Mitigating Hotel Employment Risk with Class Action Waivers

By John Mavros Attorney at Law, Partner, Fisher & Phillips, LLP | August 05, 2018

Co-authored by Lauren Stockunas, Associate, Fisher Phillips LLP

Hotel employers must constantly juggle leaves of absences, employee complaints, and other personnel problems.  Sometimes these can result in employment claims or lawsuits ranging from disability discrimination to retaliation to wrongful termination.  But, a hotel employer's biggest concern is a class action lawsuit for wage and hour violations. A class action lawsuit turns one employee's complaint for unpaid wages (or failure to provide meal/rest periods) into a lawsuit on behalf of 100 or more employees.   This means that the value of the claim jumps from $20,000 to $2,000,000. 

While the best way to avoid a class action is to comply with employment laws, i.e. tracking employee time, paying minimum wage, properly accounting for overtime, and providing proper meal and rest breaks et cetera; the second best way for a hotel to protect itself is to implement and have all employees sign an arbitration agreement with a class action waiver. 

Arbitration agreements with class action waivers are relatively commonplace amongst employers, but this past spring, the Supreme Court officially gave employers the green light to implement such waivers with confidence. 

The Pros and Cons of Arbitration Agreements

This protective measure for warding off class actions has two components:  (1) an arbitration agreement; and (2) a class action waiver within the arbitration agreement. 

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Social Media: Getting Personal

There Social media platforms have revolutionized the hotel industry. Popular sites such as Facebook, Twitter, Pinterest, Instagram, Snapchat, YouTube and Tumblr now account for 2.3 billion active users, and this phenomenon has forever transformed how businesses interact with consumers. Given that social media allows for two-way communication between businesses and consumers, the emphasis of any marketing strategy must be to positively and personally engage the customer, and there are innumerable ways to accomplish that goal. One popular strategy is to encourage hotel guests to create their own personal content - typically videos and photos -which can be shared via their personal social media networks, reaching a sizeable audience. In addition, geo-locational tags and brand hashtags can be embedded in such posts which allow them to be found via metadata searches, substantially enlarging their scope. Influencer marketing is another prevalent social media strategy. Some hotels are paying popular social media stars and bloggers to endorse their brand on social media platforms. These kinds of endorsements generally elicit a strong response because the influencers are perceived as being trustworthy by their followers, and because an influencer's followers are likely to share similar psychographic and demographic traits. Travel review sites have also become vitally important in reputation management. Travelers consistently use social media to express pleasure or frustration about their guest experiences, so it is essential that every review be attended to personally. Assuming the responsibility to address and correct customer service concerns quickly is a way to mitigate complaints and to build brand loyalty. Plus, whether reviews are favorable or unfavorable, they are a vital source of information to managers about a hotel's operational performance.  The February Hotel Business Review will document what some hotels are doing to effectively incorporate social media strategies into their businesses.