Duff on Hospitality Law

On Tuesday, November 22nd, a United States District judge in Texas issued a preliminary injunction that blocks the U.S. Department of Labor (DOL) from implementing a controversial rule that would have expanded overtime protections from going into effect, at least for now. The pending regulations were scheduled to go into effect on December 1, 2016 and would have more than doubled the salary level required for employees classified as exempt under the “White Collar” exemptions. The Department of Labor estimated if the new regulations went in to effect more than 4 million workers would now be eligible for overtime. The salary level is currently $455 per week or $23,660 per year. The new regulations would have increased that amount to $913 per week or $47,476 per year.

When we last visited this topic, the proposed regulations revising the overtime exemptions were still very new. The regulations are due to go into effect on December 1 of this year. There has been legislation introduced to stop them from being implemented and court cases are pending. This article will remind you of the obligations, answer some additional questions that keep coming up and will bring you up to date on the efforts to stop the regulations from going into effect.

Service charges, administrative charges, surcharges, house fees—whatever you call those charges assessed for food and beverage service in restaurants and in hotels—the rules about how they need to be disclosed to guests and how they must be allocated are propagating. More and more cities, municipalities and other local legal bodies are taking on service charges in detailed laws, and we expect more to come.

Interest in this issue at all levels of lawmaking seems to be increasing as living wage/minimum wage raise efforts become more and more popular throughout the country. Many such efforts result in laws that also affect how service charges may be collected, distributed and how they must be disclosed to consumers. In other words, the locus for relevant law in this area has shifted significantly from the state to the county or city level.

Hospitality industry stakeholders who host sites for online reviews or rely on review sites such as Yelp, Trip Advisor, Urban Spoon, or Oyster, may take comfort in the recent Ninth Circuit decision regarding the liability of the publishers of those reviews. See Kimzey v. Yelp! Inc., No. 2:13-cv-01734 (U.S.D.C. Wash. Sept. 12, 2016). But, there is an argument to be made that the protections afforded under Section 230 of the Communications Decency Act (“CDA”) may be wearing thin. As the industry looks for more ways to leverage data harvested  from online reviews, it is slipping out from the protective umbrella afforded to “passive hosts” of user generated content.

On Monday, July 25, 2016, the Seattle City Council unanimously voted to place Initiative 124 (“I-124”), entitled the “Seattle Hotel Employees Health and Safety Initiative,” on the November 2016 ballot. Many voters will likely not even bother to look beyond the title before casting their vote. But they should. There is much more to this initiative than the title suggests.

I-124 is comprised of five substantive parts, plus definitions and a “miscellaneous” section (containing perhaps the most important piece of the entire initiative – more on that in the following paragraph). Each of these parts has an admirable statement of purpose (e.g., “Protecting Hotel Employees from Violent Assault and Sexual Harassment”), and a slew of requirements that are allegedly aimed at achieving that purpose. But, as with the title of the entire initiative, each part contains language that prompts countervailing concerns.

Brexit, the United Kingdom’s (UK) decision to leave the European Union (EU), is headline news. Brexit is already impacting trademark rights in Europe, including in the hospitality industry.

Regular readers of this blog will know that we have been following the development and implementation of the FDA’s new menu-labeling regulations with some interest. After multiple rounds of drafts and public comment periods, the agency now has issued its final guidance for compliance with the new rules. According to the FDA’s press release, the guidance is intended to respond to the most frequently-asked questions from business potentially subject to the new rules, and “differs from the draft guidance by providing additional examples and new or revised questions and answers on topics such as covered establishments, alcoholic beverages, catered events, mobile vendors, grab-and-go items, and record keeping requirements.”

One big trend in the restaurant industry is no-tipping policies, replacing the optional gratuity line on the bill with a “service included” mandatory charge or higher menu prices. After a number of successful restaurants having tried and failed to transition successfully to this model, the service-included model is not necessarily the future of the industry.

The good news is the long awaited rule on overtime has arrived – finally. The proposed rule goes into effect on December 1, 2016. The quick summary is the changes aren’t quite as bad as everyone feared. The long summary is below. We have broken out the rules into specific talking points to try and make them easier to digest. This does not erase the entire prospect of heartburn, however. The Department of Labor has also developed a page of Questions and Answers on the new rule, which includes a comparison between the old rule and the new rule.

Despite lawsuits and persistent legal uncertainties, the “sharing economy” is booming, and the companies at its forefront continue to grow. Some of these businesses are a natural complement to the hotel industry, while others directly compete with it. Whatever may become of these companies as they are reined in by regulation, one thing is certain: the rise or fall of the “sharing economy” will define the landscape of the hospitality sector in the decades ahead.

Ridesharing giant Uber raised $2.1 billion in its most recent round of funding, buoyed by a valuation of more than $65 billion – a remarkable ascendance for the five-year-old company. Its success has attracted a wave of new entrants seeking to gain a foothold in this burgeoning market. But the road to a share of the sharing economy is fraught with legal peril.