Tag Archives: Legal Risks

Hospitality Industry Legal Risks: Employers Unaware Of A Co-Worker’s Harassment Are Still “Vicariously Liable” If Done By A “Supervisor”; Defined As Power To Take “Tangible Employment Actions” In “Hiring, Firing, Decisions On Benefits”

“…The enforcement guidance issued by the EEOC interprets broadly which employees should be considered “supervisors” under Title VII. Hospitality Industry Sexual Harassment LawsuitsAccording to the guidance, any individual with the ability to exercise significant direction over another’s daily work is a supervisor, and the employer would be liable for their acts…The U.S. Supreme Court rejected the EEOC’s stance with the 2013 case of Vance v. Ball State University. If the employer is unaware of a co-worker’s harassment, the Supreme Court decided that employers should only be vicariously liable under Title VII for a co-employee’s harassing behavior if the employer granted them the power to take “tangible employment actions,” such as hiring, firing, failing to promote, significant reassignment, or decisions causing significant changes in the employee’s benefits…”

Employers are not automatically liable for harassment committed by all employees. If the employer is aware of harassment occurring and does not take steps to address and stop it, then the employer has some exposure. If the employer is not aware of the harassment, the employer may be liable if the harasser is considered under the law to be a “supervisor.”

Some harassment lawsuits turn on whether the person who was doing the harassing should be treated as a supervisor. A recent Tenth Circuit Court of Appeals decision (which applies to Oklahoma employers), sets some guidelines for what employees are considered supervisors, for purposes of imposing potential harassment liability on employers.

Priess Enterprises operated a McDonald’s restaurant in Cheyenne, Wyoming. Megan McCafferty began working as a crew member on February  15, 2007. Her shift leader was Jacob Peterson. Peterson participated in the restaurant’s “Manager-in-Training” program. He was also responsible for directing day-to-day activities of shift workers like McCafferty. His responsibilities included assigning duties, scheduling breaks, authorizing crew members to leave early or stay late, and writing up employees for misconduct. Everyone agreed that Peterson did not have the authority to hire, fire, promote, demote or transfer other employees.

McCafferty, a high school student, agreed to cover another employee’s shift, but explained to Peterson she would need a ride from school. As promised, Peterson picked up McCafferty from school and checked her out of class early. Peterson told McCafferty that she had been excused from her shift, and asked her if she wanted to “hang out.”

When she accepted his invitation, Peterson offered McCafferty marijuana. Peterson and McCafferty spent the next two days together, which involved alcohol, methamphetamines and sex. Eventually, McCafferty’s sister spotted her, pulled McCafferty from Peterson’s car, and called the police. When McCafferty did not contact anyone at McDonald’s, the restaurant treated McCafferty as having resigned.

McCafferty filed a charge of discrimination with the Equal Employment Opportunity Commission, and later filed a lawsuit against the restaurant and Peterson. McCafferty claimed Peterson was a supervisor under Title VII, and that she had been sexually harassed. McCafferty also included a state law claim, accusing the restaurant of being negligent in hiring, supervising and retaining Peterson.

For more:  http://hr.blr.com/HR-news/Discrimination/Sexual-Harassment/Sexual-harassment-Is-employer-liable-for-shift-lea

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Filed under Employment Practices Liability, Labor Issues, Liability, Management And Ownership, Risk Management, Training

Hospitality Industry Legal Risks: IRS Rules That “Automatic Gratuities” Are Now “Service Charges”; Restaurants Must Add To Paychecks As Wages

“…The IRS has signaled its intent to scrutinize auto-gratuity patterns to determine whether they are tips, or if there has been more coercion so it Restaurant Tips And Service Chargesbecomes more of a service charge…rather than receiving automatic gratuities at the end of the night, under the new IRS rule, those payments would be tacked onto paychecks as wages…Darden Restaurants – which operates Red Lobster, Olive Garden, Longhorn Steakhouse Seasons 52, The Capital Grille and other chains – is testing a concept that eliminates 18 percent automatic gratuities for parties of eight or more, and instead leaves tip percentage calculations at the end of a bill…”

Even with automatic tipping, customers have always faced a decision over how much to leave a server. Now, thanks to an IRS ruling, restaurants are being thrown into the debate – and are faced with a decision of their own: Should tipping for large parties be left to the customer or should the restaurant tack it on to the bill?

The IRS ruling, which takes effect in January, will treat automatic gratuities as service charges, rather than tips. The switch means servers will no longer be responsible for reporting those automatic tips as income. And it also means automatic gratuities will be considered a part of a server’s wages, making that money subject to payroll tax withholding and delaying receipt until the next paycheck.

Understandably, many servers aren’t happy about the tax policy, but neither are restaurant owners. The change will create additional accounting and bookkeeping work, because automatic gratuities will have to be factored into hourly pay rates that could vary depending on the number of large parties served by the employee.

The IRS policy change also could mean the loss of an income tax credit, which restaurants receive for paying Medicare and Social Security taxes on employees’ reported tips. Service charges are not eligible for the credit.

For more:  http://www.news10.net/news/national/260375/5/Tip-ruling-could-prove-taxing-to-servers-restaurants

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Filed under Employment Practices Liability, Labor Issues, Liability, Management And Ownership, Risk Management

Hospitality Industry Legal Risks: Connecticut Hotel Owners Settle “Negligence Lawsuit” For $1 Million; Woman Tripped Over “Bunched, Wrinkled Carpet” Which Required “Elbow Replacement Surgeries”

“…(the plaintiff) was walking from the restaurant to the front lobby when she tripped on a bunched and wrinkled carpet, catching her toe on it Hospitality Industry Injury Lawsuitsand landing on her elbow…(she) had five surgeries, and when the elbow would not heal right, underwent a total elbow replacement…her medical bills totaled $240,000, which will be repaid with proceeds from the settlement, he said…as early as 2009, Holiday Inn, which was threatnening to pull the hotel’s license because of various maintenance issues, had inspected the hotel and reported that the carpet in the restaurant was loose…(attorneys) discovered that members of the hotel staff had tripped on the rug and complained to the management…”

The owners of the former Holiday Inn on North Frontage Road agreed this week to pay $1 million to a 77-year-old St. Louis woman who fractured her elbow after tripping over a loose carpet and falling as she exited the hotel’s restaurant. Heritage New London LLC, the corporation that owns the property and managed the hotel agreed to the settlement after five days of jury selection in New London Superior Court.

Norma Minke was part of a visiting tour group that stayed at the hotel on October 3, 2010, according to her attorney, Joseph M. Barnes of the Reardon Law Firm.

During the discovery process, Barnes said he deposed the corporation owner, Sunil Nayak of Princeton, NJ. Barnes said he learned that as early as 2009, Holiday Inn, which was threatnening to pull the hotel’s license because of various maintenance issues, had inspected the hotel and reported that the carpet in the restaurant was loose. The report specifically identified the location of the incident, Barnes said. He also discovered that members of the hotel staff had tripped on the rug and complained to the management.

For more:  http://www.theday.com/article/20131010/NWS02/131019970/1047

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Filed under Guest Issues, Injuries, Liability, Maintenance, Management And Ownership

Hospitality Industry Employment Issues: Restaurants Increasingly Use “Payroll Debit Cards” To Save Money And Time; Workers Must Be Legally Notified Other Payment Options Exist

For managers, Darden says the cards eliminate two hours of paperwork each pay period. Employees incur no fees if they use their cards at more Hospitality Industry Payroll Debit Cardsthan 40,000 Allpoint ATMs nationwide and make purchases at places that accept Visa cards…They can be a convenient option for workers who don’t have checking accounts, a common situation for many restaurant or retail workers. The National Restaurant Association says 30 percent of industry workers don’t have traditional checking accounts…The Consumer Financial Protection Bureau recently issued a warning to employers that federal law requires other pay options besides debit cards.

In Orlando, companies that swear by the payroll cards include Darden Restaurants, Tony Roma’s, and Smokey Bones Bar & Fire Grill. Nationwide, the number of such cards is expected to more than double in five years to 10.8 million, according to business-research company Aite Group.

The cards save employers money and time. But workers who aren’t careful about where they use the cards can rack up fees, which has put payroll cards under scrutiny. New York’s attorney general is investigating more than 40 companies, including Darden, asking for information about fees and seeking proof that workers know they can receive their pay in other ways.

At Darden, which owns chains including Olive Garden and Red Lobster, new employees automatically are set up to receive debit cards, but they can make a phone call or go online to opt out. Now, 48 percent of Darden’s workers use the debit cards, and 50 percent have direct deposit. Only 2 percent receive traditional checks.

Consumer advocates frown on the automatic signup, saying employees should make the choice upfront. Darden said the cards are more convenient than paper checks, which used to be the automatic payment method.

For more:  http://articles.orlandosentinel.com/2013-10-06/business/os-cfb-cover-payroll-cards-20131006_1_debit-cards-payroll-cards-such-cards

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Filed under Employment Practices Liability, Labor Issues, Liability, Risk Management, Technology

Hospitality Industry Safety Risks: Florida Hotel Group To Place “Lifeguards And Fences” At Pools During “All Open Hours”; Move Follows Death Of 13-Year Old Boy In March

“…Lifeguards will be on duty at all times while the pools are open…But guests will no longer be permitted to swim in the feature pools after Hotel Pool Drowing Riskshours. Disney plans to install fences around any of those pools that are not already gated, a process that will begin in the coming months as hotels roll through their regular renovation cycles…(the move follows) the death of 13-year-old Anthony Johnson, who was pulled from a pool at Disney’s Pop Century Resort at about 9:30 p.m. on March 10…(he) died two days later at Florida Hospital Celebration…”

Walt Disney World says it will begin stationing lifeguards at its largest hotel pools during all operating hours and then locking them down overnight, six months after a young boy drowned while a pool was unguarded. Disney says its largest and most popular “feature” pools will begin opening at either 7 a.m. or 9 a.m. and closing at 11 p.m.

Only smaller and unguarded “quiet” pools at some hotels will remain accessible at all hours. Disney has about two dozen hotels and time-share resorts across its sprawling property.

“These changes make it easier for guests to understand when our pools are open and when a lifeguard is present,” Disney World spokeswoman Bernadette Davis.

Disney would not say whether a specific event triggered the move. Though that pool was open from 7 a.m. until 11 pm., lifeguards were only on duty from 10 a.m. to 8 p.m. Disney said it had posted signs warning that guests who chose to swim while the pool was unguarded did so at their own risk.

For more:  http://articles.orlandosentinel.com/2013-09-26/business/os-disney-locking-swimming-pools-20130926_1_walt-disney-world-pools-lifeguards

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Filed under Guest Issues, Health, Injuries, Liability, Management And Ownership, Pool And Spa, Risk Management

Hospitality Industry Legal Risks: North Carolina Restaurant Operator Sued By EEOC For “Religious Discrimination”; Fired Woman For Wearing Skirts As Part Of Her Pentecostal Church Beliefs

“…(the employee, Sheila Silver, was) a member of the Pentecostal church (and believed) women should wear skirts in accordance with this EEOCreligious belief…Silver worked for various Kentucky Fried Chicken restaurants since 1992.  Scottish Food Systems and Laurinburg KFC Take Home purchased the KFC restaurant where Silver worked in April 2013.  At that time, they informed Silver she must wear pants to work because of their dress code policy.  Silver told Scottish Food Systems and Laurinburg KFC Take Home she could not wear pants because of her religious beliefs.  The companies ultimately fired her for refusing to wear pants to work…”

Scottish Food Systems, Inc. and Laurinburg KFC Take Home, Inc., two North Carolina corporations that operate a chain of Kentucky Fried Chicken restaurants in eastern North Carolina, violated federal law by failing to accommodate an employee’s religious beliefs and firing her because of her religion, the U.S. Equal Employment Opportunity Commission (EEOC) charged in an employment discrimination lawsuit filed today.

Such alleged conduct violates Title VII of the Civil Rights Act of 1964, which requires employers to reasonably accommodate an employees’ due to their religious beliefs as long as doing so does not pose an undue hardship.  The EEOC filed suit in U.S. District Court for the Middle District of North Carolina (EEOC v. Scottish Food Systems, Inc. d/b/a Kentucky Fried Chicken and Laurinburg KFC Take Home, Inc. d/b/a Kentucky Fried Chicken, Civil Action No. 1:13-CV-00796) after first attempting to reach a voluntary settlement through its conciliation process.  The EEOC seeks back pay, compensatory damages and punitive damages, as well as injunctive relief.

“Employers must respect employees’ sincerely held religious beliefs and carefully consider requests made by employees based on those beliefs,” said Lynette A. Barnes, regional attorney for the EEOC’s Charlotte District Office, which includes the EEOC’s Raleigh Area Office, where the charge of discrimination was filed. “This case demonstrates the EEOC’s continued commitment to fighting religious discrimination in the workplace.”

The EEOC is responsible for enforcing federal laws prohibiting discrimination in employment.  Further information about the EEOC is available on its web site at www.eeoc.gov.

For more:  http://www.eeoc.gov/eeoc/newsroom/release/9-19-13c.cfm

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Filed under Employment Practices Liability, Labor Issues, Liability, Management And Ownership, Risk Management, Training

Hospitality Industry Legal Risks: Illinois Restaurant Sued For “Negligence” By Woman Who Slipped In Puddle Of Water; Seeking $50,000 For “Leg Injuries, Pain And Suffering”

“…(the plaintiff) blames the restaurant for causing her injuries, saying its employees negligently allowed a puddle of water to remain on its Hospitality Industry Injury Lawsuitspremises, failed to remove the puddle, failed to reasonably inspect the premises and failed to properly manage the restaurant…In addition to her injuries, (she) became sick, lame, disordered and disabled; experienced pain and suffering; incurred medical costs; and suffered disability and disfigurement, the suit states. She also lost earnings and wages, the complaint says…”

A woman claims suffered left knee and leg injuries after she fell on a puddle of water at a Mexican restaurant. Andrea B. Mercer filed a lawsuit Aug. 29 in Madison County Circuit Court against Chivas doing business as Carisilos Mexican Restaurant. In her complaint, Mercer alleges she was eating at Carisilos, which is located at 1978 Vandalia St. in Collinsville, on Sept. 3, 2011, when she fell on a puddle of water in the restaurant.

In her complaint, Mercer seeks a judgment of more than $50,000, plus costs and other relief the court deems just.

For more:  http://madisonrecord.com/issues/366-personal-injury/259131-collinsville-mexican-restaurant-sued-by-customer-over-slip-and-fall

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Filed under Guest Issues, Injuries, Liability, Management And Ownership, Risk Management

Hospitality Industry Legal Risks: Immigration And Customs Enforcement (ICE) Employment Audits Targeted Restaurants (38%) In 2012; “Silent Raids” Force Workers To Lose Jobs, Large Fines For “Paperwork Errors”

“The administration appears to start with the presumption that employers are not telling the truth about their listed employees…”

U.S. Immigration and Customs Enforcement“…(an Ohio) restaurant was audited in early 2012. No undocumented workers were found…but paperwork errors resulted in a $27,500 fine, which didn’t get reduced. The company paid another $7,500 to have an immigration attorney handle the case and review the I-9 forms of the other 13 restaurants to make sure they were filled out correctly…”

“In late 2010, (a national restaurant) chain lost about 450 Minnesota workers, between 30% and 40% of its employees there…Last year, the burrito chain announced it was under federal investigation over possible criminal securities law violations related to communications to investors of work-authorization compliance. The company has said it is cooperating fully with the investigation…”

The U.S. government has launched a fresh crackdown on employers suspected of hiring illegal immigrants by notifying about 1,000 businesses across the country in recent weeks they must submit documents for audits. The so-called “silent raids” are the largest since July 2009 when just as many companies were notified, according to immigration attorneys, and weren’t publicly disclosed by Immigration and Customs Enforcement, the agency that conducts such inspections.

While the audits don’t lead to the deportation of a firm’s illegal workers, they lose their jobs if discovered. Critics of the crackdown say it drives more immigrants to eploitative, off-the-books work. For employers, the audits can lead to deep losses in productivity, in addition to civil and criminal fines, and many workers end up getting hired by competitors.

For more:  http://online.wsj.com/article/SB10001424127887324755104579071331936331534.html

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Filed under Employment Practices Liability, Labor Issues, Liability, Management And Ownership, Risk Management

Hospitality Industry Legal Risks: Missouri Restaurant Operator Ordered To Pay $20.5 Million To Man Permanently Disabled After Beating In Parking Lot; “Failure To Prevent Fight”, Violated “Disruptive Customer Policies”

 “…(the plaintiff) claimed the fast food giant failed to prevent the fight, poorly trained its employees and violated its own policies for dealing Hospitality Industry Injury Lawsuitswith disruptive customers…(the jury) actually returned a $25 million verdict against Jack in the Box after an eight-day civil trial. That was reduced to $20.5 million after the jury found Aziz to be 18 percent at fault for the attack…”

A City Court jury ordered Jack in the Box restaurants to pay $20.5 million to a man who is permanently disabled from a beating in a parking lot 3 years ago.  Ali Aziz, now 35, was beaten unconscious and spent more than a year in a coma after the June 20, 2012 assault. He has permanent brain damage and cannot walk or feed himself, the St. Louis Post-Dispatch reported.

Aziz, through his mother Annette Brown, sued Jack in the Box in City Court in 2011.  Four people – three men and a woman – pleaded guilty and have gone to prison for it.
Earnest Carter, 22, was sentenced to 12 years in prison; Jasmine Jeffries, 22, to 15 years; Johnnie Lane, 33, to 5 years; and Rwoeshan Booker, 20, to 13 years, the Post-Dispatch reported.

A Jack in the Box spokesman said the company is considering an appeal.

For more:  http://www.courthousenews.com/2013/09/09/60939.htm

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Filed under Crime, Guest Issues, Injuries, Labor Issues, Liability, Management And Ownership, Risk Management, Training

Hospitality Industry Legal Risks: Oregon Restaurant Sued For “Racial Discrimination”, Retaliation; Claims “Intentional Bias, Visceral Antagonism”

“…The suit says (the plaintiff) reported Counard’s conduct and “visceral antagonism” to other managers…he was suspended based on an Hospitality Industry Discrimination Lawsuitsallegation that he had told a server to rinse and serve a skewer of shrimp that had fallen on the floor…A month later, after an investigation in which Huleis was not interviewed, he was fired…The lawsuit claims Huleis’ treatment was intentional, was part of a pattern of discrimination against minority employees and was done with a reckless disregard for the company’s societal obligations…”

A Eugene man who says he was fired from his job at the Eugene Red Lobster restaurant because he is of Middle Eastern descent has filed a lawsuit against the chain in federal court. Jim Huleis, who came to Eugene in 2011 to help open a Red Lobster outlet near Valley River Center, seeks unspecified damages on claims of racial discrimination and retaliation. He alleges an area manager who disliked that Huleis was Arab singled him out for bad treatment to discredit and ultimately fire him.

The lawsuit asks the court to issue an injunction barring Red Lobster’s parent company, Florida-based GMRI Inc., from discriminating against people based on race or national origin. It also asks for an award compensating Huleis for his economic losses, including his past and future earnings, and for reinstatement to his job.

In addition, the suit asks for compensation for noneconomic damages and punitive damages and for an award covering his legal costs.

“We are a company known for greatly valuing diversity and have zero tolerance for any form of discrimination, so we take any claim like this very seriously,” Bernstein said in an e-mailed statement. “If there are differences between employees and our company during or after employment, the mutual goal is to resolve these issues in a prompt and fair way, and to do that we have a robust dispute resolution process, which includes mediation and arbitration. Mr. Huleis is pursuing this matter through that process.”

According to the suit, Counard immediately treated Huleis different from other managers, giving him inappropriate tasks, minimizing him and barring him from duties he would usually perform.

For more:  http://www.registerguard.com/rg/news/local/30417354-75/huleis-eugene-lobster-red-says.html.csp

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Filed under Labor Issues, Liability, Management And Ownership, Risk Management, Training