Duff on Hospitality Law

Back in February, we gave you the heads up that Oregon was in the process of adopting the 2009 FDA Food Code. Bar and food cart owners, restaurateurs, and folks employed in the food industry were urged to prepare for new changes in labeling laws and implement best practices to protect themselves from liability once the new rules were announced.

Last month the Federal Trade Commission filed a lawsuit against Wyndham Worldwide Corporations and three of its subsidiaries (“Wyndham”) in U.S. District Court in Arizona. The complaint alleges that Wyndham engaged in unfair and deceptive practices by failing to implement reasonable data security protections on computers used by independently owned Wyndham hotels and because the company’s public privacy policy misrepresented the security measures it actually employed to protect customer’s personal information. Specifically, the Commission alleged that Wyndham:

• • failed to use strong (and in some cases any) passwords to limit access to computer files;
  • failed to use firewalls to separate corporate and hotel computer systems;
  • improperly stored payment information in clear text;
  • failed to implement reasonable measures to detect security breaches;
  • failed to implement proper incident response procedures or  remedial steps after learning of a data breach; and
  • failed to adequately restrict access to company systems by third party vendors.

The claims stem from three separate data breaches over a period of two years in which hackers obtained the private information of more than 600,000 customers, which led to more than $10.6 million in fraudulent charges.

It has been a busy year thus far for public accommodations issues under the Americans with Disabilities Act (ADA). In this week’s post, Mike Brunet, a member of our Hospitality, Travel & Tourism team, rounds up past issues, discusses a new public accommodations ruling that could affect your business, and speculates as to where public accommodations issues might go in the next year, informed by his attendance at the recent 2012 National ADA Symposium. 

March 15, 2012: ADA revisions become effective.

As detailed in a prior 2012 post, the first significant revisions to public accommodations regulations in almost 20 years became effective March 15, 2012. These revisions are far-ranging, potentially requiring changes to existing and planned features in any place of public accommodation, including hospitality properties and restaurants.

April-May, 2012:  The battle over swimming pool accessibility heats up.

Also discussed in two posts previously this year (here and here), was a battle between the U.S. Department of Justice (DOJ), which enforces ADA regulations, and hospitality owners and trade associations over swimming pool accessibility. DOJ interpreted the new ADA regulations to require fixed (as opposed to portable) swimming pool lifts that could not be shared between pools, while hoteliers raised safety, financial and availability reasons why the DOJ’s interpretation was incorrect. DOJ extended the date to comply with its interpretation until January 13, 2013, and legislation has been introduced in Congress to clarify what is required to comply with swimming pool access regulations.  

Just this week, the Seattle Office for Civil Rights released its final regulations for the new Paid Sick/Safe Time ordinance. They arrived not a moment too soon, because the ordinance goes into effect on September 1, 2012. If you haven’t already started planning for compliance, you should now.

The new law will require businesses to accrue and provide paid sick and safe leave for employees when they or their family members are ill or are a victim of domestic violence. The law also includes notice and posting requirements to employees, as well as record keeping and reporting.

In an earlier posting, we walked through the basic requirements of the law. Here is a more detailed look at the law and tips on how you can ensure compliance.

Alcohol has been making the headlines over the past several weeks in Washington as the state prepares for Initiative 1183 to take effect. And while the privatization of liquor sales remains a popular topic, another alcohol-related headline deserves some notice from business owners. The Seattle Times recently described a questionable situation caught by KOMO News cameras: beer in the temporary offices of Kiewit, the construction firm responsible for some of the work being done on Highway 520. Partially in response to the pending investigation by the Department of Labor and Industry, clients and other readers have been asking whether a business can have alcohol in the workplace without running afoul of liquor regulations.

By now, nearly every revenue manager, electronic distribution manager and sales and marketing manager is familiar with the significance of keywords and the need for brand owners to manage third parties’ use of keywords in search-based Internet marketing. Every negotiation of an online distribution agreement (whether direct-to-consumer, wholesale or otherwise) should include careful consideration about reasonable restrictions or conditions a hotelier will place on a distributor’s use of keywords.

As technology continues to evolve and to disrupt many traditional travel sales, marketing and distribution channels (Tnooz alone seems to report on new search-based tools weekly), owners and operators must reconsider their historical (and by now standard) approaches to critical contract provisions that address how and to what extent a distributor may use the hoteliers’ trademarks, trade names, logos and other intellectual property, including use as keywords. The recent and much publicized launch of Promoted Hotels by Google served as an important reminder of this fact.

Promoted Hotels is Google’s new search-based marketing tool that allows hoteliers, OTAs and anyone else interested in securing a preferred booking position over other channels to bid for the right to be the primary (and sometimes, sole) booking option in ads that appear at the top of the Google Hotel Finder search results. As you might expect, nearly all of the searches that I ran for hotels in various locations across the U.S. featured ads and links placed by OTAs and not the featured properties themselves. Does any of this sound familiar?

If you are anything like me, you have been eagerly awaiting another update from the NLRB on its social media decisions. Well, wait no longer. On May 30, the NLRB’s Acting General Counsel issued a third report on recent social media cases. This complements the two previous reports from January 12, 2012, and August 18, 2011. For more information on the first two reports, see my recent post.

The new report does not offer any groundbreaking new principles for employers seeking to implement or enforce social media policies. This is good news, as it means that you don’t need to rewrite your social media policy every time the NLRB issues a report. This report does elaborate on a few of the key principles, however, and it offers some new and interesting examples. It also includes as an example an entire social media policy that was found lawful.

A recent Field Assistance Bulletin issued by the U.S. Department of Labor (DOL) on February 29, 2012, announced a substantial change of the DOL’s enforcement position regarding mandatory tip pooling with back-of-the-house employees. 

As we have discussed in this blog previously tip pooling is the practice by which the tips of regularly tipped employees are pooled together and then redistributed among employees, including, on occasion, employees who do not customarily receive tips. Employees may voluntarily participate, or they can be required to participate by the employer.

In 2010, the U.S. Court of Appeals for the Ninth Circuit issued a decision, Cumbie v. Woody Woo, Inc. (596 F.3d 577 (9th Cir. 2010), which held that DOL limitations on an employer's use of the employee's tips did not apply when the employer does not take a tip credit. In states like Oregon and Washington, where the employer must pay a tipped employee the full minimum wage and is prohibited by state law from taking a tip credit, the employer is permitted to impose a mandatory tip-pooling arrangement and insist that tipped employees share their tips with back-of-the-house employees, not just with employees who customarily receive tips. The court's ruling was a significant win for employers in the Ninth Circuit; the employer was represented by Garvey Schubert Barer, amicus briefs were filed by Oregon Restaurant and Lodging Association and others, and the DOL even submitted a brief and argued part of the case for the employee -- and lost.   

In Mike Brunet’s April 16, 2012 post, he discussed the history and potential future of the Department of Justice’s (DOJ) controversial requirement that hoteliers install permanent lifts at all swimming pools to comply with the Americans with Disabilities Act (ADA). Today, he writes about a recent extension on the deadline to satisfy DOJ’s mandate. 

As of May 16, hotel owners and others operating swimming pools open to the public had a mere five days, until May 21, to install permanent pool lifts at their facilities pursuant to the DOJ’s interpretation of the 2010 Standards to the Americans with Disabilities Act. However, on May 17, the DOJ extended the deadline for compliance with its requirement by over eight months, to January 31, 2013. The fact that DOJ extended the deadline is not a total surprise, as the agency has been accepting comments on a possible six-month extension since March of this year, and interested parties, including hoteliers and trade associations, have been vocal in their support. However, the length of the extension is somewhat of a surprise, especially given DOJ’s hard-line stance on this issue in the past.

Portland received another sign that the local hospitality industry may be on its way to a full recovery late last month. On April 26, Metro, Portland’s regional planning entity, voted to issue again a request for proposal (RFP) on a large hotel project that was brought to a halt in 2008 due to the economic downturn. The earlier incarnation of the project asked for responses to a 2004 RFP for the project, available here, that called for 800 rooms. 

The April 26^th vote brings back to life a plan to develop a large headquarters hotel project that will serve as the designated hotel space for the Oregon Convention Center (albeit slightly smaller in scale than what had been considered in 2008), that will provide an additional 500 rooms for group visitors to the Rose City. Local revenue generated by attracting large conventions is big business for the hospitality industry and the region. Metro estimates that national events at the Oregon Convention Center, such as the Specialty Coffee Association of America’s Convention that took place earlier this year in April and the 2012 World Brewing Congress scheduled for August of this year, result in millions of additional dollars flooding area businesses over just one weekend.