Why is the Hotel Industry a Target for FLSA Prosecutions?

By Amy Bailey VP of Finance and HR, TSheets | January 08, 2017

There's a big red bulls eye in the hotel industry. In fact, accommodation and food services ranks #1 in sheer volume for wage and hour prosecutions by the Department of Labor. That’s 24.4% of all the cases that have been brought since 1985. To put that number into perspective, hotels, restaurants, and bars—from the behemoths to the holes in the wall—have been required to pay more than $276 million in government prosecutions alone, with an average payout of $9.5k for every business affected.

Why? Does this trend represent shady business owners getting their comeuppance? Not quite. As Daniel Abrahams, employment law specialist of Brown Rudnick LLP says, "Other than the IRS, the FLSA is about the most regulated area of American jurisprudence. A dispute with the DOL or a group of employees doesn't mean you're a bad employer. It just means that you ran afoul of some very complicated rules. There's no shame to be had in not knowing all the rules offhand, or running into trouble with these requirements."

That said, not knowing all the rules offhand is very different from failing to keep a pulse on emerging trends in FLSA wage and hour lawsuits, or understanding the factors that have placed the accommodations industry on the front lines.

Several factors emerge in the search for why this industry in particular has a target on its back.

Salary Thresholds

The salary range for accommodations and food services employees varies wildly, with chefs and restaurant managers earning upward of 40K. However, hourly rates hover just above minimum wage for a large contingent of employees in the food service/accommodations industry, and hover closer to $10 per hour for positions like line cooks. The industry is filled with middle-management positions that fall between the current overtime threshold of $23,600 and the new threshold of $47,467—meaning, these workers are currently considered exempt and allowed to work until the job gets done, even if that means putting in a 70 hour workweek. ¬†Workers who currently find themselves in this limbo between the old cutoff and the new cutoff are those most likely to pursue—and win—a wage and hour lawsuit on the basis of misclassification and owed back wages for overtime. Because the salary cutoff hasn’t been updated since 2004, workers just above the current cutoff who don’t meet the job duties test are especially likely to bring lawsuits for misclassification against employers. And with the threshold nearly doubling in December of 2016, the number of misclassification lawsuits is likely to continue its upward trend.

Choose a Social Network!

The social network you are looking for is not available.

Close

Hotel Newswire Headlines Feed  

Alan Zajic
Bryan Green
Steven Ferry
Rani Bhattacharyya
David Tossell
Roberta Nedry
Ken Hutcheson
Arturo Garcia Rosa
Pedro Colaco
Lorraine Abelow
Coming up in July 2018...

Hotel Spa: Oasis Unplugged

The driving force in current hotel spa trends is the effort to manage unprecedented levels of stress experienced by their clients. Feeling increasingly overwhelmed by demanding careers and technology overload, people are craving places where they can go to momentarily escape the rigors of their daily lives. As a result, spas are positioning themselves as oases of unplugged human connection, where mindfulness and contemplation activities are becoming increasingly important. One leading hotel spa offers their clients the option to experience their treatments in total silence - no music, no talking, and no advice from the therapist - just pure unadulterated silence. Another leading hotel spa is working with a reputable medical clinic to develop a “digital detox” initiative, in which clients will be encouraged to unplug from their devices and engage in mindfulness activities to alleviate the stresses of excessive technology use. Similarly, other spas are counseling clients to resist allowing technology to monopolize their lives, and to engage in meditation and gratitude exercises in its place. The goal is to provide clients with a warm, inviting and tranquil sanctuary from the outside world, in addition to also providing genuine solutions for better sleep, proper nutrition, stress management and natural self-care. To accomplish this, some spas are incorporating a variety of new approaches - cryotherapy, Himalayan salt therapy and ayurveda treatments are becoming increasingly popular. Other spas are growing their own herbs and performing their treatments in lush outdoor gardens. Some spa therapists are being trained to assess a client's individual movement patterns to determine the most beneficial treatment specifically for them. The July issue of the Hotel Business Review will report on these trends and developments and examine how some hotel spas are integrating them into their operations.