Category Archives: Risk Management

by | September 23, 2012 · 7:53 am

Hospitality Industry Legal Risks: Wisconsin Restaurant Sued By Former Employees For Violation Of State And Federal Wage Laws; Plaintiffs Seek $46,000 Plus Liquidated Damages And Attorneys Fees

“…servers are paid at a sub-minimum wage rate, plus their tips…the complaint alleges that Ginza management wholly failed to pay any base compensation to Wu and Qin, who only received tips…in addition, the restaurant did not pay overtime compensation when the employees worked over forty hours each workweek…”

“…the restaurant failed to have their servers sign a tip declaration each pay period…and failed to pay the two servers in the amount of $46,000. Under the Fair Labor Standards Act, the servers are entitled to their back pay, plus an equal amount of liquidated damages and attorneys’ fees and costs…”

Two former servers at Ginza Japanese Restaurant in Wauwatosa filed suit Friday in federal court in Milwaukee against Ginza PZW Corp. and Ping Xiao Fang, who operates the business, alleging violations of both state and federal wage laws.

According to one of the plaintiffs, Ginza initially paid her no wages at all, only letting her keep tips. Later, both of the servers assert, Ginza did begin cutting paychecks, but then simply demanded they pay the restaurant back the after-tax portion of their pay.

For more:  http://wauwatosa.patch.com/articles/ginza-restaurant-sued-over-employee-pay

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by | September 22, 2012 · 6:04 am

Hospitality Industry Legal Risks: Indiana Hotel Settles "Racial Discrimination Lawsuit" With EEOC For $355,000

The operators of an Indianapolis hotel have agreed to pay $355,000 to settle allegations they underpaid and fired African-American housekeepers because of their race…the settlement will be divided among 75 employees or job applicants.

The U.S. Equal Employment Opportunity Commission announced Friday that it had filed a consent degree in federal court with     Noble Management LLC and New Indianapolis Hotels LLC, which operate the Hampton Inn on Shadeland Avenue on Indianapolis’ north side.

The agency says the companies also retaliated against black employees who complained about racial bias. The EEOC also says the hotel regularly excluded African-American job applicants who were equally or better qualified than the Hispanic applicants it hired as housekeepers.

For more:  http://www.ibj.com/indy-hotel-to-pay–355-000-to-settle-race-lawsuit/PARAMS/article/36844

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by | September 21, 2012 · 6:22 am

Hospitality Industry Property Risks: North Carolina Restaurant Fire Caused By "Outside Neon Lighting Electrical Short"; Extensive Exterior And Smoke Damage

“…the fire started on the half of the building that serves as the dining area…it went inside to the attic space…in addition to a sizable hole in the building’s roof, the building sustained smoke damage; siding closest to the flames melted and peeled down…”

An electrical short associated with the neon lighting attached to the facia of Peaden’s restaurant and catering service building on McArthur Road caused significant damage to half the building on Thursday, fire officials said. When they responded about 5:30 p.m., the building already had been evacuated, and no one was injured.

“When we first arrived, fire was showing from the gable in the front,” Southern said. Firefighters then attacked the fire from the front and back of the building, he said. The 23 firefighters who responded were quick to bring the fire under control in 15 minutes, he said. That quick response spared the rest of the building from further damage. City health officials visited the building and spoke with the business’s owners, who didn’t want to comment Thursday night, and evaluated the damage. Southern could not say whether the business could reopen today.

However, the restaurant side of the building would need “extensive repair” before it could be usable again, he said.

For more:  http://www.fayobserver.com/articles/2012/09/20/1205576?sac=fo.home

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by | September 20, 2012 · 6:14 am

Hospitality Industry Property Risks: Texas Restaurant Rebuilds After Electrical Fire Causes More Than $40,000 In Damage; Insurance Policy Covers Employee Payroll

“…a fire struck the backside of the building. It is still undetermined as to what exactly caused the one-alarm fire, which left approximately $40,000 in electrical damage…thanks to the preservation of its original pits and an insurance policy that has kept their employees on the payroll since the incident… it will feel as if Hutchins BBQ never closed…”

At first, a hopeful Tim believed the restaurant would be up and running in a couple of weeks. But with more planning and red tape to navigate than originally expected, he and his father, Roy, recovering a business from fire entailed much more than he anticipated.

The fire originated in the rear of the building and destroyed its back wall and pit room, which housed two wood-burning rotisserie pits, a trademark of the family namesake.

“It was devastating,,” Roy said. “We’ve put in 14 restaurants since 1975, and this is the first fire we’ve ever had.”

With the damages being more expensive than he originally thought, Tim believes the worst is behind them, and said he and his father are resting easier now that they can see the progress taking shape.

“A lot of times with a lot of restaurants, this could put you under,” Tim said.  “Thankfully, this is something I’ve been able to do.”

The restaurant, which has been at that location since 1991, will look very similar to way it was before the fire, except for a completely new pit room constructed of steel and cement, no wood, Roy said.

For more:  http://www.scntx.com/articles/2012/09/19/mckinney_courier-gazette/news/8971.txt

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by | September 18, 2012 · 6:12 am

Hospitality Industry Legal Risks: Pennsylvania Restaurant Franchise Settles "Class-Action Discrimination Lawsuit"; Employees Denied Promotion Can Get Compensation For "Lost Opportunities"

The lawsuit said that the company relegated black employees to  back-of-the-kitchen work and denied them promotional opportunities…Under the settlement, anyone who worked for Covelli’s Panera franchises from  Jan. 11, 2008, through Jan. 11, 2012, for more than one year, and applied for or  wanted a promotion, can get compensation for alleged lost opportunities…for  each hour worked after their first year, they can get 70 cents — roughly what  they would have gotten through a one-level promotion.

Around 200 to 300 current or former employees of Panera Bread franchisee  Covelli Enterprises stand to get payments under a class action lawsuit  settlement that won preliminary approval from a federal judge at a hearing  today.

Attorney Sam Cordes, who represents Mr. Vines and the class of employees,  told U.S. District Chief Judge Gary Lancaster that the settlement terms will  soon be published in newspapers in areas in which Covelli franchises  operate.

Judge Lancaster gave the settlement his initial nod, though he is expected to  hold a hearing to hear any objections from class members. Neither Mr. Cordes nor the attorney for Covelli would comment after the  hearing. Neither had an estimate of the costs to the firm.

In addition to the payments to black employees, Mr. Vines would get $10,000  and Mr. Cordes $66,000 under the settlement agreement.

Read more: http://www.post-gazette.com/stories/local/region/panera-class-action-settlement-gets-preliminary-approval-653740/#ixzz26pWk7kLY

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by | September 17, 2012 · 6:31 am

Hospitality Industry Property Risks: Oregon Hotel Fire Caused By Cigarette Thrown In Bark Dust; $75,000 In Damage To Structure

“…the building’s fire sprinkler system activated in the attic and stopped that fire from spreading to the rest of the hotel…Fire investigators said the fire started in bark dust and they believe the fire had been burning for some time…The fire caused at least $75,000 in damages to the building and its contents…”

A cigarette is to blame for a fire that damaged the side of the Best Western Hotel in Forest Grove on Sunday afternoon. Firefighters were called to the hotel at 3933 Pacific Ave. at about 2:45 p.m. to reports of a fire burning up the side of the building.

When fire crews arrived, they were able to put the fire out, but not before it had spread up the two-story hotel.

Hotel guests had reported smelling smoke earlier in the day, but nothing was ever found.

A hotel housekeeper first spotted the fire and quickly started to evacuate about a dozen guests at the hotel.

Officials said another housekeeper grabbed a fire extinguisher but the fire was already burning inside the wall space. Staff at the hotel are working to find another hotel in the area for displaced guests.

Fire officials said this is one of several fires in bark dust that has occurred over the last week in Washington County.

For more:  http://www.kptv.com/story/19558127/fire-damages-forest-grove-hotel

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by | September 16, 2012 · 7:31 am

Hospitality Industry Legal Risks: Restaurants Forced To Settle "Class-Action Lawsuits" For "Wage And Hour" Claims; Potential Damages Are Double Wages Owed Dating Back 2-6 Years

“… a restaurant  is permitted to require front-of-the house employees to “pool” their tips, the  pool may be illegal if it is shared with employees who interact with customers  only indirectly. And if the pool is illegal, regardless of the reason, the  restaurant can incur enormous liabilities to employees, even if those employees  each collect hundreds of dollars per week in tips, which is often the case…”

The hospitality industry is under siege by attorneys who stand to gain big  fees from huge class-action settlements. The same gains do not apply, however,  to the waitstaff and other restaurant employees on whose behalf these lawsuits  are filed.

On a federal level, wage and hour claims are brought under the Fair Labor  Standards Act, passed in the 1930s to address intolerable conditions, such as  child labor and six-day workweeks of 10- to 12-hour days without overtime pay.  Such conditions were long ago eradicated from most restaurants and other  establishments, but the FLSA, as well as state wage and hour laws, have  continued to expand by prohibiting common practices that many eateries have  followed for years.

When faced with class actions, most restaurants have few options. Potential  damages often amount to double the wages or tips owed, dating back from two to  six years. Prejudgment interest rates can be as high as 9%, depending on the  state, and plaintiffs’ “reasonable” attorneys’ fees can be enough to put many  operations out of business. Not included here are the costs of defense counsel,  the hit to the restaurant’s reputation, and the disruption of daily operations.  For many owners, settling the plaintiffs’ claims, regardless of their merit, is  the most reasonable business decision.

Read more: http://www.crainsnewyork.com/article/20120916/OPINION/309169972#ixzz26e5yTkfQ

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by | September 14, 2012 · 6:10 am

Hospitality Industry Property Risks: Las Vegas Hotel "Trash Chute Fire" Caused By Sparks From Workers Grinding Metal; $100,000 In Damage

“…Sprinklers inside the chute activated to control the fire, but firefighters found smoldering material in or around the trash chutes from the second to the ninth floors…sparks produced by workers grinding metal with an industrial tool around the trash chute caused the fire…”

Clark County Firefighters were called Thursday morning to the Strip to extinguish a fire in a trash chute at the Planet Hollywood, which caused an estimated $100,000 in damage.

Firefighters responded to reports of smoke at 10:12 a.m. and discovered the fire, which was quickly contained, in a fifth-floor chute in the north hotel tower, according to Clark County spokesman Dan Kulin.

Heavy smoke was reported on several floors, and the fifth, sixth and seventh floors were evacuated, Kulin said.

For more:  http://www.lasvegassun.com/news/2012/sep/13/planet-hollywood-trash-chute-fire-extinguished/

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by | September 13, 2012 · 6:15 am

Hospitality Industry Legal Risks: Illinois Restaurant Sued For "Negligence" After Repairman "Set On Fire" By Employee; Seeks $50,000 In Damages

“…a recently filed lawsuit argues the East China Inn was negligent, and seeks more than $50,000 in damages…the man was standing on top of the stove inspecting a sprinkler system and changing a fuse…he needed medical treatment for a year…”

A fire suppression repairman has sued the East China Inn restaurant on Randall Road in Batavia, arguing he was set on fire while working during an October 2010 visit. Matthew Rapp, 25, of Oak Forest sustained severe burns to his left leg after someone turned on a wok while Rapp was atop a stove fixing fuses, his attorney said.

“He got burned quite badly,” said attorney Matt Willens, adding Rapp was burned mostly on his left leg from his ankle to his knee. “Because of the burn, he missed 21 weeks of work. He was burned by grease.”

The suit states that Rapp visited the Chinese restaurant on Oct. 12, 2010, for his job with Fire Science Techniques. “A restaurant employee turned on the stove or continued to work on the stove that the plaintiff was working above which set the plaintiff on fire,” the lawsuit states.

For more: http://www.dailyherald.com/article/20120912/news/709129713/

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by | September 12, 2012 · 6:09 am

Hospitality Industry Legal Risks: Kansas Hotel Owners Indicted For Hiring "Undocumented Workers And Paying Them In Cash"; Government Seeks "Forfeiture Of Properties"

“…the (hotel owners) are charged with one count of conspiracy to harbor  undocumented workers for personal gain, five counts of harboring  undocumented workers for personal gain and four counts of wire fraud…The government is seeking to forfeit the proceeds of the crimes, including the two hotels the couple own. The government would seize the properties and then sell them, gaining money for taxpayers. The couple failed to pay the government the payroll taxes that they should have…”

The owners of two Kansas City-area Clarion hotels have been indicted on charges of knowingly hiring undocumented workers who were paid less than other employees. Munir Ahmad Chaudary, 51, and his wife, Rhonda R. Bridge, 40, both of Overland Park, own the Clarion Hotel at 7000 W. 108th St. in Overland Park and the Clarion Hotel at 11828 NW Plaza Circle near the Kansas City International Airport.

Both pleaded not guilty on Tuesday. U.S. Attorney Barry Grissom said the grand jury’s indictment alleges Chaudary and Bridge knew they were hiring undocumented workers to serve as housekeepers. This gave them a competitive advantage over law-abiding hotel owners, Grissom said.

“They paid the undocumented workers less and they paid them in cash. Their economic motive was to cut their costs and to get an advantage on other hotels that abided by the law,” Grissom said.

“This prosecution is aimed at unscrupulous employers who are a driving force behind illegal immigration,” Grissom said. “We’re going to go after people who are hiring them.”

The indictment alleges that in December 2011 investigators from DHS Homeland Security Investigations and the Kansas Department of Revenue received information that the two hotels were employing undocumented workers.

Investigators interviewed hotel employees and found out that most of them were illegally in the United States.

In June 2012, an undercover agent took a job as a housekeeper at the Clarion hotel in Overland Park, Grissom said.

The agent made it clear to Chaudary and Bridge when he was hired that he was unlawfully in the United States and had no documents allowing him to be employed, according to the indictment.

For more: http://www.kctv5.com/story/19512719/us-attorney-barry-grissom-holds-news-conference

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