Tag Archives: Wage and Hour Division

by | October 7, 2010 · 5:49 pm

Hospitality Industry Risk Management: Hotel Owner Must Review “Employment Practices Liability Insurance” Coverage Language To Determine If It Covers “Wage And Hour” Lawsuits

 In Professional Security Consultants, Inc. v. United States Fire Insurance Co., Case No. CV 10-04588 SJO (SSx), Judge James Otero recently denied an EPL insurer’s motion to dismiss a complaint seeking coverage for costs incurred to defend and settle an underlying wage and hour class action.    

The exclusionary language at issue was typical of such exclusions, barring coverage “for violations of the responsibilities, obligations or duties imposed by…the Fair Labor Standard Act…or similar provisions of any federal, state or local or foreign statutory or common law.”

The underlying litigation alleged that employer Professional Security Consultants (“PSC”) violated various provisions of the California Labor Code, including wrongfully withholding overtime compensation. PSC was insured under an EPL policy issued by United States Fire (“US Fire”). US Fire moved to dismiss the coverage action on the basis of its “FLSA” (Fair Labor Standards Act) Exclusion. Citing California law regarding the breadth and scope of an insurer’s duty to defend, the court denied US Fire’s motion.

The court noted that the policy’s definition of an “Employment Practices Wrongful Act” included “employment-related misrepresentations.” Comparing this policy language to the allegations of the complaint, the court emphasized the underlying plaintiffs’ allegation that PSC “[d]isseminated false information throughout [PSC’s] facilities and amongst [PSCs] employees, reciting that, under [PSC’s] labor policies and practices and under California law, the members of the Illegal Wages Class were not entitled to overtime compensation.” The complaint therefore alleged “employment-related misrepresentations,” triggering the potential for coverage under the policy.

The court also rejected US Fire’s argument that there was no potential indemnity coverage because any amounts allegedly owed to the underlying Plaintiffs were not covered “Loss” under the policy. The court observed that the policy’s definition of covered Loss included “damages,” and that the underlying complaint expressly sought to recover damages.

For more:  http://www.lexology.com/library/detail.aspx?g=75f1cf83-81de-43a4-8217-45ef67ed56ec

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by | August 28, 2010 · 9:07 am

Hospitality Industry Employment Risk: Management Must Insure Compliance With H-2B Visa Program Requirements And Fair Labor Standards Act

 “…the hospitality industry is “always on the radar” for potential violations because it employs large numbers of H-2B and younger workers…”

In June and July, employment law firms began issuing legislative alerts to hospitality industry clients, warning them of plans by Wage and Hour Division officials to launch investigations of the hotel and motel industry beginning Oct. 1.

These investigations will center on compliance with H-2B visa program requirements and the Fair Labor Standards Act. The H-2B visa program allows businesses needing one-time, seasonal, peak-load, or intermittent staffing to use foreign workers as temporary labor.

Dolores Quesenberry, a spokeswoman for the N.C. Department of Labor, told Carolina Journal that she was unaware of any increased complaints, but did say the hospitality industry is “always on the radar” for potential violations because it employs large numbers of H-2B and younger workers.

Paul Stone, president of North Carolina Restaurant and Lodging Association, told CJ that the lodging and restaurant industry is North Carolina’s second largest employer, with approximately 500,000 workers, accounting for 10 percent of the state’s total workforce. Of the 1,600 hotels in North Carolina, only a few employ H-2B workers, Stone said, mostly because the program is so restrictive. Before hiring an H-2B worker, for example, an employer must certify there are no domestic applicants qualified for the position.

Stone wonders why hospitality employers are being targeted with the economy mired in recession. Wage and hour audits and similar investigations disrupt operations and increase costs, especially if an employer has to engage outside counsel or auditors, said Stone.

For more:  http://www.lincolntribune.com/modules/news/article.php?storyid=20513

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by | July 14, 2010 · 6:34 am

Hotel Industry Employment Risks And Liability: Dept. Of Labor (DOL) Is Increasing Compliance Audits To Look For Violations Of Overtime Rules, Minimum Wage And Federal Wage And Hour Regulations

“. . .The U.S. Department of Labor (DOL) is planning an initiative that specifically targets every hotel, motel and resort in the United States for audits by the department’s Wage and Hour Division.”

“. . . DOL has labeled the lodging industry as a “high-risk industry” where violations of federal wage and hour laws are most likely to occur. The department has chosen to consider employees in the lodging industry as “the most vulnerable workers” in the country. As a result, you will be subject to a DOL audit, covering all of your employees…”

The Department of Labor’s (DOL) Wage and Hour Division (WHD) has experienced a huge increase in funding and staffing, adding hundreds of new investigators, and is gearing up for a new wave of compliance audits and enforcement actions.

Specifically targeting the hospitality industry, the WHD plans to audit hotel employers for violations of overtime rules, minimum wage, family and medical leave, classification of exempt and non-exempt positions, and virtually every Federal labor wage and hour regulation.

  • Perform an internal audit. Talk to your hotel labor lawyer who can organize an internal audit of your payroll practices, hiring practices, and recordkeeping procedures and then help ensure that your organization is in compliance with Federal laws, including H-2B requirements. It is important that you avoid precipitous action to terminate any employees that do not meet the H-2B visa requirements, because there are anti-discrimination laws that also apply to any termination based on immigration status.
  • Understand your exposure. Hotels that use outside staffing agencies to hire employees face certain risks as well since they can be held responsible for failure on the part of the agency to comply with federal regulations. Also, employers with collective bargaining agreements may need to involve the union on various aspects of the audit, including H-2B visa employees if they are part of the “represented workforce.”
  • Develop a strategy. Experienced hotel labor lawyers can let you know what to expect in a government compliance audit and should help you prepare a strategy for successfully cooperating with all phases of the audit. Your management team should be alerted so that no one panics when the audit notice is received, and they know the importance of getting it to the right person quickly so you can promptly launch the action plan you developed.
  • Get involved. The American Hotel & Lodging Association (AH&LA) is urging hotel employers to ask their elected officials to contact the U.S. Department of Labor on their behalf to express their opposition to the hospitality industry being singled out for compliance audits. AH&LA is the primary advocate of the hospitality industry in Washington D.C., giving a voice to thousands of individual hotels and owners. The Association’s success depends on the number of people in the industry that become involved and support the Association’s important work. To get involved and become a member of the AH&LA you can register on their website at www.ahla.com.

For more:   http://www.hospitalitynet.org/news/154000320/4047438.search?query=hospitality+industry+risks

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