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Hoteliers Face Complex Union Negotiations

(This column recently appeared in Hotel News Now where Randall Pullen is a columnist for their on-line publication)

I attended the annual Hospitality Law Conference recently concluded at the Houston Omni Hotel.  Besides meeting with many of the leading labor attorneys across the country, it is an opportunity to learn about the latest legal issues and rulings that are affecting hotel human resources and labor markets.  This year was no different; there are a lot of new developments that are or will impact the hospitality industry now and in the near future.

It would take several columns to just deal with the many unknowns of the Patient Protection and Affordable Care Act also known as Obama Care, or the proposed changes to the immigration laws that are now being discussed in Congress, or with the many labor union contract negotiations scheduled to occur in 2013. While all three of these issues are very important to the Hospitality industry, I am going to focus on the upcoming negotiations between hotel companies and the labor union, UNITE HERE. There is much that can be learned from the last round of negotiations to prepare for this new round of union contract negotiations.

UNITE HERE represents the most hotel workers of any union with over 100,000 hotel workers in almost 1,000 hotels across the country.  The union currently has contracts with several of the major hotel companies that expire later this year.  The negotiations for the current contracts started in 2009 when the prior contracts expired, and were not signed until last year. The negotiations were contentious and drawn out due to many of the contracts expiring during the great recession. Management companies were looking for wage freezes, longer work hours as well as employees picking up a portion of the healthcare premium costs. Now, a year later the process will start all over.

In the prior negotiations, UNITE HERE made several changes in the tactics it used. The most notable was negotiating on a regional or national level with individual hotel companies instead of using the multi-employer model market by market previously used.  Once they achieved a concession from one employer, they would use it in negotiations with the other companies to accept a similar concession. Although carrying on multiple negotiations at one time made it more complex, the tactic appeared to work as they played management companies off against each other as well as in individual markets.

Also notable in several current contracts is the requirement that a successor company purchasing the hotel must honor the existing contract with the union.  This clause was added due to the many sales of hotels over the last 5 years where the contracts with the unions were ended and employees were rehired without a contract.  This expanded interpretation of succession was approved by the NLRB, which is quite different to how succession is typically determined. There have already been a number of hotel sales that have been cancelled due to this requirement.

Going forward this year, we will see a number of new tactics as well as some that were tried in the last round and will likely be front and center this time. Management companies successfully used poor financial performance as a tactic, which will not be available this time.  The strong recovery of the hotel industry with record occupancies and continued strong financial performance forecasted for 2013 and 2014 generally will preclude such a defense, even though RevPAR still lags.  For those markets not recovering as quickly as the major markets, hotel companies that make this argument will likely have to produce financial statements for all affiliated companies to prove there is a financial hardship.

We have already begun to see the counter arguments being made by the unions.  They are claiming that hotel companies have recovered and are making record profits.  The only ones left out of the recovery are the workers. A good example of this tactic is what occurred in Seattle last April.  In a report issued by SAGE (a union supported non-profit), Seattle Hotels Do Not Pay a Living Wage, they claimed that many hotel workers in downtown Seattle did not earn a living wage, had no benefits and a housekeeper’s job was more dangerous than working in a coal mine. Of course none of these claims were true, but it became a national news story. The AH&LA, with the help of WageWatch, was able to refute all of these claims.  No doubt, we will see this played out again and again this year and next as negotiations drag on into 2014.

UNITE HERE will intensify its efforts to negotiate one-on-one with management companies. The example they have made of Hyatt Hotels over the past 2 years is what awaits other management companies who refuse a union contract for all their hotels.  Flash mobs (Lady Gaga Flash Mob), boycotts (Hyatt Hurts) and employee lawsuits brought against individual hotels (Hyatt Settles Complaint) with the backing of the NLRB await those who don’t play ball.

Labor lawyers also believe a number of other provisions will become more mainstream in negotiations including: expanded successor language to require new owners to honor existing union contracts; more limitations on subcontracting of services including such things as prepackaged food, wedding cakes, arguing that such purchases equate to subcontracting culinary services; extended length of contract to 7 years; and significant wage increases to “catch-up” with wage freezes implemented during the recession.

Looking ahead, hotel companies will face an entirely new bargaining landscape in union negotiations this time around. Some of the lessons learned from the prior contract negotiations will likely shape the new negotiations, bargaining goals, concessions, and tactics employed. As more unions move toward the UNITE HERE model of nationally-focused bargaining strategies, employers that operate in multiple markets will be forced to take a “big picture” approach to their negotiations as well as to unique circumstances in individual markets. Smaller hotel companies that operate in a few markets or in a single market will be forced into accepting provisions negotiated with the major hotel companies or face the consequences.

 

Randall Pullen is President and CEO of WageWatch, Inc., which he founded in 1999 to design and implement Web-based wage and benefit surveys. Mr. Pullen’s work experience includes over 30 years of software development and consulting to the hotel industry. Mr. Pullen is a certified public accountant and a member of the AICPA. He earned a Bachelor’s Degree in mathematics and an MBA from Arizona State University. He serves on the boards of a number of companies and associations, and is currently the Treasurer of the Arizona Housing Finance Authority.

The opinions expressed in this column do not necessarily reflect the opinions of HotelNewsNow.com or its parent company, STR and its affiliated companies. Columnists published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.

Copyright © 2004-2011 Smith Travel Research /DBA HotelNewsNow.com (HNN). All Rights Reserved.

The Paycheck Fairness Act: Are you ready for this?

“Giving women my Lilly Ledbetter Fair Pay Act without the Paycheck Fairness Act is like giving them a nail without a hammer.”  Lilly Ledbetter (AAUW.org) 1/28/13

If you don’t already have the compensation structures, policies and administrative processes in place to ensure fair and equitable pay within your organization, this may be a good time to do so.  The Paycheck Fairness Act (PFA), which has been rejected twice by the United States Congress, was reintroduced by Senator Mikulski & Representative DeLauro earlier this year.  Additionally, in his recent inaugural speech, President Obama highlighted equal pay for women as a priority for this next term.  The PFA, if passed, would close ‘loopholes’ in the historic 1963 Equal Pay Act (EPA) and build upon The Lilly Ledbetter Fair Pay Act which was signed by Obama four years ago.  The Lilly Ledbetter Act most significantly stated that the 180-day statute of limitations for filing an equal-pay lawsuit regarding pay discrimination resets with each new paycheck affected by that discriminatory action.

The PFA’s objective is to further narrow the pay gap between men and women by limiting employer defenses and removing the caps on punitive and compensatory damages from pay discrimination lawsuits.  The Paycheck Fairness Act would apply to all businesses that must comply with the FLSA and would have widespread implications for businesses and their employees.  The PFA would amend the Fair Labor Standards Act of 1938 and the Equal Pay Act of 1963 in the following ways:

  1. Broadens the definition of the term “establishment” from the same job site to any location owned by the same firm within the same county.  The new definition would no longer permit pay differentials on the basis of different working conditions.  For example, the PFA would no longer permit pay differentials for employees doing the same work in different locations owned by the same fast food establishment within a county.  Currently, pay differentials may be permitted for reasons such as the different competitive markets in each location.
  2. Only wage differentials that can be proved to be caused by something other than gender, truly related to job performance and consistent with “business necessity” will be defensible.
  3. Includes all female workers within an establishment in class-action lawsuits, unless they specifically opt out.
  4. Lifts the cap on punitive and compensatory damages and leaves it up to the courts to decide what appropriate damages are.
  5. Protects employees who discuss, or disclose their wages with another employee.
  6. Authorizes subsequent regulations that require employers to collect and report pay information data on their employees’ sex, race, and national origin.
  7. Creates a new grant program for training girls and women how to negotiate.

The PFA, if passed has the potential for numerous new lawsuits exposing employers to far greater liability.  It is critical for employers to continually manage and monitor their compensation practices.  Managing internal and external equity is a dynamic process requiring human resources to remain vigilant on changes in market conditions and business demands. HR must also continually ensure internal compensation structures, policies and administrative practices are achieving their intended goals.  The WageWatch Compensation Consulting Team is available to conduct internal equity audits to address employer concerns and add creditability to pay practices.  Additionally, the WageWatch PeerMark ™ Salary Survey reports the most current data available which forms the basis of the external analysis. To learn more about our compensation surveys, salary reports and other market compensation data, please call 888-330-9243 or contact us online.

Common FLSA Pitfalls

The Fair Labor Standards Act (FLSA) is a federal statute that applies to most jobs within the United States. The law regulates such things as minimum wages, overtime hours and child labor laws. In addition to following these regulations, your business should also use salary reports, compensation surveys and other market compensation data to make sure your employees are being compensated fairly.

While the FLSA is designed to protect employees, there are certain elements of the law that can be a cause of confusion for employers. The following is a list of common FLSA pitfalls that employers can and do fall into:

  • “The FLSA doesn’t apply to our business because we’re too small”. While many state and federal employment laws take the number of employees into consideration, the FLSA does not; therefore, this law does apply no matter how big or small your business may be. The FLSA covers all employees who work for a company that affects interstate commerce, which is the majority of businesses.  To save time, legal expenses and a lot of headache, it is safe to assume that your employees are covered under the laws of the FLSA.
  • “Our salaried and/or high ranking employees are exempt from overtime pay”. This is not entirely true. There are many non-exempt employees that are paid set salaries based on salary reports, compensation surveys and other market compensation data, such as secretaries or technicians. Also, even if an employee has a high ranking job title, such as manager or director, it does not necessarily mean they are exempt. The Department of Labor has designed tests regarding the nature of each employee’s job in order to qualify for exemption. Pay and job title are completely irrelevant.
  • “Overtime is not given because the fixed salary covers straight time and overtime pay”. No matter how large the salary may be, this is false. The Department of Labor requires that if an employee exceeds the maximum weekly number of hours worked, overtime must be paid because salary pay only covers straight time pay.
  • “Our employees volunteer extra time, so no overtime is paid”. Employers should never allow employees to work extra hours off the clock because this can lead to wage claims and lawsuits. At a minimum, the employee must be paid minimum wage and overtime pay for each additional hour. There are exceptions for organizations, such as governmental entities or non-profits, which may have actual volunteers. For these types of organizations, every unpaid individual must sign a volunteer agreement in order to avoid lawsuits.
  • “Our business provides employees with compensatory time in place of overtime”.  While governmental employers are allowed to use compensatory time, private employers are not; however, private employers may informally use compensatory time by adjusting the schedule of a work week to make sure that no employee works over 40 hours. Keep in mind that in most cases, overtime hours cannot be averaged over a long time period. All overtime worked within one work week must be accounted for.
  • “Contracted employees don’t receive overtime”. Independent contractors do not get paid overtime as they are not considered to be employees of the company. While this is true, problems occur when employers misinterpret what it means for an employee to be considered a contractor. For example, employers may hire temporary workers during busy months of the year to help with the workload and think of them as contract employees. In reality, these workers are not contractors and are covered under FLSA.

It is important to know the regulations of FLSA in regards to your business and employees. Additionally, you should be using compensation surveys and salary reports in order to establish a fair rate of pay for your employees. At WageWatch, our market compensation professionals can provide your business with accurate, up-to-date compensation surveys and salary reports from businesses in your industry. To learn more about our compensation surveys, salary reports and other market compensation data, please call 888-330-9243 or contact us online.

The Impact of the Affordable Care Act on Business

The Affordable Care Act is already causing much confusion for American companies as well as for the general public. The law, as passed, was over 2,500 pages long and will require thousands of additional pages of regulatory policy in order to be enacted.  As we enter the year 2013, there will be many more changes to healthcare as the new law and the regulatory policies surrounding it take effect. As the provider of employee benefits, business owners need to fully understand the impact that the Affordable Care Act will have on their business and their employees over the next few years.

The professionals at WageWatch would like to share the following refresher on some of the most important policies within the Affordable Care Act:

1. Small business owners will receive a tax credit on their contribution to employee insurance policies. For businesses with less than 10 employees, each with average wages under $25,000, they will receive a 50 percent tax credit on their contribution. These tax credits apply to all small businesses up to 50 employees with average wages of $50,000, although the credit is reduced on a sliding scale depending on the businesses size and average salary.

2. Beginning in the year 2018, the Affordable Care Act will impose a 35 percent tax on employer provided health insurance plans that exceed $10,200 for individual coverage and $27,500 for coverage of a family. The idea behind this policy is that business owners will aim to avoid expensive insurance policies known as Cadillac Plans, and insurance companies will be forced to modify coverage with an eye to keeping costs down.

3. If you are a small business with 51 or more full time employees, you will be fined $2,000 per employee, excluding the first 30 employees, if you do not offer insurance for employees that work an average of 30 or more hours each week.  For small businesses with 50 or fewer employees, there is no penalty. Small businesses of all sizes are also not required to provide insurance for part-time employees.

4. Business owners must offer insurance that is certified affordable to employees. The premium for each employee’s plan cannot exceed 9.5 percent of their total household income. If the insurance coverage doesn’t meet the affordability law, employees should be offered tax credits to purchase insurance on their own. Business owners will then have to pay whichever is less: $3,000 per employee that receives the credit or $2,000 per employee, excluding the first 30 workers.

5. Businesses with less than 100 employees that work an average of 25 or more hours per week are eligible for grants to start wellness programs. These programs encourage employees to take control of their health by living more healthy lifestyles, which helps to prevent harmful health conditions down the road.

It is clear from just the five points above, that much is still to be determined before implementation can take effect. Please stay tuned as we will continue to provide you with updates on ACA as more information becomes available.

The experts at WageWatch want you to know how important it is to be aware of the new policies under the Affordable Care Act and their effect on small businesses. Employers need to properly plan for the future by developing accurate budgets that take the changing costs of healthcare benefits into consideration for the year 2013 and beyond. For assistance with your budget, WageWatch offers cost-effective reports, including salary, wages and benefits survey data. To learn more about the services provided by WageWatch, please call 480-237-6130 or contact us online.

 

Posted in Regulatory & Legal Updates on December 12th, 2012 · Comments Off on The Impact of the Affordable Care Act on Business

How to Avoid Antitrust Claims When Conducting Wage Surveys: Part 2

As stated in our previous post, we will now cover the proper steps to take in order to minimize risk when deciding to share wage and benefit information with a competitor. The safest course of action for human resource directors to follow is to not discuss wage and benefit information with competitors except in controlled and limited situations. The following is a summary of the steps that WageWatch recommends to minimize your risk if you intend to share data:

  • -Employers should act unilaterally about setting wages and benefits.  There should not be an agreement or understanding, written or oral, with respect to fixing, maintaining or stabilizing wages and benefits.
  • -The wage and benefit information should not be exchanged directly between employers.  This means no phone calls or round tables where information is exchanged.
  • -A third party should be utilized in order to make sure that no employer has direct access to each other’s data. Participation in a WageWatch compensation survey can be part of a defense against accusations of antitrust violations. The WageWatch Hospitality Industry Competitive Market Survey complies with all DOJ safe harbor guidelines.
  • -The information that is disseminated by the third party should be aggregated.  The ranges or averages of the wages and benefits cannot be disseminated if it can be related to a particular organization or a specific job.  This eliminates the once prevalent practice of tabulating the data for each employer in a spreadsheet format even if the name of the particular employer associated with that data was excluded.
  • -Each aggregated wage or benefit statistic disseminated should be a composite of at least five different employers.
  • -The disseminated statistics must be “historical”.  This means the older the better.  The aggregated information disseminated to participants should not reflect current or prospective wages and benefits.  Current is defined as wages or benefits that having been in effect for less than three months.

While the above is an overview of steps to be taken when considering exchanging wage and benefit information between hotels, consultation with your legal counsel is recommended before participating in any exchange of wage and benefit information with competitors.

For 13 years, WageWatch has been providing expert services across multiple industries and geographic markets with cost-effective online compensation and salary surveys. We are an innovative organization that is always on the lookout for new ways to collect compensation and salary data for surveys and wage reports, allowing us to expand continuously into new industries and markets.

Please call us today at 480-237-6130 or contact us online to learn more about our services.

Posted in Regulatory & Legal Updates on September 5th, 2012 · Comments Off on How to Avoid Antitrust Claims When Conducting Wage Surveys: Part 2

How to Avoid Antitrust Claims When Conducting Wage Surveys: Part 1

Hotel human resource professionals frequently participate in professional associations, industry groups and other organizations formed to facilitate information sharing and networking.  Few are aware that such activity, if it involves the sharing of cost-related information such as employee wages and benefits, could give rise to violations of antitrust law or be used as evidence of such violations.

There have been a number of antitrust cases brought by plaintiffs in different industries regarding the exchange of wage and benefit information between competitive employers. Probably the two most noted cases are United States v. Utah Society for Healthcare Human Resources Administration (1994) and Todd v. Exxon Corp. (2001). While these cases dealt with specific industries, most attorneys practicing in the area of labor relations and antitrust look to these cases for guidance regardless of the industry.

The Federal Trade Commission and the Department of Justice have issued a statement setting forth an antitrust “safety zone” for health care providers who participate in written surveys.   They will not be considered to be in violation of antitrust laws if the following conditions are satisfied:

– The survey is managed by a third party;

– The information provided by survey participants is based on data more than three months old; and

– There are at least five providers reporting data upon which a disseminated statistic is based, no individual provider’s data represents more than 25% on a weighted basis of that statistic and any information disseminated is sufficiently aggregated so that it does not allow recipients to identify the compensation paid by any particular provider.

This statement gives guidance specifically to the health care industry.  To date, there is not such a case that has been brought in the hotel industry. Although, with the recent surge of labor organization activity going on across the country, our industry should continue to be cautious with regard to how wage and benefit information is shared with competitors.

In our next post, we will discuss precautions to minimize risk if you intend to share wage and benefit information with a competitor.

WageWatch surveys over 5,000 hotels, resorts and casino properties in the United States and the Caribbean. It was the first to leverage the power of the Internet to create the first of its kind, web-based wage and benefits survey tool in 2000.  WageWatch’s proprietary survey process enables human resources professionals to access the most up-to-date and accurate wage and benefits data and prepare custom reports based on their needs and requirements. For more information, please contact WageWatch at 480-237-6130 or contact us online.

 

Posted in Regulatory & Legal Updates on August 29th, 2012 · Comments Off on How to Avoid Antitrust Claims When Conducting Wage Surveys: Part 1