Duff on Hospitality Law

After some delay, the new federal regulations giving gift card holders greater protections took effect recently, adding to a patchwork of state consumer laws already in place. The new regulations apply to both issuers and sellers of store gift cards, gift certificates, and general use prepaid cards, such as prepaid Visas or Mastercards, sold after August 22, 2010. We’ve seen our clients consider conflicts between state and federal law, advertising policies for resellers, tax recognition on gift card income, and unclaimed property laws.

As many of you are aware, the 9th Circuit Court of Appeals gave Northwest restaurant owners much to cheer about early last year when it authorized Northwest restaurants to initiate mandatory tip pools including back-of-house employees who traditionally do not receive tips. A complete description of the Court's decision in Woody Woo and its immediate effects can be found in my blog post from last November.

The Federal Drug Administration (FDA) has released its long anticipated draft regulations about menu labeling, which describe how the agency intends to enforce Section 4205 of the Patient Protection and Affordable Care Act of 2010, signed into law by President Obama just over a year ago. The FDA is accepting comments from the public on the proposed regulations until June 6, 2011.

Employment Law specialist, Mike Brunet, details a growing trend and how it will impact the Seattle-area hospitality industry.

This week’s topic may appear limited in scope, but is representative of a national and local trend. On April 25, 2011, the Seattle City Council unanimously passed an amendment to the City of Seattle’s municipal code to define and punish “wage theft,” the practice of improperly withholding amounts owed to employees. Seattle thus joins a growing number of jurisdictions, including Miami-Dade County, FL, and the cities of Austin, TX, Denver, CO, Kansas City, KS, and San Francisco, CA in having a specific law in place to combat wage theft. A number of legislators in cities, counties, and states around the nation are considering pending bills that would add to this list. Although the goals of Seattle’s Wage Theft Ordinance may be laudable, the scope of the bill could cause well-meaning employers, including hoteliers and restaurateurs, to unintentionally run afoul of it.

I am just back from the 5th Annual HR in Hospitality Conference, held in Washington DC last week. The Conference was an information-packed two and one-half days. There were terrific presentations, interesting panel discussions, great audience questions, and many opportunities to informally connect with others in the hospitality industry who focus on human resource issues. I have already marked my calendar for next year’s Conference to be held February 27-29 in San Francisco. 

In today’s post, HT&T team member Diana Shukis (Employment and Litigation) discusses the appropriate test, as determined by a recent Washington state appellate court decision, to decide whether a worker is an independent contractor or an employee.

Back in December, my colleague Greg posted “Premises Security 101,” noting the increased attention our clients were paying to premises security issues. As it turns out, they were right to do so. Less than two months later, on February 7, 2011, a King County jury decided that Denny’s owed three plaintiffs $46.4 million in total for injuries sustained when a patron shot into a Denny’s Restaurant in Kent with a semiautomatic gun. According to plaintiffs’ attorney Ron Perey, this was the largest personal injury verdict ever rendered in the State of Washington; however, Denny’s insurance company settled the case for $13 million before the jury delivered its damage award.

Just to be clear, the man who shot plaintiffs Steve Tolenoa, Lisa Beltran-Walker and Carl Walker was not employed by or otherwise related to Denny’s or its management or the owner of that particular Denny’s. Frank Evans was a violent drunk guy who showed up after the bars closed, picked a fight with another patron, lost it, got mad, left and came back with a Glock .40, which he used to shoot up the restaurant (11 bullets). Mr. Evans was convicted on multiple counts of first-degree assault and is currently serving a 62 year sentence in state prison.

Our friends at Seattle's Convention and Visitors Bureau have issued a "Call to Action" regarding Substitute House Bill 1371: Boards and Commissions. They have requested our help with the following:

Earlier this month, Stephen Barth and HospitalityLawyer.com hosted the most recent installment of their successful hospitality law conference held each February in Houston. This year’s conference saw attendance return to pre-recession levels with representation from many of the in-house legal departments of the largest national and international hotel operators. The conference dedicated the first day to three all-day pre-conference boot camps on real estate, privacy / PCI compliance and the unique issues faced by the restaurant and lodging in-house lawyer. I sat through the real estate presentations, which although a little slow at times (you can only define REVPAR so many times), did a reasonable job of summarizing the variety of issues associated with the development, purchase, sale and management of hospitality properties in one coherent presentation. Ruth sat through the privacy / PCI discussion and found it very informative. The second day was filled with a wide variety of topics – from alcohol compliance, to sweepstakes, to franchise negotiations, to receiverships to tips – in one of four breakouts dedicated to food & beverage, lodging, human resources and loss prevention. The highlight of the third and final day was the annual hospitality case update.

Greetings from an unusually cold Houston, location of the 2011 Hospitality Law Conference, sponsored by HospitalityLawyer.com. I attended a number of interesting sessions over the course of two and a half days including the one that is the topic of this post: legal concerns that arise with holding contests and sweepstakes that result in the award of prizes.

No doubt you’ve seen advertising for these kinds of promotions: “Submit your favorite photo of a stay at our hotel and win a free night!” “Leave your business card for our monthly drawing and win a chef’s menu dinner with wine pairings for 2!” “After your cucumber eye treatment, enter your name for a chance to win a shiatsu massage with reflexology finisher!”  Contests and sweepstakes are immensely popular marketing tools throughout all retail markets, including hospitality. I myself have shed business cards all over Seattle, chasing dreams of chic meals taken at funky, retro hotels (with free wi-fi). Contests and sweepstakes can be as simple as dropping a card in a fishbowl or as complicated as shooting, editing and submitting a polished six-minute animation short to be judged in a “contest of skill.”

A word on terminology: the speakers defined a sweepstakes as a promotion in which prizes are awarded by chance versus a contest (or contest of skill) in which entrants must perform an action—answer a trivia question, write an essay, paint a picture—in order to be judged for a prize. Prizes in contests are based on skill and not luck.

The primary focus of the session yesterday was the importance of making sure all sweepstakes and contests stay on the right side of the line that separates a fun and useful marketing tool from an un-fun, illegal gambling operation (lottery). Every state regulates gambling, games of chance, lotteries—in short, if you aren’t the government, or aren’t licensed by the government, don’t run a lottery.