Industry NewsWhat Hotel Operators Need to Know About Employment Law

What Hotel Operators Need to Know About Employment Law

Owning and operating a successful hotel requires compliance with a myriad of employment laws, particularly those relating to overtime and minimum wage laws. While failure to comply can be expensive, there are steps that owners/operators of hotels, motels, lodges, and resorts can take to avoid repercussions.

The federal overtime law applies to all employers regardless of the number of employees. Moreover, employees cannot waive their right to overtime–period. In the unlikely event that a front desk employee, for example, signs a contract agreeing that he or she will not be paid overtime, that person can still sue for the unpaid overtime if an issue arises. In fact, this is why employees sue employers for unpaid overtime or minimum wage violations more often than for any other reason.

Many business owners–in hospitality and in numerous industries–wrongly assume that if an employee works overtime without advance approval, in violation of a written policy, they do not have to pay for that overtime. This is not the case. If the company knows or has reason to know that the employee is working overtime, it is liable and must pay for that overtime. Disciplining the employee for violating the policy may be in order, but not paying is not an option.

In the overtime context, it is the employer’s obligation to keep and maintain accurate time records. A work schedule does not constitute an accurate time record. For hotels with multiple facilities, if employees work at different locations in a single work week, the owner/operator is required to aggregate the employee’s time worked at both locations in order to ensure that proper overtime is being paid. If the employee works 20 hours at one location and 30 at another in the same workweek, the hours must be combined such that the employee would have worked 10 overtime hours in that week. The payroll systems for all locations should be coordinated to ensure proper compliance with the overtime laws. And the hotel should never require an employee, such as a housekeeper, to work off-the-clock or reduce the hours worked to keep labor costs down.

If, for example, a meeting planner or concierge sues for overtime and the employer does not have accurate time records, the law allows the employee to merely estimate the number of hours worked in the event of a lawsuit. This could be as simple as the employee stating that he or she worked an average of “X” number of hours per week. Moreover, if even one penny in unpaid overtime is recovered, the hotel more than likely will be required to pay double that amount as a penalty. The overtime law also requires the employer to pay the employee’s reasonable attorney’s fees if the employee wins. If the employer wins, in most cases the fees cannot be recouped.

Hotels must also include the portion of service charges or mandatory gratuities paid by guests and received by the employee in the employee’s regular rate of pay for purposes of calculating overtime pay. Many hotels also require employees to reimburse the hotel for the cost of a uniform through payroll deductions. However, an employee’s wages can never be reduced to below the applicable minimum wage for all hours worked.

Hotel operators should also note that classifying employees as exempt does not guarantee that the law will see them as such. Paying an employee a salary or giving him or her the title of ‘manager’ does not mean the employee is not entitled to overtime. Being paid a salary simply changes how to calculate the overtime rate. Likewise, only certain types of jobs are exempt from the overtime requirements. A maintenance supervisor, for example, must be paid a minimum salary in order to be exempt; however, being paid a salary alone does not make the supervisor exempt from the overtime law. Exemptions focus on the employee’s actual day-to-day job duties and responsibilities, and not the job title. It is a factually-intensive analysis performed on a case-by-case basis. In other words, it can be a costly mistake for hotel owners to make this determination themselves.

The best thing hotel owners or operators can do to protect themselves is to maintain accurate time and pay records and consult with an attorney who is experienced in labor and employment law.


About the Author
Robin I. Frank is a partner with Shapiro, Blasi, Wasserman & Hermann, P.A., an independent full-service litigation and transactional law firms in South Florida.