protections to sexual orientation, and (ii) the multifaceted bases for its entreaties to the U.S. Supreme Court and the Congress to extend Title VII’s prohibition against sex discrimination to sexual orientation discrimination.

The Seventh Circuit panel highlighted the following reasons as to why the Supreme Court or Congress must consider extending Title VII’s protections to sexual orientation …

Read the full post here.

Our colleague Nancy L. Gunzenhauser, an Associate at Epstein Becker Green, has a post on the Retail Labor and Employment Blog that will be of interest to many of our readers in the hospitality industry: “Reminder: All Philadelphia Employers Must Post New Ban-the-Box Poster.”

Following is an excerpt:

One of the requirements of the amended Philadelphia ban-the-box law has gone into effect. As of March 14, 2016, Philadelphia employers are required to post a new poster provided by the Philadelphia Commission on Human Relations in a conspicuous place on both the employer’s website and on premises, where applicants and employees will be most likely to notice and read it. …

Read the full post here.

Our colleague Joshua A. Stein has a Retail Labor and Employment Law Blog post that will be of interest to many of our hospitality industry readers: “Defending Against Website Accessibility Claims: Recent Decisions Suggest the Primary Jurisdiction Doctrine Is Unlikely to Serve As Businesses’ Silver Bullet.”

Following is an excerpt:

For businesses hoping to identify an avenue to quickly and definitively defeat the recent deluge of website accessibility claims brought by industrious plaintiff’s firms, advocacy groups, and government regulators in the initial stages of litigation, recent news out of the District of Massachusetts – rejecting technical/jurisdictional arguments raised by Harvard University and the Massachusetts Institute of Technology – provides the latest roadblock. …

These recent decisions reveal a reluctance among the courts to dismiss website accessibility actions on technical/jurisdictional grounds.  Taken along with the expanding number of jurisdictions who subscribe to legal theories accepting that Title III covers website accessibility (whether adopting a nexus theory or broadly interpreting the spirit and purpose of the ADA) and it is becoming increasingly clear that many businesses will have a difficult time ridding themselves of website accessibility claims in the early stages of litigation.  Of course, these decisions have been quick to note they do not foreclose a variety of potentially successful defenses that may be asserted later in the litigation – e.g., undue burden, fundamental alteration, and the provision of equivalent/alternative means of access.  While, to date, the existing website accessibility case law has not focused on when these defenses might prevail, with the recent proliferation of website accessibility demand letters and litigation, businesses should soon find themselves with greater guidance from the courts.  In the interim, the best way to guard against potential website accessibility claims continues to be to take prophylactic measures to address compliance before you receive a demand letter, complaint, or notice of investigation.

Read the full post here.

My colleagues Nancy L. Gunzenhauser, Kate B. Rhodes, and Judah L. Rosenblatt at Epstein Becker Green have a Retail Labor and Employment Law blog post concerning a recent EEOC modification to employment discrimination protection: “EEOC Rules Discrimination Based On Sexual Orientation Illegal Under Title VII.”

Following is an excerpt:

The EEOC held that “[s]exual orientation discrimination is sex discrimination because it necessarily entails treating an employee less favorably because of the employee’s sex.”  The EEOC noted that sex-based considerations also encompassed gender-based considerations under Title VII. This ruling, if accepted by federal courts, would extend protection under Title VII to decisions made on the basis of sexual orientation. While only the Supreme Court can issue a final, definitive ruling on the interpretation of Title VII, EEOC decisions are given significant deference by federal courts.

Read the full original post here.

By:      Mark M. Trapp

In these challenging economic times, many private clubs are finding it increasingly difficult to attract new members, or to retain existing members.  Over the last few years many clubs have lost members, and many more are facing substantial drops in revenues due to a decline in money spent by members on activities such as golfing or dining out.  Many golf, country and social clubs are finding it difficult to sustain their amenities and level of service. 

Because the economic situation is decreasing the potential membership pool, many clubs are offering incentives to join, such as reducing initiation fees, while some are even exploring other more drastic options to generate revenue, such as opening their doors to the general public, moving toward a semi-private status or creating public/private hybrid clubs.

Economically, such decisions may or may not make sense. But allowing virtually anyone into an ostensibly “private” club can have other than strictly economic ramifications. In addition to making the club’s members wonder just how exclusive the club really is (which could itself lead to loss in membership and decreased revenues), a decision to accept virtually anyone as a member could actually open up a private club to potential legal liability for discrimination from which it would otherwise be exempt.

This seemingly paradoxical result stems from the fact that under both Title VII of the Civil Rights Act of 1964, as amended (which prohibits discrimination based upon race, color, religion, sex and national origin) and Title I of the ADA (Americans with Disabilities Act), private membership clubs enjoy an exemption from liability.  Both the ADA and Title VII expressly state that the definition of “employer” found in each statute “does not include” a bona fide private membership club which is exempt from taxation under section 501(c) of the Internal Revenue Code.

In order to qualify for this statutory exemption, a club must be tax exempt and it must be “a bona fide private membership club.” Because tax exempt status is relatively straightforward, the court battles over this exemption usually hinge on whether or not the club meets the criteria of being a bona fide private membership club. 

Generally, courts have defined a private membership club as “an association of persons for social and recreational purposes or for the promotion of some common object (as literature, science, political activity) usually jointly supported and meeting periodically, membership in social clubs usually being conferred by ballot and carrying the privilege of use of the club property.” Quijano v. University Federal Credit Union, 617 F.2d 129, 131 (5th Cir. 1980). While country clubs, fraternal lodges, swim clubs and the like usually fit comfortably within this definition, the decision to open the use of the club’s facilities and/or membership to anyone from the general public could lead to the loss of the otherwise-available statutory exception.  In deciding whether a club is private, the EEOC and courts consider how selective it is in choosing its members. See EEOC Compliance Manual § 2-11(B)(4)(a)(ii) (among the three factors considered is whether there “are meaningful conditions of limited membership.”); and Quijano, 617 F.2d at 131 (noting that “in order to be exempt” a private club “must require some meaningful conditions of limited membership.”). 

In construing whether a club meets the requirement of “meaningful conditions of limited membership,” courts have commonly focused on factors such as:

  • whether the club allows members of the public full access,
  • whether the club limits its total membership and how restrictive or stringent its requirements are for membership, and
  • whether applicants for membership must be personally recommended, sponsored or voted on by other members. 

See e.g. EEOC v. University Club of Chicago, 763 F.Supp. 985 (N.D. Ill. 1991)(concluding that a club was not private because it gave both members and guests essentially the same privileges); and Bommarito v. Grosse Pointe Yacht Club, 2007 U.S. Dist. LEXIS 21064 at *30-31 (E.D. Mich. 2007)(finding requirements of a written application, sponsorship of three current members, posting of the candidacy at the clubhouse, consideration by the board of directors, and a secret ballot to constitute “meaningful limitations on membership.”).  As stated by one leading opinion, “selective membership practices are the essence of private clubs.”  EEOC v. The Chicago Club, 86 F.3d 1423, 1436 (7th Cir. 1996).

Based on the foregoing, it should hardly come as a surprise that a “private” club which opens itself up to the public, or which accepts virtually every applicant meeting minimal criteria or without recommendation or some form of personal screening may be placing its statutorily-afforded exemption in jeopardy.  Because a carefully structured and properly run private club should be able to meet the requirements for exemption from the ADA and Title VII, clubs should be careful that in their push for additional revenues and/or members, they do not open themselves up to potential forms of liability.  It should be noted that depending upon the jurisdiction, there may be applicable state, local or municipal discrimination laws which provide similar protections, and which may be construed as covering private clubs.

Simply stated, in the private club industry, a little “discrimination” can go a long way in avoiding potential lawsuits based on discrimination!