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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