Duff on Hospitality Law

First-time contributor and resident litigation expert, Don Scaramastra, has offered to update the status of the much discussed class-action involving online distributors and certain hotel operators, and to discuss antitrust laws related to online distribution. Thank you Don for this informative piece.

On December 11, 2012, the federal Panel on Multi-District Litigation ordered the consolidation of class-action lawsuits alleging that online travel agents and certain hotel chains conspired to impose a resale price maintenance scheme that fixed the retail price for hotel room reservations in violation of federal and state antitrust laws. The MDL Panel ordered these lawsuits to proceed in the U.S. District Court for the Northern District of Texas. Since last summer, over 20 such lawsuits have been filed. This outcome appears to be good news for the defendants, all of whom advocated for the transfer and consolidation of these cases to that district.

You might be wondering what these lawsuits are all about, what “resale price maintenance” (or “RPM”) is, and what the antitrust laws have to say about it.

RPM is the practice in which a seller and buyer at one link in a distribution chain agree on the minimum price that the buyer may turn around and resell the product.

RPM has something of a storied history in antitrust law. Under federal antitrust laws, RPM was deemed unlawful just over a century ago. But in the 1930s, Congress enacted a partial “fair trade” exemption from liability. Four decades later, Congress repealed the exemption, returning RPM to its former illegal status. And finally, five years ago, in Leegin Creative Leather Products v. PSKS, Inc., the Supreme Court declared that not all RPM agreements were illegal, only those that imposed an “unreasonable” restraint on trade. And that is where things stand today.

If you are a regular reader of Duff on Hospitality, you are well aware of the recent battle between the U.S. Department of Justice (DOJ), which enforces the Americans With Disabilities Act (ADA), and hospitality owners and trade associations over swimming pool accessibility regulations (see previous posts here and here). With DOJ’s twice-extended deadline for compliance right around the corner on January 31, 2013, and industry-backed legislation dead in Congress committees, pool owners need to focus on compliance with DOJ’s requirements immediately, if they have not already. Mike Brunet, a partner in our Seattle office's labor and employment group and member of our Hospitality Practice Team, has prepared this post to help readers understand the requirements and nuances of the new law. Please feel free to contact Mike Brunet directly if you have any questions.

What are the DOJ requirements?

Under DOJ’s interpretation of the applicable regulations on swimming pool accessibility, owners of pools or spas open to the public must, if “readily achievable” (more on this below), provide at least one accessible means of entry to small swimming pools, which must either be a sloped entry or a pool lift. Larger swimming pools (with more than 300 linear feet of wall) must have two accessible means of entry, one of which must be a sloped entry or a pool lift. Each pool or spa on the property (with a minor exception for clustered spas) must have a separate accessible means of entry. If the means of entry is a pool lift, which is the most popular choice given its cost relative to other means of entry, it must be affixed to the pool deck or apron in some manner, and must be in place and ready for use (including charged batteries, if using a battery-powered lift) during all hours that the pool or spa is open for use.

On November 6, Washington voters passed Initiative 502 related to the decriminalization of marijuana under state law. We understand that you may have questions about how this new law affects the enforcement of your employment policies including drug free workplace and drug testing policies.

Now that the election is over and we know who’s running the country for the next few years, is it too much to think that we might get some kind of comprehensive immigration reform? It seems that the time is right for a big change. Presidents Bush and Obama were not successful in getting Congress to take action. President Obama recently instituted some controversial but popular reforms on his own without waiting for Congress. The fact that those actions may have helped him get re-elected has not gone unnoticed by Congressional representatives, who are likely to take action. But the question is when.

The federal government does not move at the speed of business. So it’s important to plan based on current law, not on what might get through Congress next year or even later. The legislative process can take months, and laws enacted won’t go into effect until even later, after regulations have been drafted and vetted. It’s important to understand your current options and the timelines associated with them while you urge Congress to fix the broken immigration system in the future.

Here are some ideas about options the hospitality industry can expect to have available for 2013. The letter and number designations in the sections below are the government’s codes for particular employment-based classifications.

TN Status:  Canadians and Mexicans in some professions can get employment authorization quickly

The North American Free Trade Agreement (NAFTA) provides options for quick (often approved on-the-spot in less than an hour), inexpensive (as little as $50 in government fees), and long-lasting employment (up to three years at a time) of citizens of Canada or Mexico. The candidate must satisfy the minimally-described educational requirements for a limited group of professions, such as accountant, computer systems analyst and hotel manager. Management consultants are also possible, but don’t call someone a consultant just because there isn’t a NAFTA profession for the service you need.

Portland’s City Council may follow San Francisco and Seattle and soon enact an ordinance that would require all employees in the city limits to earn paid sick leave. The City Council could vote on an ordinance mandating paid sick days as early as the end of the year.

Seattle’s paid sick leave ordinance only went into effect September 1st, after lengthy negotiations to revise the original ordinance to make it workable for Seattle businesses. Seattle’s ordinance requires nearly all private-sector employers to provide employees who work in Seattle with specified amounts of accrued paid sick and safe time; employers with 4 to 250 employees are required to provide one hour of sick leave for every 40 hours an employee works. San Francisco’s paid sick leave ordinance has been in effect for about 5 years. There, workers accrue an hour of sick leave for every 30 hours worked, up to 5 paid sick days per year at smaller workplaces with fewer than 10 employees and up to 9 paid sick days per year at larger workplaces. A study in San Francisco by the Institute for Women’s Policy Research found that since the enactment of San Francisco’s paid sick leave ordinance, the average worker takes 3 sick days per year. Tipped employees take an average of 2 days off and return to work sooner because their paid leave cannot make up for lost tip revenue.

The U.S. Green Building Council is currently accepting public comments until December 10, 2012, on its draft of LEED v4 that will aim to establish LEED certification for the hospitality industry. This post discusses a few of the categories that will be considered for applicants seeking to obtain LEED certification for hotels.

LEED (Leadership in Energy and Environmental Design) is a voluntary, consensus-based, market­-driven program that provides third-party verification of green buildings. For commercial buildings and neighborhoods, to earn LEED certification requires that a project must satisfy all LEED prerequisites and earn a minimum 40 points on a 110-point LEED rating system scale. The main credit categories are sustainable sites, water efficiency credits, energy and atmosphere credits, materials and resource credits, and indoor environmental quality credits.

Here is a brief overview of some of the credits that are proposed for the hospitality industry, as well data centers, retail, and healthcare uses. Although LEED v4 does apply to renovation projects, the categories summarized here do not directly address renovation work.

Travel industry and technology experts gathered at the Four Seasons Seattle this past Wednesday to participate in the region’s first conference devoted exclusively to the intersection of hospitality, travel and tourism with technology. The TNT Travel & Technology Conference was hosted by the Hospitality, Travel & Tourism practice group at Garvey Schubert Barer and local angel investment/opportunity facilitator and industry connector Zino Society. I conducted an informal interview of participants and attendees, which I selected randomly via a complex, proprietary algorithm (red wine vs. white wine; preference for mushroom quiches over Vietnamese spring rolls, cocktail napkin or no cocktail napkin) and 100% of respondents indicated the event was an unqualified success.

Garvey owner and chair of the firm’s E-Commerce and Technology practice, Scott Warner, and Hospitality, Travel & Tourism Practice chair, Greg Duff, each hosted a panel of experts—Scott, a group of expert technologists and Greg, a group of expert users. The former consisted of representatives from Expedia, Microsoft, Intelity, Sabre Hospitality, Google, Concur Technologies, Urbanspoon, Tnooz and Ascension Software and the latter of panelists from Evergreen Finance Consulting, Virtuoso, Alaska Airlines, Benchmark Hospitality, American Casino & Entertainment Properties, Mandarin Oriental and Holland America Line. See the linked Conference Program for a more detailed description of the panels and each of the panelists.

Accessing Social Media Accounts

California has now joined Illinois and Maryland in banning employers from requesting social media passwords from current or potential employees or from requiring that employees log in while in the employer’s presence. Other states with pending legislation on this subject include Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New York, Ohio, Pennsylvania, South Carolina and Washington.

Because this trend is sweeping the nation, employers in any state should be careful and not request that employees divulge their social media passwords or otherwise pressure employees into granting access to social media accounts. This is good advice not only because of the legislative action, but for common sense reasons. Accessing an employee’s private social media account can lead to, among other things, the discovery of the employee’s membership in a protected class or the employee’s protected concerted activity, the employer’s knowledge of which could cause problems if the employee is later disciplined. In other words, ignorance is bliss. This is especially important to remember as the election draws near and employee use of social media to express political beliefs becomes more and more frequent.

Do you feature ATMs in your hotel, restaurant or conference center? If yes, you may be an unwitting target for ATM fee notice lawsuits. Here’s why: 

The Electronic Funds Transfer Act (EFTA) contains a provision requiring owners of ATMs to provide adequate notice to consumers about fees charged for using ATMs not owned by the consumers’ own bank. The EFTA states that you must notify these consumers twice regarding such fees:

1. You must post an external notice on the body of the ATM “in a prominent and conspicuous location” stating what the exact fee imposed will be for performing a transaction on the ATM, and
2. There must be a second notice on the screen, or by paper issued from the machine, which advises the user that they can avoid paying the fee and terminate the transaction before the consumer is irrevocably committed to completing the transaction.

Don’t have both notices? Then your ATM is not in compliance with the EFTA and if you own or operate the machine, you could face penalties for damages incurred by the ATM customer plus a statutory penalty of up to $1000. Worse, if a case is brought against you as a class action, you could be liable for up to $500,000 or 1% of your net worth—whichever is smaller—plus costs and reasonable attorney fees. That adds up to a significant potential recovery, which is why there are lawsuits being filed across the country as we type.

In case there was any doubt the political season is well upon us, an increasing number of companies have been letting their employees know that if the owners had their way, everyone would vote for the candidates backed by the owner. Westgate Resorts, ASG Software Solutions and the Koch brothers of Georgia Pacific have all let their employees know that they are supporting the Republican slate, both nationally and locally. While this may be a savvy campaign strategy started by Mitt Romney in a virtual town hall meeting with the National Federation of Independent Businesses last June, the tone of the letters are seen as threatening by some. The letters have been carefully crafted to walk the thin line between a threat about the future of the company and a reflection of what the authors perceive the economic impact on business will be if the Democrats prevail. All of these letters have people wondering just how much political talk can be controlled by an employer, and just what can be said in the workplace.

The federal laws do not include political views or political affiliation in the laundry list of protected classes, but many states have taken such steps. The real risk of such public endorsement (and perceived veiled threats) in the workplace is the inherent tension and negative atmosphere that results. It is tougher to keep your employees from discussing politics (and the resulting heated discussions), if the Company president has already made a very public statement regarding his/her political views. The statements that imply the Company will close, reduce the workforce, or otherwise be impacted if the desired political party is not elected can create a lot of fear for the employees. If your employees are concerned about their jobs, you may lose some top talent. They aren’t going to want to stick around a Company that may or may not be in existence in a year. The bigger impact, though, can be on employee morale.