Newly Enacted Employment Regulations Affecting Hotels

By Victoria Kane Counsel & Compliance Manager, Shiftgig, Inc. | December 11, 2016

It feels as if the government is intentionally focusing on the hospitality industry by significantly changing and adding laws that have a greater impact in employment at our businesses, and at an unprecedented pace. Newly enacted employment regulations are not just coming down from the federal level, but frequently enacted by states, cities, and counties. In any business, a change in how people are hired, paid, scheduled, and managed generally impacts services, operations, turnover, satisfaction levels, finances, and can influence the public at large. Prior to when the employment relationship begins, employers should focus on these pre-employment issues: compliant practices in background screening; immigration law compliance with Form I-9 and international student visas; and the lawful use of social media.

Employers conducting background checks including criminal history, credit reports, and education verification, will have to keep compliance top of mind, as regulatory oversight has resulted in a growing number of class-action lawsuits. Additionally, there is the ever-present threat of data breaches compromising the personally identifiable information of what could be thousands of applicants for which there is no employment or contractual relationship, and thus consumer laws may apply, exposing the business to a different type of liability.

Most class-action lawsuits against employers are over alleged violations that could have easily been avoided by a review of forms and processes. The current focus is on consent and disclosure forms that include extraneous information by being embedded within the job application or by incorporating liability release statements for the employer. Screening firms are obligated to utilize "reasonable procedures to obtain maximum possible accuracy" under the Fair Credit Reporting Act (FCRA). In 2015, two of the nation's largest employment background check firms paid a total of $13 million for allegedly failing to take steps to ensure the accuracy of the information they reported about job applicants contained in background check reports. Legal risks resulting from FCRA violations, data breaches, and litigation over consent forms will lead employers, applicant tracking system (ATS) operators to review and modify compliance measures.

Vendors providing applicant tracking systems, screening services, and employers all will be responsible for any data collected and used as a basis of an employment decision. All parties will be held to the same standards and expectations for gathering, transmitting, using and storing such data. Litigation for FCRA violations is steadily on the rise. Keep in mind that if your company relies on an inaccurate report to reject an applicant for hire, and you agreed to indemnify the screening provider in the vendor contract, your company is on the liability hook, too. In 2015, BMW, Calvin Klein, Chuck E. Cheese, Food Lion, Home Depot and Whole Foods paid settlements ranging from $716,400 to $3 million in FCRA lawsuits.

Also impacting the hiring process are so-called "ban the box" and fair chance laws. Generally, ban-the-box laws prohibit employers from asking about criminal records until after making a job offer. A total of 24 states and over 150 cities and counties have adopted laws requiring employers to consider a job candidate's qualifications first, before an applicant's criminal record. In most cases, the employer can withdraw the job offer if the applicant has a conviction record that has a relevant relationship to the job duties and responsibilities. Other laws limit the number of years an employer can look back into an applicant's criminal history. Employers struggle to keep up with multiple ban-the-box ordinances, with their often too specific, and conflicting rules contrary to each other and federal EEOC guidelines.

Tightening immigration laws passed with conflicting guidance from multiple enforcement agencies are leading to compliance issues. People are becoming more confused and uncertain about the rules for completion of the federal Form I-9, used to verify all workers' authorization to work in the U.S. The penalties for Form I-9 mistakes and omissions, as simple as a wrong date, can be quite significant. A government agency can assess a civil monetary penalty for each and every substantive or uncorrected technical violation on a form. Moreover, the actual fine amount is based on a sliding scale – the more errors you have as a percentage of the whole, the more each violation will potentially cost you.

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