Battles Over Hospitality Wages May Turn On Technicalities

October 8, 2014 – In The News

Nancy Yaffe and Carolyn Richmond quoted in the Law360 article, “Battles Over Hospitality Wages May Turn On Technicalities.” Full text can be found in the October 8, 2014, issue, but a synopsis is below.

Hit with minimum wage hikes in both New York City and Los Angeles, hotels and restaurants are preparing for legal fights on both coasts.

The recent wage hike in L.A. targets hotels, while the New York wage hike puts pressure on restaurants and retail spaces. The groups are facing tough odds they may find respite by targeting certain questionable moves taken by city officials in the approval of the measures.

Nancy Yaffe explains that, “any legal challenge is likely to be based on whether the City Council appropriately dotted its Is and crossed its Ts.”

According to Yaffe, the Los Angeles City Council recently decided to raise the minimum wage for certain hotel workers to $15.37 per hour. It is likely that various hotel associations will mount a legal battle over the raise.

Yaffe suspects that “any challenge will face an uphill battle. Such legal challenges ultimately failed for workers at LAX-area hotels several years ago. Moreover, the trend seems to be to allow industry-specific wage laws, especially in areas and industries that benefit from government subsidies. If there were good equal protection challenges, those would have prevailed then.”

"I know it's creating a lot of angst in the middle of budget season," she said, adding that she has been attempting to figure out if her clients are impacted by the wage hike or not.

In New York, Mayor Bill de Blasio's ordered new minimum wage requirements for real estate projects that receive $1 million or more in city subsidies will be passed along to tenants and subtenants in the buildings.

Carolyn Richmond notes that "the executive order was unfortunately an end run around the legislative process and actually kept the City Council out of the process. I think the business community is still digesting the order and reviewing its options."

A potential target for opponents of the order is that under these new rules the mayor is putting labor policy in the hands of the city's Department of Consumer Affairs.

“While an important city agency, it is not one educated, trained or mandated to function in the workplace. I think we may see a number of possible challenges to these recent moves to legislate the hospitality industry in particular," Richmond said. "Due process ... still means something in this country, and the idea of regulating primarily small businesses is something that needs to be looked at seriously."