Articles Posted in Labor & Employment

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PREVAILING WAGE LAW is California’s “other” minimum wage. It requires workers to be paid union wages on publicly funded construction projects. But in recent years, the law in California has EXPANDED well beyond its initial purpose.  It has become a tool for workers to demand union wages on virtually any construction project in California. These claims can increase the cost of a major construction project by millions of dollars—and can be brought years after construction is complete.

$8 million Prevailing Wage verdict in 2011
for work on the Hilton San Diego Bayfront Hotel
Jon Welner, Hotel Lawyer

Rent credit from Port District triggered prevailing wage; $8 Million in back wages paid by Hensel Phelps Construction Company

In California Prevailing Wage Law, “public funds” come in many forms. In the case of the Hilton San Diego Bayfront Hotel, the Hotel learned the hard way that a “rent credit” can transform a $350 million, privately funded project into a “public work.”

In 2005 the Hotel signed a ground lease with the Port of San Diego. The lease required the construction of a hotel and convention center by the end of 2008. Rent would be a minimum of $2.25 million per year during construction and $4.5 million per year thereafter. To help support the project, the Port agreed to a “rent credit” of up to $46.5 million during the first eleven years of the lease.

Does a rent credit = the payment of public funds?

Hilton San DiegoThe Hotel claimed that project was privately funded and not a “public work.” It argued that the rent credit was not the “payment…of public funds” because the overall lease—including the credit—was at fair market value (FMV).

The unions disagreed. They argued that a “rent credit” falls squarely within the statutory definition of “public funds,” which includes “rents…that are paid, reduced, charged at less than fair market value, waived, or forgiven” by the government. CONTINUE READING →

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10 November 2013

Hotel Lawyer with some tips for employers on handling tipping — the new IRS Rules.

Employer practices with tips at hotels and restaurants have spawned a lot of employee discontent, class actions and other litigation. Some employers have withheld all or a portion of employee tips to cover administrative costs and others have redistributed tips amongst employees, some of whom (like bus staff and kitchen crews) have no opportunity to earn tips. Even the IRS has gotten into the game by adopting new rules that go into effect in January 2014.

The latest development centers around the common practice for restaurants, hotels, and others in the hospitality industry to impose “mandatory gratuities” to large parties of patrons. (We’re all familiar with those menus that read, “A gratuity of 18% will be charged for parties over 6.”) While there may be legitimate reasons for this practice, the potential liability for mishandling automatic gratuities is significant, and about to get much bigger.

Plaintiffs have been fairly successful in arguing that such mandatory gratuities or service charges are compensation for employees, all of which must be paid to the employees, which may not be distributed to non-tipable employees, and are probably subject to employer reporting and withholding taxes, and are part of employees’ regular rates of pay for overtime calculation purposes.

But now the IRS is promulgating some rules that go into effect in 2014, and all employers should pay attention. My partner, hospitality employment lawyer Travis Gemoets, gives us the full story.

Change in IRS Rules on “Automatic Tipping”
Raises a red flag for hotels & restaurants

Travis Gemoets

One of the many new laws going into effect in 2014 will require hotels, restaurants and other employers in the hospitality industry to change their current practice when employees are paid “automatic” tips charged to large groups of patrons. This ruling will not only effect tax withholding, but also require employers to make additional overtime payments to the employees, above and beyond the automatic tip charged to the customer.


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17 July 2012

Hotels and restaurants are among many other businesses that monitor employees at work through video surveillance, and through employees’ use of company-issued computers and smart phones. While employers gain benefits such as reducing theft, decreasing liability and ensuring safety procedures are followed, employees can feel that this electronic monitoring violates their privacy. In his article below, Mark Adams, a litigator in JMBM’s Global Hospitality Group®, shares with us how courts are ruling in lawsuits that deal with electronic surveillance of employees. He also gives employers advice on how to prevent these lawsuits from happening.


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23 April 2012

Hotel Lawyer with some insights on the recent California Supreme Court Case, Brinker v. Superior Court

Last week, the California Supreme Court gave employers a “break” by resolving issues in a case that has been pending since 2008 — issues that have cost California employers more than a billion dollars in settling and defending class action lawsuits.

At issue in Brinker Restaurant Corporation v. Superior Court was whether California employers must ensure that their employees actually take their meal and rest periods or merely make them available. To the collective relief of California employers, the court found that an employer must only provide meal and rest periods to its employees, leaving the employees free to use the period for whatever purpose they desire. The employer is not obligated to ensure no work is performed during the period.

My partner, labor and employment lawyer Travis Gemoets, offers some practical pointers to employers based on the Brinker decision, in his article below.

While it is always great to share positive news with our friends in the hospitality industry, the Brinker decision also reminds us of the critical need for clear, sound employee policies, and the importance of providing regular, ongoing education to supervisors who implement those policies.

JMBM’s Global Hospitality Group® includes labor and employment lawyers with deep experience in the hospitality industry, providing clients with practical advice and planning, as well as aggressive advocacy. If you would like to discuss how our industry-specific prevention and preparedness strategies can help you avoid or minimize costly employment claims, or how the Brinker decision impacts your hotel operation, please contact me or my partner, Travis Gemoets.


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6 October 2011

My partner, labor and employment lawyer Scott Brink, has informed us that the California Supreme Court is scheduled to hear oral argument in a high-profile labor law case, Brinker Restaurant v. Superior Court, on November 8, 2011. He believes it is likely we will see a decision within the following 90 days.

The outcome could curb a wave of class action lawsuits in California — or provide the fuel for more of them.

At issue in the case is whether California employers must ensure that their employees actually take their meal and rest periods or merely make them available. Here is Scott’s update.


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20 September 2011

On September 10 2011 , we let you know that the National Labor Relations Board (NLRB) is making it harder to stay union free.

As of November 14, 2011, most private sector employers are required, by a controversial new National Labor Relations Board rule, to post a notice advising employees of their rights under the National Labor Relations Act.

Now, according to my partner, labor and employment lawyer Scott Brink, the NLRB’s authority to issue the new rule is already the subject of legal challenge.

Because NLRB enforcement of the new rule may be delayed — pending the resolution of a lawsuit challenging the validity of the rule — employers should not rush to post the notice before the November 14, 2011 deadline.

Scott’s brief article below explains what is going on and why you need to pay attention to this important development.

A link to the NLRB’s Form of Notice, which was issued September 14, 2011, may be found at the end of the article.


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10 September 2011

A highly controversial new law, which many employers believe will unfairly foster union organizing, requires that employers post notices of employee rights — including the right to organize, join or discuss the activities of a union. The law goes into effect on November 14, 2011.

Employers must comply with the new rule whether they have a unionized work force or not.

My partner, labor and employment lawyer Scott Brink, has outlined in his article below the requirements the new rule imposes on employers.

Scott and the labor and employment lawyers of JMBM’s Global Hospitality Group® have represented the hospitality industry in all aspects of labor and employment law including union prevention, collective bargaining negotiations, and defense of unfair labor practice charges before the NLRB. If you have questions about how this new rule will impact your hotel business, we can help.


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12 July 2010

Hotel Lawyer with an alert about the DOL’s historic action targeting hotels.

The U.S. Department of Labor (DOL) is taking historic action. With a huge increase in funding and staffing, the DOL is specifically targeting audits and enforcement actions for every hotel, motel, and resort in the U.S. The program will search for violations of overtime rules, minimum wage, and classification of exempt and non-exempt positions. In addition, one of the primary focal points of these audits will be employers with workers holding H-2B visas.

Hotel labor lawyer Marta Fernandez and hotel lawyer, Jim Abrams, both senior members of the JMBM Global Hospitality Group®, say, ” We expect that the DOL compliance audits will cover all of the laws administered by the DOL and WHD including H-2B labor certification wage requirements and other federal laws such as minimum wage, overtime, and family and medical leave.”

In today’s Alert, they also suggest “4 Things that you should do now — Before it is too late.”


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5 January 2009

To say the least, the last year has been a very “interesting” one. Here are our picks for “The Best from” from 2008. There are some classic pieces here!


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1 December 2008

Hospitality Lawyer with insights on “What you CAN do NOW” . . . before the pending Employee Free Choice Act is adopted and the unions come calling. Today we are going to talk about a monumentally important event facing the hotel industry, that is almost certain to happen with Barack Obama’s election. It is something that will affect virtually every hotel in the United States, and there is probably a very limited window of a few months that you can do something that will have a long lasting benefit for your hotel. But you have to act very soon.