Pay Equity and EEO-1 Reporting Remain a Priority of Federal Regulators

Pay inequity, particularly compensation disparity based on sex, has become a very prominent political issue in the last decade and it looks like some additional changes could be on the horizon at the federal level.  Demshutterstock_532208329ocrats expressed that pay equity would be a priority in their labor agenda during the 2018 Congressional election cycle and, in February 2019, a proposal intended to further promote fair pay practices was reintroduced in Congress.   In addition, just last week, a federal judge lifted the stay on the changes to the Equal Employment Opportunity Commission’s (“EEOC”) EEO-1 Report.  The revised EEO-1 report would require certain employers to provide pay data by sex, race, and ethnicity to the EEOC, allowing it to more easily detect and track impermissible pay differentials.  Though at very different stages in their respective lawmaking processes, the proposed law and final regulation are very clearly intended to address pay inequality and provide additional enforcement tools.

Stay Lifted on EEO-1 Report

In August 2017, ahead of the 2018 submission deadline, the Office of Management and Budget (“OMB”) stayed collection of pay data based on race, ethnicity, and sex to allow it to review the regulation related to the lack of public opportunity to comment on the format of submission of the additional data and burden estimates related to the specific data file format provided.  However, on March 4, 2019, a Washington, D.C. federal judge ordered the stay be lifted because she determined that OMB’s decision was arbitrary and capricious – citing unexplained inconsistencies based on its prior approval of the rule and failure to adequately support its decision.  Continue reading

DOL Revises Field Operations Handbook to Clarify Interpretation of FLSA’s Dual Jobs Regulation

Department of LaborThe U.S. Department of Labor (“DOL”) has officially curtailed another controversial interpretation of its dual jobs regulation that has plagued employers for more than decade – i.e. the 20% rule.  This is welcome news for the hospitality industry and other employers who employ tipped employees, as the previous rule effectively forced employers to track and monitor the time that tipped employees spent on non-tipped tasks and “related duties.”  Although the DOL issued an opinion letter rescinding its interpretation of the 20% rule in November 2018, the DOL’s recent revisions to its Field Operations Handbook has official dispelled lingering concerns about the DOL’s interpretation of the Fair Labor Standards Act’s dual jobs regulation and potential enforcement of the 20% rule.

The Tip Credit

Under the federal Fair Labor Standards Act (“FLSA”), employers must pay employees a minimum wage of $7.25 per hour. Various state wage and hour laws impose higher minimum wage requirements, but employers covered Continue reading

Have Faith: 4.9 Million Dollar Settlement Underscores Importance of Accommodating Religious Beliefs During Hiring Process

What happens when the religious beliefs of an applicant conflict with your grooming and appearance policy?  What if the applicant is seeking a public-facing position in which they will be the first (and only) representative of your organization with whom most members of the public interact?  shutterstock_EEOCWhile some employers may believe that “image is everything” when it comes to the appearance of their public-facing employees, a 4.9 million-dollar settlement of a religious discrimination lawsuit announced recently by the U.S. Equal Employment Opportunity Commission (“EEOC”) serves as a stark reminder to employers that even your most straightforward policies may need to be modified in certain situations.  As detailed in our June 7, 2018 blog post, the EEOC has been aggressively making good on the promise made in the agency’s Strategic Enforcement Plan for Fiscal Years 2017 – 2021 to focus on “class-based recruitment and hiring practices” that discriminate against people with disabilities by filing a series of lawsuits accusing employers of violating the Americans with Disabilities Act by inquiring about prior medical histories, subjecting applicants to physical capacity tests and refusing to hire individuals who disclosed certain conditions.  The agency’s Strategic Enforcement Plan similarly committed to rooting out religious barriers to employment.  This is important because while many employers readily understand the need to reasonably accommodate disabled applicants and employees, it seems that some employers fail to grasp that they may also have to accommodate religious beliefs and practices of applicants and employees.

What the Law Requires

Title VII requires that employers, once informed that a religious accommodation is needed, accommodate an employee whose sincerely held religious belief, practice, or observance conflicts with a work requirement, unless doing so would pose an undue hardship.  If an employer’s dress and grooming policy conflicts with an employee’s known religious beliefs or practices, the EEOC expects Continue reading

Digital Threats Continue to Confront the Hospitality Industry

shutterstock_217014265Cybersecurity and digital threats were a hot topic at ALIS Law, a conference for hotel owners and operators, in Los Angeles last month.  I had a pleasure of moderating a session on “threats in a digital world” with senior executives from national hotel management and ownership groups.  In our session, we discussed what were some of the pressing and most concerning digital threats that kept the hospitality industry up at night.  Here are some highlights and take-aways from the session:

  • Cybersecurity and hacks from foreign and domestic threats remain a top concern. Many hotels have been engaging in surveillance as one method of cyber protection.  It was noted how much the investment in technology to prevent, address, and respond to cybersecurity issues has increased for both owners and operators.  While owners may bear the cost on their profit & loss statement, and management companies are putting in policies, owners are adding property specific monitoring.  It was discussed that one global hotel company, Hyatt Hotels, recently announced a bug bounty program whereby they will be paying ethical hackers to monitor their systems, including mobile applications, for potential risks and where credible risks or threats are found – the hackers will be compensated – which is a novel approach in the hospitality industry.
  • While cybersecurity threats have been a focus, one repeated concern is the threat of harm to a hotel’s reputation due to guests and third parties spreading false information on social media sites, such as LinkedIn, Yelp, and Trip Advisor. To address these concerns, hotel operators talk with their teams daily about the consequences of false information or a bad review and take steps to remove false reviews if possible.  Others noted that removing a false review from a site like Trip Advisor can be challenging unless the company is able to prove that the review was posted for criminal reasons or demonstratively false.
  • One consequence of a cybersecurity hack beyond the disclosure of guest information is if a hacker was able to secure personal identifiable information of a hotel company’s investors and borrowers. If investors are concerned that a hotel company is not protecting their highly confidential and personal financial information, that would have a significant impact on the reputational harm to the company.
  • Some of the best practices that owner and operators have put into place is an incident response plan to respond to a threat. In doing so, a key question is who you need at the table to decide how to move forward (IT / GC / PR / Owner) and what elements do you need to put into place.  In addition, implementing policies and procedures on the front end is critical.  For example, from an accounting perspective, having controls in place that can protect where the money is going and where it is coming from and ensuring that there are multiple approvals before money is sent out electronically.  Finally, training staff on the policies and procedures so that the right people are getting the right information.  Managers need to judge and reward staff for compliance with the policies because while a company continue to monitor and audit, training is only effective if compliance is monitored.  For example, one company reported conducting more secret shoppers to determine whether someone can drop a flash drive into a front desk computer to tap into the network.

Unfortunately, cybersecurity risks and threats are not going away anytime soon, but with planning and focus on this important issue, hotel owners and operators can get ahead of some of the threats and take control and strong action if a risk materializes.

[Webinar] A Business Primer on Disability Access Laws: Preventive Tools and Defense Strategies

On Thursday, October 25, 2018, at 1 pm EDT, join Kara M. Maciel and Andrew J. Sommer of Conn Maciel Carey’s national Labor & Employment Practice Group for a complimentary webinar:  “A Business Primer on Disability Access Laws:  Preventive Tools and Defense Strategies

Businesses continue to be plagued by litigation under the Americans with Disabilities, Title III (ADA) over alleged access barriers.  Lawsuits against hotels and retailers, among other public accommodations, appear to be on the rise with a disproportionate share in California.

Disability Webinar

This webinar will provide an overview of ADA, Title III standards as they apply to construction existing before the enactment of the ADA in 1992 as well as to subsequent new construction and alterations.  The webinar will also address Continue reading

Tips, Service Charges, and Automatic Gratuities Continue to Cause Problems for Employers

Hospitality employers nationwide continue to be hit with class action lawsuits alleging failure to properly pay/distribute tips, as well as failure to correctly characterize service charges and automatic gratuities.  These lawsuits have the potential to result in verdicts or settlement amounts more costly than virtually any other employment-related matter.  As a result, it is important to periodically review what is or is not permissible under the law is it relates to tips, service charges, and automatic gratuities.  shutterstock_waiter

Most employers are familiar with the basic premise that a tip is a voluntary amount a guest leaves for an employee over the amount due for the goods sold or services rendered, while a service charge is an amount agreed-upon in advance by a venue for services provided, often in connection with large pre-planned events.  However, service charges are treated differently than tips for tax and other purposes, and automatic gratuities add an extra complicated layer in this analysis. A brief synopsis of the differences of these terms from a legal perspective is set forth below:

Continue reading

SCOTUS Approves Class Action Waivers in Employment Arbitration Agreements

By:  Kara Maciel and Dan Deacon

The U.S. Supreme Court ruled on Monday that class/collective action waiver clauses in employment agreements that compel employees to settle disputes individually with a third-party arbitrator are enforceable.  In a landmark 5-4 ruling, the Justices in the majority rejected the National Labor Relations Board’s position and held that a class/collective action waiver in an arbitration agreement – which effectively prohibit employees from joining together in a class or collective action lawsuit to settle disputes – do not violate the Federal Arbitration Act (“FAA”) or the National Labor Relations Act (“NLRA”).

Background

Arbitration agreements – requiring employees to submit claims to an arbitrator instead of filing in court – are relatively common in the workplace.  Many employers favor arbitration because it tends to lower the cost of litigation and streamlines a resolution.

The legal issue that percolated through the federal Courts of Appeals over the past several years was whether a class/collective action waiver in an arbitration agreement is enforceable.  An arbitration agreement that includes a class/collective action waiver benefits an employer because it prevents employees from banning together to file costly class or collective actions and it forces employees to utilize the arbitration process rather than filing a lawsuit.  Thus, the only form of redress for an employee is a single action that must be worked out before a neutral, third-party arbitrator.

Over the past five years, the Courts of Appeals issued conflicting opinions on whether class action waivers are enforceable.   Notably, between 2013 and 2014, employers were provided favorable opinions from the U.S. Courts of Appeals for the Fifth, Second, and Eleventh Circuit which concluded that the NLRA does not invalidate class action waivers in arbitration agreements.  In contrast, in 2016, the U.S. Courts of Appeals for the Ninth and Seventh Circuit adopted the NLRB’s position that class and collective action waivers violate Section 7 of the NLRA.

The Supreme Court’s Decision

The Supreme Court’s ruling brings finality to an issue that sparked years of debate and caused significant uncertainty for employers.  Oral arguments took place in October 2017 with the justices appearing split along ideological lines – except for Justices Clarence Thomas and Neil Gorsuch who did not speak at all during the session.  Interestingly, however, it was Justice Gorsuch who wrote the opinion – which was his first major opinion since joining the Court last spring.

As alluded to in our prior blog post, President Trump’s ability to fill Justice Scalia’s vacancy was ultimately a deciding factor in what appears to have been a partisan showdown.  Speaking for the conservative wing on the bench, Justice Gorsuch explained that the law is clear that Congress in enacting the FAA instructed federal courts to enforce arbitration as written, including those terms calling for individualized proceedings, and that the “decision does nothing to override” what Congress has done.  In a lengthy dissent, Justice Ginsburg criticized the majority for overturning 80 years of NLRB precedent.  Justice Ginsburg commented that the majority’s decision is “egregiously wrong” and expressed concerns that many employees with small claims, such as minimum wage and overtime violations, will be disinclined to pursue potential claims individually.

The expected fall-out and the future of this ruling now rests with Congress.  Congress certainly has the ability to revise the FAA and the NLRA through legislation.  Given the deep split amongst party lines, however, it is unlikely that Congress will act any time soon.

Take Aways for Employers 

In light of the Court’s decision, employers should immediately review their practices and policies governing employment agreements with arbitration clauses.  For those employers who do not require arbitration of disputes, now may be the time to reconsider whether to implement such an agreement with current employees.  For those employers who have arbitration agreements in place already, now is the time to ensure the agreement contains an enforceable class/collective action waiver, especially for wage and hour disputes.  Employers may want to evaluate whether to restrict class/collection actions for other types of disputes, such as discrimination or harassment cases.  Importantly, any arbitration agreement must be drafted with the company culture in mind.

In short, employers now have the ability to utilize a new forum to resolve legal disputes on an individual basis.  In some circumstances, especially for class/collection claims, an arbitration may be less expensive than lawsuits, take less time, and do not typically result in years of appeals.  Ultimately, the Supreme Court’s decision is welcome news for employers.  Employers can proactively mitigate litigation risk through carefully drafted employment agreements and more effectively manage legal disputes.