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The Global
Hospitality Advisor
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October 2003
Joint Employer Liability The U.S. Department of Labor recently announced that a federal investigation covering over two years resulted in an order against the owners of the Crown & Anchor and Crowne Pointe Historic Inn in Massachusetts to pay significant sums in back wages and penalties to its employees. The federal investigation found that employees worked at two separate locations: The Crown & Anchor, which is a restaurant, hotel and nightclub, and the Crowne Pointe Historic Inn, which is a hotel. Employees worked for more than 40 hours a week between both establishments and received straight time pay rather than the required time and half for hours worked in excess of 40 in a week. The owners and operators of the establishments maintained that the employees were separately employed and, therefore, did not exceed 40 hours at either establish-ment. Under a theory of �joint employer,� based on interlocking ownership and common management practices, the Department of Labor found both employers liable for failure to pay overtime. Practical tip for employers. This case is particularly significant because of the DOL�s imposition of overtime liability based on the �joint employer� theory. Where employees are working for more than one entity that may be related through common ownership and/or management, joint employment liability may be found and could subject each of those entities to separate overtime liability. Similarly, it is easy to run into overtime liability issues in situations where employers compensate employees at different straight time rates of pay for different types of work. While it is permissible for an employer to compensate at different rates of pay for different types of jobs, there are certain overtime calculation methodologies that must be followed to avoid liability in this area. Missed rest and meal periods The world famous Beverly Hills Hotel in Beverly Hills, California has recently been the target of a class action lawsuit filed on behalf of banquet servers who are now or have been employees of the hotel during the last four years. The lawsuit alleges the hotel failed to provide plaintiffs with mandatory rest and meal period breaks. As a result, the complaint claims that the employees are owed overtime, as well as the statutory right to an extra paid hour per day for each day that they were required to forego ten minute rest periods, pursuant to the California Labor Code. In addition to back pay for overtime wages, penalties and interest, the suit seeks punitive damages, attorneys� fees and injunctive relief. In a novel twist, the lawsuit also alleges that the hotel�s alleged pay practices constitute an unfair business advantage over its competitors in violation of California�s unfair business practices statutes. Practical tip for employers. Unfortunately,
claims for violation of meal and rest periods (which are mandated under
both federal and many state laws, as is the case in California) are frequently
made against employers because they are easy to allege and very difficult
to defend. In order to successfully defend against such allegations, the
employer must have a paper trail to demonstrate that it: (1) properly maintains
a policy of providing rest and meal periods in accordance with federal
and state laws; (2) tracks employee rest and meal period breaks; (3) issues
directives to employees regarding when and how they are to take rest and
meal period breaks; and (4) provides a mechanism through which employees
may complain and/or seek payment in the event of a missed rest and meal
period breaks. Without these safeguards in place, employers are unable
to defend against these kinds of claims. This is a good time to conduct
an audit of rest and meal period rules and procedures.
Marta M. Fernandez is a senior member of JMBM�s 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
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