The California legislature is considering a bill that would codify in the Labor Code and Unemployment Insurance Code the California Supreme Court’s decision in Dynamex – which adopted a standard that made it significantly more difficult for employers to classify workers as independent contractors, ignoring the realities of the modern workplace and gig economy. Assembly Bill 5 was introduced back in December 2018, and has passed the Assembly and is making its way through the Senate.
As this blog previously noted, last year the Supreme Court in Dynamex interpreted the definition of “employee” under the California Wage Orders as placing the burden on the hiring entity seeking to characterize a worker as an independent contractor to establish each of these three factors: (A) that the worker is free from the control and direction of the hiring entity in performing the work; (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (C) that the worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed. This is known as the “ABC test.”
For years prior to the Dynamex decision, the California courts Continue reading
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. Democrats 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
The 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
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? While 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
Cybersecurity 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.
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.
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
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.
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: