Hoteliers must be proactive to avoid hiring and pay practices that could land them in legal trouble.
Being an employer in the hospitality space is not easy, that is for sure.
In a commercial landscape in which “see you in court” is an all too frequent refrain, legal exposure is a constant concern for hotel owners, operators and management. But this worry can be reduced if hoteliers avail themselves of a handful of safeguards that can significantly lower the risk of costly and time-consuming workplace litigation.
Here, we outline five simple steps that can be taken to prevent potential employee-related problems.
1. Say no to salary inquiries
Unfortunately, there continues to be a divide between what men and women are paid. In an effort to narrow the gap, a number of state and local legislators, including those in hospitality hot spots like California and New York City, have moved to ban questions about a job candidate’s salary history. The thinking behind the laws goes like this: When employers rely on an applicant’s past earnings to determine compensation going forward, wage inequality is perpetuated. Therefore, many employers are now prohibited from asking would-be employees what they were paid at prior jobs so that salary conversations are merit- and qualifications-based.
Disobeying salary inquiry bans can come at a hefty price; for instance, infractions of the law in NYC can result in penalties of up to $250,000. As such, the best hiring practice would be to preclude questions about an applicant’s current and past earnings, and instead set compensation based upon the candidate’s skill set and its relevance to the job being filled. Another permitted approach is to advertise an expected pay range for any given position, which takes into account experience, licenses and education. In either case, hotel employers—particularly those with properties in cities and states with salary history prohibitions—should update their employment applications and interview processes accordingly.
2. Ban the box, too
While on the topic of hiring, it is also important to mention the denial of employment based on an applicant’s criminal history. In many places—California and New York City included—this has become a bit complicated and certainly frowned upon. To ensure that job seekers with criminal records are judged first on their qualifications and to give them a fair chance at employment, laws are in place in more than 30 states and 150-plus municipalities that require the removal of the conviction history question from job applications—“check here if you have ever been convicted of a crime.”
Some jurisdictions go a step further and delay background checks until later in the hiring process—i.e. once a conditional offer of employment has been made—and others, including California, even insist that an employer undertake an individualized assessment to determine if a person’s criminal record justifies the denial of employment. In fact, when a job offer is withheld in the Golden State based upon an applicant’s criminal past, he or she must be given the opportunity to challenge the accuracy of the conviction record and/or provide evidence of rehabilitation or mitigating circumstances.
It is no secret that hotel employers have relied on the criminal history question to limit their applicant pools, but continuing to do so may be unlawful, not to mention costly. Those who violate these “ban-the-box” regulations are subject to significant financial penalties. Hoteliers operating properties can limit potential liability by making sure their job applications do not ask about criminal convictions and their hiring methods otherwise conform to applicable state or local fair chance laws.
3. Wage-theft prevention
Here is a rather obvious principle: Hospitality employers must provide paychecks to employees on time and in full. Nonetheless, shortchanging workers—not paying them their legally or contractually promised wages—is an ongoing problem; one that has precipitated the passage of a series of wage-theft laws throughout the country.
Most commonly, wage theft comes in the form of an employer’s failure to pay the full minimum wage or for all hours an employee has worked; not properly compensating a worker for overtime or meal and rest breaks; making illegal paycheck deductions; or withholding a former employee’s last paycheck after he or she leaves a job. Such wage and hour law violations can spell big trouble for hotel owners, operators and management and should not be allowed to happen. Employee-leaning laws, like California and New York’s Wage Theft Protection Acts, are designed to make sure they do not. How? By requiring that non-exempt employees be given detailed written notice containing wage and overtime information at the inception of employment and, subsequently, upon a change in pay rate, as well as legally compliant paystubs.
Whether or not they are governed by a wage theft protection regulation, hoteliers must be certain to:
- Extend minimum wage and overtime standards to their employees.
- Be wary of misclassifying these employees as independent contractors—especially for the purposes of wage and hour laws.
- Ensure that their personnel is being paid for all hours worked.
Doing so will go a long way toward avoiding wage and hour litigation.
4. Do not allow off-the-clock work
While off-the-clock work falls under the wage and hour umbrella just discussed, the topic is deserving of a category all its own. That is because we live in an age of instant access, meaning that it is far too easy for a hotel employer to reach out to non-exempt employees before or after hours asking that work be done. Yet as a general rule, requiring workers to perform off-the-clock tasks without pay violates labor laws—an obvious no-no for hotel owners, operators and management.
Even the smallest infraction can be problematic. For example, if a hotelier emails or texts an hourly employee before or after working hours, who then checks his or her smartphone and reads and responds to the communication while off-the-clock, that worker likely is performing compensable work. Such a routine task left unpaid—and similar others ones, like locking up a workplace, activating an alarm or logging off a computer before “clocking in” or after “clocking out”—can be perilous for a hotel employer. Bottom line: Non-exempt employees are to be compensated for all the time they spend working, and those who toil off-the-clock can sue to be paid for any increments of time that employers refuse or fail to count, including overtime. As a hotel manager, do not email, text or even call non-exempt employees on their personal devices—or have them do anything, really—when they are off-the-clock, unless, of course, you are prepared to track and pay for the time.
5. Play by the rules with tip credits
Most states—Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington excluded—allow hospitality employers to pay service-facing employees who customarily earn tips a reduced wage, so long as the gratuities they receive bring their hourly earnings up to at least the legally mandated minimum wage. This is known as a tip credit, which hotel employers can take advantage of when paying for positions like restaurant employees or valet attendants.
To do so without running afoul of the law, hoteliers must confirm claiming a tip credit is legal within the state(s) they operate and determine if the reduced minimum wages they are paying are compliant with the applicable state and federal standards. The federal minimum wage for tipped employees is currently $2.13 an hour, as opposed to the full federal minimum hourly wage which now stands at $7.25, though some states have their own minimum wage that overrides these amounts. Employers must also provide proper notification to tipped employees that a tip credit has been applied to minimum wage so they understand why hourly earnings may reflect something other than the full minimum wage and properly document the number of hours tipped employees have worked and the amount of gratuities earned so that paychecks can be correctly calculated. This will also come in handy in the event of IRS or Department of Labor audit. It is also key to pay the difference should an employee’s tips not bring his or her hourly wages up to at least the minimum wage. These measures will go a long way in helping hotel owners, operators and management prevent tip-related lawsuits.
Defending against litigation brought by an employee—or worse yet, a class of employees—can serve to exhaust an hotelier’s precious resources and distract from day-to-day operations. But with an ounce of prevention as prescribed above can come a pound of cure in the form of a workplace that steers clear of the courthouse.
Marc Zimmerman is a partner at Michelman & Robinson, LLP, a national law firm with offices in Los Angeles, Orange County (California), San Francisco, Chicago and New York City. He represents management across multiple business sectors in litigation and transactional matters. Marc can be contacted at 212-659-2554 or firstname.lastname@example.org.
Amanda Pawlyk is a senior associate at M&R, where she focuses her practice on counseling and litigating on behalf of employers – especially those in the hospitality space – in cases involving discrimination, harassment, wrongful termination, reduction in workforce, hiring, wage and hour issues, misclassification, overtime and meal/rest breaks. Amanda can be contacted at 310-299-5500 or email@example.com.
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