- B.S., Journalism, Boston University, magna cum laude;
- B.A., History, Boston University, magna cum laude;
- J.D., The College of William and Mary.
While I was growing up, I saw first-hand the impact that even a questionable lawsuit can have on someone – worry, money and time. It would have been difficult to say which of these was the worst. As an attorney, I’ve tried to reduce all of these concerns for our clients when solving any legal challenge.
Originally, I worked in the hotel industry at properties in Boston and Cleveland. I later pursued a law degree, clerked for a prominent federal judge and started at a large international law firm. When we founded our law firm over twenty years ago, it gave me a chance to refocus on hospitality and I’ve done so ever since. Along the way, I’ve been privileged to represent hotels and restaurants in both trial and appellate courts in 31 states as well as before numerous agencies, arbitrators and mediators. I’ve also been honored to represent executives and managers in our industry when they’ve unexpectedly had to confront more individualized problems.
Regardless of whom we’re representing, I’ve never forgotten the toll that litigation can take on a business or person. As a result, I work to provide early, practical assessments of the pros and cons of each case and its potential economic and emotional consequences. Once this occurs, we can implement the best strategy to win at trial (or sooner) or resolve the dispute in other ways. With class and collective actions involving hundreds of people, this is particularly important. The same is true for counseling and advice. I try to use my experience in the industry and with its unique labor and employment issues to identify the best and most practical solutions as quickly as possible. In fact, this kind of problem solving is one of the things that I find to be the most rewarding about practicing law.
Of course, this requires keeping up with an ever changing array of government regulations and the sometimes unintended consequences they can pose for hotels and restaurants. While we try to anticipate these changes and communicate them to our clients as rapidly as possible, they also have given me the opportunity to speak about them at seminars for other attorneys and at training sessions for managers as well as write about them in articles for the industry.
Last week the Ninth Circuit filed its en banc opinion by the Ninth Circuit in Marsh v. J. Alexander’s LLC, No. 15-15791, 2018 WL 4440364 (9th Cir. Sept. 18, 2018). In this case, the full Ninth Circuit overturned previous panel and district court decisions and upheld the U.S. Department of Labor’s “20%” rule for tipped employees.
In sum, that rule provides that an employer cannot take a tip credit where a tipped employee spends over 20% of his or her time engaging in activities that are related to their work but do not directly result in the generation of tips. For example, in the case of a restaurant server, this would include tasks such as rolling silverware, brewing coffee, or wiping tables. The rule also states that a tip credit cannot be taken, and tipped employees must be paid the full minimum wage for the time they spend working on activities that are unrelated to their duties as servers or bartenders. These kinds of activities include maintenance work such as cleaning restrooms and washing windows.
Marsh was a consolidated appeal in which the defendants were J. Alexander’s, I-Hop, P.F. Chang’s, and other restaurant companies. Given the number of restaurants involved and possible future involvement by different trade groups, there’s a good chance that the defendants may petition for a writ of certiorari to the U.S. Supreme Court. And, given the Court’s recent interest in the different federal deference doctrines, there’s an equally good chance that may be granted.
For a printable PDF of this article, click here.
September 23, 2018 • Ashley S. Nunneker, John R. Hunt
This week, HotelExecutive.com published an article by our own John Hunt and Ashley Nunneker, covering the nuanced differences between different types of compensation for hotel and restaurant servers. Check it out on their website! And if this thorough review doesn’t quite clarify everything you’re wondering about gratuities and service charges, contact Stokes Wagner with any questions you might have!
December 17, 2017 • John R. Hunt
Head on over to HotelExecutive.com to read the latest article by John Hunt, covering a brief review of laws pertaining to hotel mergers and acquisitions! If that doesn’t slake your appetite for knowledge, contact Stokes Wagner at any time with your questions.
June 16, 2017 • John R. Hunt
Last year, the U.S. Supreme Court issued a decision that placed restrictions on the ability of law enforcement officers to inspect hotel guest registers and other records. Many local laws, which had authorized unlimited police inspections, suddenly were rendered unconstitutional. This article reviews that decision and discusses the developments that have occurred in this area during the past year.
Until recently, hotels in many jurisdictions routinely provided the police with access to their guest registers without much concern about the privacy issues that might be involved. After all, numerous cities and towns possessed ordinances that required hotels to collect specific guest information and allowed the police inspect the information upon request. A failure to allow access could result in a fine or in some cases, jail time.
In 2015, however, the U.S. Supreme Court decided the landmark case of City of Los Angeles v. Patel, 135 S.Ct. 2443 (2015), which recognized that a hotel has a privacy interest in the information it collects from its guests. Moreover, the court held that a hotel which objects to providing the police with access to this information must be able to obtain an impartial review of whether the request by the police is proper.
Now that Patel has been the law for over a year, it is worth examining what kinds of changes it has brought about from a legal and operational standpoint. In order to do so, a brief recap of the case is appropriate.
The dispute in Patel involved a Los Angeles city ordinance that had been on the books for over one hundred years in one form or another. The ordinance required hotel operators to record a variety of information about their guests, including: the guest’s name and address; the number of persons in their party; the make, model and license plate number of the guest’s vehicle; their arrival and departure dates and times; the room number that was assigned to the guest; the rate charged; the amount collected; and the method of payment. If a guest paid with cash or rented a room for less than twelve hours, he or she had to present the hotel with photographic identification and the operator was required to record the number and expiration date of the document. The city required hotels to keep this information for at least ninety days and train their employees on how to record it.
The Ordinance also mandated that the records containing this information were to be made available to any Los Angeles police officer for inspection. The only restriction was that an inspection was to be conducted at a time that “minimized any interference with the operation of the business.” A failure by a hotel to provide the records for inspection was a misdemeanor punishable by up to six months in jail and a $1,000 fine.
A group of Los Angeles hotels and a lodging association challenged the Ordinance in federal court contending that it violated their rights under the United States Constitution. In defense of the Ordinance, the City argued that its purpose was to deter criminal conduct because criminals would be less likely to carry out illicit activities in hotel rooms if they had to provide identifying information upon checkin. The City asserted that the only way to assure that a hotel was complying with the recording requirement was to set up a system of frequent, unannounced inspections by the police.
Nevertheless, the Supreme Court determined that the Ordinance was unconstitutional because it failed to provide hotel operators with an opportunity to have an inspection demand by the police reviewed before the hotel complied. In sum, the Court concluded that the Ordinance created “an intolerable risk that searches authorized by it will exceed statutory limits, or be used as a pretext to harass hotel operators and guests.”
In reaching this conclusion, the Court first observed that the Fourth Amendment to the United States Constitution protects the “right of the people to be secure in their persons, papers, and effects, against unreasonable searches and seizures” and that “no Warrants shall issue, but upon probable cause.” In addition, searches that are conducted without a warrant are the exception and generally viewed as unreasonable. This rule, wrote the Court, applies to business premises as well as to homes.
Second, and in what probably came as a surprise to many in the hospitality business, the Court concluded that hotels do not operate in a “closely regulated industry.” Notwithstanding the numerous licensing requirements that apply to hotels, the Court found that the regulations to which hotels are subject do not differ significantly from those which apply to the majority of other businesses. As a result, warrantless searches of the kind conducted by the government in “pervasively regulated” industries, such as liquor and firearms, are not permissible at hotels.
As a result, the Court found that a hotel owner must be afforded an opportunity to have a “neutral decision maker review an officer’s demand to search the registry before he or she faces penalties for failing to comply.” The Court opined that the police should be allowed to issue administrative subpoenas to inspect a guest register and if the hotel objects, a judicial official, such as an administrative law judge or a magistrate, must decide whether the subpoena should be quashed. The Court also stated that when such an objection is made, the police have the authority to guard the register until the review is completed. The Court, however, remarked that hotels “remain free to consent to searches of their registers….”
Notably, Patel only discussed the hotel’s interests in keeping guest information confidential. It did not directly address any rights a guest may have that such information remain private. The Court, however, did acknowledge that “modern hotel registries contain sensitive information such as driver licenses and credit card numbers for which there is no historic analog.” In doing so, the Court may have left the door open for further consideration of the privacy issues posed by the collection of guest information, particularly in view of the increasing reliance on records that are exclusively electronic and the ease with which these can be accessed. Even the City of Los Angeles told the Court that the online review of guest records by the police in real time was not a remote possibility.
Since Patel, there have been few reported court decisions describing its impact. In one New Jersey case, however, a defendant in a criminal prosecution attempted to argue that the reasoning in Patel implicitly extended a protected privacy interest to guests themselves in the information they disclose upon registration. The New Jersey court rejected this contention. It held that a guest has no reasonable expectation as to his identity when he registers as a hotel guest. The court found this to be consistent with the long established rule that a person has no expectation of privacy in information voluntarily revealed to third parties, such as through a hotel register. The court also rejected the argument that Patel required the police to inform the front desk clerk that he had a right to refuse their request to inspect the register.
What has changed since Patel, however, is the language of many local laws that previously allowed unlimited police inspections of guest registers. Many cities and towns have amended their ordinances to allow for a review procedure that they believe is consistent with the one outlined in Patel. These new requirements vary from jurisdiction to jurisdiction. Some localities also have taken the opportunity to update their laws to expressly provide for the inspection of “electronic registration systems” in addition to the traditional kinds of guest registers. For example, one city revised its ordinance to read that an officer should first ask for the innkeeper’s permission to review the registration system. If the innkeeper refuses the request, the innkeeper is required to secure the system in the presence of the Officer in a manner directed by the Officer. The innkeeper then must ensure that no one is able to tamper with the records until such time as a subpoena, warrant or court order has been issued or denied.
Other ordinances contemplate the issuance of search warrants. One city retained the requirement that a guest registry must be made available for immediate review and inspection upon request by any member of the police department. In the event the hotel operator initially declines the request to voluntarily produce the register, he or she must do so if the police then obtain and present a duly executed search warrant authorizing the “inspection, reproduction and/or impoundment of guest registry.” A failure to voluntarily produce the registry does not violate the ordinance, but a refusal to comply with a subsequent search warrant does.
A third variation describes the steps to be followed in even greater detail. First, upon receiving a demand for inspection from a police officer, a hotel operator may voluntarily allow the police to inspect the records or object. If he or she makes an oral objection to the request, then the officer must make the demand in writing and personally serve it on the hotel operator. If the hotel still wishes to object after receiving the written demand, it must make a written objection within 48 hours and personally serve it on the police. No particular form for the objection is necessary, but it must be signed by the hotel operator. Once the hotel makes its written objection, it then must file an action in court within ten days. If the hotel fails to file an action, it is deemed to have waived its right to seek precompliance review of the demand from the police.
In view of these developments, hotels should take several steps. First, given the variety of local ordinances across the country, hotel management should familiarize themselves with the ordinance that applies in their area. Second, the hotel should develop a policy that is tailored the ordinance in their locality and describes how to comply with the ordinance. The policy could designate a specific person as responsible for responding to all such requests or that approval from the general manager or other manager must be obtained before the hotel complies with or denies the request. This also should be coordinated with any other policy addressing the confidentiality of guest information. Third, once a policy is adopted, the hotel’s front desk and security staff should trained on the policy and on how it should be followed. This also should be incorporated into the training that front desk employees receive at orientation.
John Hunt has litigated employment, labor and commercial law cases in over 75 federal and state courts throughout the United States. Much of this work has been devoted to the defense of businesses in the hospitality industry. In addition to representing clients at trials, arbitrations and mediations, he provides counseling and advice on a variety of issues, including those involving, wage and hour requirements, employment discrimination, restrictive covenants, family and medical leave, union relations, contract negotiations and the preparation and implementation of personnel policies. At Stokes Wagner, Mr. Hunt works to provide early, practical assessments and strategies of the pros and cons of each case. Mr. Hunt can be contacted at 4047660076 or firstname.lastname@example.org