LOS ANGELES—The legal landscape of U.S. employment law experienced a number of changes—and some reversals—over the past few years, leading many to wonder what will happen next.
During an Americas Lodging Investment Summit Law conference panel, “The hospitality industry and labor reform,” attorneys in the hospitality industry assessed recent changes in labor laws and practices driven by both regulatory bodies and public sentiment.
The Weinstein effect
During a discussion about guest privacy, an attendee asked whether vetting guests prior to their arrival is contrary to the historical expectations of privacy in the industry, using the sexual harassment and assault claims against Hollywood producer Harvey Weinstein and former International Monetary Fund managing director Dominique Strauss-Kahn as examples. The audience member then asked the panel whether a hotel could deny them a room because the staff is afraid of something happening.
“The liability is not that big of an issue,” said David Sherwyn, director of the Cornell Institute for Hospitality Labor and Employment Relations at Cornell University, about denying the guest the room. “What are his damages?”
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Even if the claim were to go through court, Sherwyn said he’s not worried about the lawsuit going to verdict.
“I’m worried about the Weinstein world we live in now,” he said. “I’m worried about publicity. If I’m a guest with many choices, I don’t want to stay at a place with a bad reputation.”
If a guest is known for sexually harassing room attendants, hoteliers shouldn’t let the guest back, Sherwyn said. That doesn’t mean hoteliers have to do a background check on every guest, he said.
When considering liability over allowing or prohibiting a guest to stay at a hotel, James Greeley, chief legal officer for SBE Entertainment Group, said the liability is worse if the hotel allows a guest known to harass staff or other clients. If Weinstein tries to reserve a hotel room, the hotel staff is charged with that public knowledge, he said.
“You know what he’s done at hotels,” he said. “You’d have a really difficult time explaining to a staff member or the public or anyone else. If you give him or someone like him a room, and he does something at your hotel, how do you explain that away?”
In such a hypothetical situation, David Klein, SVP and general counsel at Sunstone Hotel Investors, said his company would take a more proactive approach in educating his staff in how to respond to someone like Weinstein.
“If it were my hotel, and Weinstein was staying there, I’m not sending a single housekeeper, I will send two,” he said. “I’m not opposed to saying no Harvey Weinstein at our hotels, but I just don’t know where you draw the line. What I’d rather see is a more responsible, attentive and alert workforce.”
The training aspect is now more difficult, Sherwyn said.
“That’s something we really have to figure out how to get it so people are not put into uncomfortable positions, and if they are, they know exactly what to do,” he said.
One group of employees who should receive different training is security, said Dana Kravetz, managing partner at Michelman & Robinson. Security is usually outwardly looking at issues with guests, he said before asking whether security should be looking at how employees are treated and then step in and say something.
SBE has substantial private equity invested, Greeley said. Three months ago, the company received for the first time a communication from the general counsel of its primary investor about its new anti-harassment policy and wanted to know how SBE was handling harassment on its end.
“We never saw these issues before,” Greeley said. “It’s indicative of heightened scrutiny of all levels. The private equity company really doesn’t directly involve itself with our operations. …They’re looking at it from a publicity and PR perspective. The end result is good. Everyone should be giving this more attention. We should be prioritizing it and taking a new look at training.”
Regulatory changes
When the U.S. hotel industry met for the NYU International Hospitality Industry Investment Conference in June 2017, the U.S. National Labor Relations Board had two vacancies and a number of items ahead of it, Kravetz said. Seven months later, things have changed, he said, referencing the reversal on the joint-employer decision.
“What are we going to see?” he asked. “Are we going to see a lot more of this? Will it stop, or is going to be a wholesale change of eight years of an administration putting things in and now we’re just going to completely unravel all of them?”
The U.S. Department of Labor’s solicitor’s memo laid out the administration’s plan to overturn everything, Sherwyn said.
“It didn’t say there’s a middle ground,” he said. “It was, ‘We’re going back, we’re going back, we’re going back.’”
Unions have been more active than they have been over the last couple of years, Klein said, and he’s seeing a new level of brashness.
“I think it’s a fear of the uncertainty as to what lies ahead,” he said.
Binding arbitration
Sherwyn said he’s confident employers requiring employees to agree to binding arbitration with class-action waivers will be upheld by the Supreme Court in a 5-4 decision. There likely won’t be any new federal laws passed regarding it, he said. As a result, it could potentially happen at the state level and there would likely be more use of state statutes and more cases in state courts, but that wouldn’t prevent the use of binding arbitration.
Claims lawyers hate binding arbitration, Sherwyn said, because they like juries and publicity. They also hate nondisclosure agreements and that binding arbitration can’t be written off in taxes.
“All they really want to do is settle, they don’t want to try the case,” he said.
When he joined the faculty in 1997, binding arbitration was seen as the Wild West at the time, Sherwyn said. At the time, lawyers didn’t like the concept because they felt they could win in court, he said, and there was no appeal process. Outside counsel pushed back against the idea.
Binding arbitration requires attorneys to be good at what they do, he said, as they will be before an arbitrator for a period of six to nine months rather than years.
Another aspect of binding arbitration for employees in regard to sexual harassment is the confidentiality of it, Greeley said, which is a big consideration in light of public relations.
One source of frustration Greeley has experienced is the evolving body of case law regarding what is enforceable—at least in California—and the plaintiff attorney’s ability to get around confidentiality to some extent by filing a public complaint without being sanctioned because he or she can point to a new aspect of case law questioning whether a specific aspect of binding arbitration is enforceable.
“It put pressure on the company that wants to keep things confidential to settle,” he said.
It’s more frustrating when the plaintiff’s attorney makes this move around confidentiality and then is proven wrong without consequences.
“Take that shot, roll the dice, but I want there to be some skin in the game if they’re wrong, some sanctions,” Greeley said.