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The Hospitality Industry and Employment Laws

  People from all parts of the globe visit California in large numbers. San Diego California is one of the hot vacation destinations in California. As a consequence, many businesses in California and San Diego are hospitality businesses. What legal requirements and hurdles do those businesses face?

  More hotels are using hospitality robots. Maid Bot has developed robotic cleaning services and Hilton uses Connie as a concierge robot.  In addition, some places now use Chat Bots. A guest can text the robot, and it will provide information or a simple service, like delivery of food. Part of the allure of these high-tech robots is they replace humans and reduce wage expenses.

  Mobile check-in is another way to reduce the cost of employee wages. Hotels that have mobile check-in allow the guest to check-in and open room doors with a smart phone.  Alternatively, if a guest does not have a smart phone, guests will be able to check-in at unmanned pods or kiosks in the near future.

  Recently, Air B & B has grown dramatically. As most know, Air B & B is an alternative to traditional hotel and bed & breakfast accommodations.  Air B & B has faced challenges in many California locations for potential zoning violations. Many say that they create too much traffic, too much party noise, and reduce parking in otherwise quiet neighborhoods. Different locations deal with those problems in different ways. Some cities have banned Air B & B, while others have passed new legislation requiring licensing aimed at curbing those problems and raising revenue.  Regardless, Air B & B is here to stay. As of now, Air B & B has not raised any significant employment issues, largely because they are run by the owners of private homes. In the future, that will probably change because hotels and larger vacation rentals will use the Air B & B platform and will have employees manage the properties.

  Uber is arguably part of the hospitality industry. In the last few years, some drivers have filed class actions challenging their status as independent contractors. Most cases and rulings from government agencies say that the drivers are employees. However, those cases may not be able to proceed as class actions. The class action issue is on appeal.  If the appeal courts allow the cases to move forward as class actions, then Uber will probably owe its drivers a large amount of money for unpaid wages and penalties.

  Of Course, hospitality businesses also have traditional concerns that other businesses have.  For instance, all businesses must pay minimum wage to its employees, and restaurants must have lawful tip arrangements. Many hospitality employees get paid minimum wage.

  The federal minimum wage for most employees is $7.25 per hour. Apparently, that rate will continue to apply for the foreseeable future. However, many states and cities have much greater minimum wage rates. Presently, California requires employers who employ 25 or fewer employees to pay $10 per hour.  It requires businesses that employ more than 25 employees to pay $10.50 per hour. That minimum wage rate will increase incrementally for both groups of employers until 2023, when all employees, with a few exceptions, will make at least $15 per hour. The city of San Diego requires all employees to make at least $11.50 per hour.

  Many people in San Diego work in bars, pubs, coffee shops, restaurants, and other businesses where employees receive tips as part of their compensation.  Generally, California law forbids the employer from taking or sharing in tips (Labor Code §351), and employers must track all tips that they collect for employees (Labor Code §353). Employer mandated tip pooling is legal, but the house cannot share in the pooling arrangement. The tip pool must be fair and reasonable.  Only those who are in the chain of service can be in the pool.  For instance, an employer cannot require servers to include cooks and dishwashers in the pool.


S. Ward Heinrichs, Esq.
Employment Law Office of Ward Heinrichs
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)


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