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The Global Hospitality Advisor

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

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

©2004 Jeffer, Mangels, Butler & Marmaro LLP


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