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The Global Hospitality Advisor

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Wage & Hour Class Action Lawsuits: Hospitality Employers Caught
in the Cross Hairs


By Marta Fernandez, September 2004

It’s open season on employers in the hospitality industry who fail to understand and properly implement their wage and hour obligations. The hot national market for wage and hour class actions is getting even hotter in California. 

In his last days in office, former California Governor Gray Davis signed into law Senate Bill 796, aka the Bounty Hunter Law. It creates a new “private right of action” so that California employees can sue their employers for most violations of the California Labor Code. Prevailing plaintiffs may recover lost wages plus significant civil penalties and attorneys’ fees. Although Governor Schwarzenegger recently signed modest reforms to the law, the most significant provisions of the legislation remain intact and continue to adversely impact employers. 

Plaintiffs’ attorneys have sprung into action, loaded their weapons and filed a variety of these Bounty Hunter lawsuits against employers based on workplace posting violations, unlawful pre-employment inquiries in employment applications, failure to provide rest breaks and meal periods, unlawful pay practices and wage deductions and almost invariably, a claim for violations of California Unfair Competition Laws.

In June 2004, California hospitality employers Wolfgang Puck Casual Dining, Crystal Park, Hollywood Park and Bell Gardens Bicycle Club casinos, among numerous others, were targeted in Bounty Hunter class action lawsuits. Common allegations against the casinos include the casinos’ requiring card dealers to buy casino chips or post a bond payment in order to take possession of a bank to perform their job duties. Dealers purportedly were required to take responsibility for any loss to the bank at the end of their work shift. Also, the casinos allegedly required dealers to make a payment to the casino out of any earned tips at the end of every half-hour work rotation, regardless if they received any tips during the work rotations. 

Allegations against Wolfgang Puck Casual Dining include the company’s failure to provide non-exempt employees with rest and meal periods, failure to provide additional compensation for working through rest and meal periods, failure to provide additional compensation for split shifts, and failure to pay such wages upon termination of employment. The plaintiffs also allege that the company failed to maintain required time records, failed to provide employees with appropriate wage statements and unlawfully required employees to purchase uniforms.

8 Steps to Reduce the Risk of Bounty Hunger Lawsuits

  1. Understand wage and hour obligations.  Regularly review with human resources personnel their current obligations. Consult labor and employment counsel to confirm proper interpretation of current obligations.
  2. Classify employees properly.  Multi-state employers should know that the federal wage and hour exemptions have been changed, effective as of August 2004. The minimum salary requirement for exempt status jumped from $250 to $455 per week, resulting in fewer employees being properly classified as exempt. Marketing and inside sales persons are often misclassified as exempt employees because their job duties usually do not meet the requirements. Outside salespersons are only exempt if they spend at least 50% of their time away from the employer’s business location selling services or products.
  3. Maintain time records.  To guard against meritless claims and minimize exposure to valid claims, employers must maintain adequate and accurate time records, maintain express policies governing time records, and provide training to ensure compliance.
  4. Review wage and hour policies.  Ensure that your written policies fully comply with applicable law. This is currently an explosive area for dangerous class action lawsuits.
  5. Audit wage and hour practices.  If your company already has policies, they must be properly implemented. Review the company’s written policies and, through direct consultation with employees at different levels, look for disparities between company policy and practice.
  6. Issue new or revised written policies as necessary.  If written policies or practices do not comport with applicable wage and hour laws, you should remedy deficiencies immediately. Start right away with new written policies complying with applicable law and affirming the company’s ongoing commitment to such compliance.
  7. Training supervisors and managers. When new or corrected policies or procedures are issued, supervisory employees must understand their proper implementation.
  8. Training is critical.  Although competent human resources professionals can implement these recommendations, counsel should review new or current policies and procedures for deficiencies and ambiguities that invite wage and hour attacks by Bounty Hunters.
Alert:  On August 26, 2004, the California Supreme Court issued its long-anticipated decision in Sav-on Drug Stores v. Superior Court, allowing a statewide class of plaintiffs to proceed with their lawsuit against the retailer, alleging exempt employee misclassification. In the lawsuit, managers claim they are entitled to overtime because they did not spend more than 50% of their day on managerial duties. To add to employers’ woes, it will now be easier for employees and former employees to receive court approval to proceed against employers in large class actions.



Marta Fernandez is a senior member of the Global Hospitality Group and Labor Department. As a management labor lawyer, Marta specializes in representing hospitality industry clients in all aspects of labor and employment, including implementation of preventative management strategies, such as executive training, arbitration enforcement and policies and procedures; defense of administrative and litigation claims, such as employee claims of sexual harassment and discrimination; and labor-management relations including union prevention, collective bargaining for single as well as multi-employer bargaining units, neutrality agreements and defense of unfair labor practice charges before the NLRB. For more information, please contact Marta Fernandez at 310.201.3534 or at mfernandez@jmbm.com

The Global Hospitality Group® is a registered trademark of Jeffer, Mangels, Butler & Marmaro LLP

©2004 Jeffer, Mangels, Butler & Marmaro LLP

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For more information:
Jeffer, Mangels, Butler & Marmaro LLP
web site: http://www.jmbm.com
Email Jim Butler at jbutler@jmbm.com
Or contact 
Jim Butler at the Firm
 Jeffer, Mangels, Butler & Marmaro LLP
  1900 Avenue of the Stars
 Los Angeles, CA 90067
     Phone: 310-201-3526 
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in a full-service law firm
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Also See: Adopting Pet And Service Animal Policies To Avoid Lawsuits from Disabled Hotel Guests / Marty Orlick / JMBM / September 2004
Politics Over, New ‘Overtime’ Law Takes Effect; The Significant Changes / JMBM / September 2004
Hotel Franchise Agreements: Opportunities And Pitfalls / JMBM / September 2004
ADA Lawsuit Alert: Beware the Internet Surf-by; A new twist on the ADA drive-by lawsuit / JMBM / September 2004
Hotel Unions Challenging Work Rules Found in Hotel Employer / The Global Hospitality Advisor Handbooks; Claim Interference with Employees’ Rights to Organize / JMBM / October 2003
Wage and Hour Lawsuits and Audits Continue to Sweep the Hospitality Industry / The Global Hospitality Advisor / JMBM / October 2003
Prepare NOW for an ADA Attack; Myths and Tips on How to Minimize Exposure / The Global Hospitality Advisor / JMBM / October 2003
Sarbanes-Oxley Update / The Global Hospitality Advisor / JMBM / Arpil 2003
Equal Public Access or Access to Deep Pockets? The Hospitality Industry Remains a Target of Lawsuits by Disability Rights Groups Under the Americans with Disabilities Act / The Global Hospitality Advisor / JMBM / March 2003
Outlook 2003: A Roundtable Discussion / The Global Hospitality Advisor / JMBM / Dec 2002 
Time Bomb Waiting to Explode: Wage & hour Claims Over Exempt Employees / The Global Hospitality Advisor / JMBM / Oct 2002
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Outlook 2002: A Roundtable Discussion /  Bruce Baltin, Bjorn Hanson, Randy Smith, Jack Westergom - The Global Hospitality Advisor / January 2002 
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Avoiding Liability for Lay-Offs / The Global Hospitality Advisor / December 2001
The Worker Adustment and Retraining Notification Act: Impact on the Hotel Industry / JMBM 
When is an Apartment a Hotel ... and Who Cares? / The Global Hospitality Advisor / JMBM / September 2001 
The 'Perfect Storm' / The Global Hospitality Advisor / JMBM / September 2001 
Richard Kessler's Grand Theme Hotels - Interview with GHG Chairman  Jim Butler / March 2001
Stephen Rushmore's  Industry Trends / Top Markets, Predictions & Opportunities  / Jan 2001
Outlook 2001: A Roundtable Discussion The Global Hospitality Advisor / Jan 2001
Perspectives on Hotel Financing in 2001; Jim Butler, JMBM's Global Hospitality Group Chairman, Interviews Two Active Players in Hotel Finance / Jan 2001 
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