Law and the Hospitality Industry
Law and the
Hospitality
Industry
HMGT 401 on-line
Judy Streeter
UMES – HTM
Module Seven
Legally Managing
Employees
Chapter 8
What you need to know…
◼ Explain the difference between an employment agreement and an employee manual.
◼ Explain how to establish a nondiscriminatory work environment.
◼ Recognize and define the two types of harassment and be able to describe how to implement
procedures designed to eliminate harassment and minimize the risk of penalties resulting from
charges of unlawful harassment.
◼ Describe the procedures to investigate complaints of harassment.
◼ Explain a businesses’ requirements related to:
◼ FMLA
◼ Compensation – Minimum Wage, Tipped Employees, Taxes
◼ Performance Management
◼ Define, recognize and explain Wrongful Termination
◼ Explain the steps in a Progressive Discipline Program
◼ Describe the guidelines to ensure fair and legal employee terminations
◼ Describe Unemployment Insurance and Claims, explain which unemployed workers qualify
◼ Summarize the basic standard related to employment records retention.
◼ Explain the basic requirements of a business related to Employment Posters
◼ Describe the basics of legal Workplace Surveillance
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
Employment Relationships
◼ Employment Agreement:
◼ “The terms of the employment relationship between an
employer and employee that specifies the rights and
obligations of each party to the agreement.”
◼ Verbal or…… Written = Offer Letter
◼ Employee Manual:
◼ “A document written to detail the policies, benefits,
and employment practices of an employer.”
As a manager you must adhere to
the standards and procedures in the
manual. Keep it updated!!!!
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
Preventing Workplace Discrimination
◼ Maintain a Philosophy of Prevention
◼ Manage Diversity in the Workplace
◼ Maintain/manage a Zero Tolerance Policy
◼ Employer Liability:
◼ Vicarious Liability – A party’s responsibility for
the acts of another which result in an injury,
harm or damage.
◼ Harassment…
My job is to
prevent
discrimination!
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
My job is to
prevent
harassment!
Two types of Sexual Harassment
◼ Quid Pro Quo:
◼ Someone in authority, such as a supervisor or
manager, requests sexual favors of an employee or
engages in unwelcome advance or other sexually
related behavior and…
◼ The submission to or rejection of the behavior by the
employee is used as a basis for a tangible employment
action.
◼ Hostile Work Environment:
◼ Harassment is repeated behavior (language or
conduct) which creates an intimidating or hostile
working environment for individuals of a particular
gender.
NOTE: Hostile Work Environment Harassment may also be about race,
color, national origin, or religion – harassment is not sexual in nature.
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
Third Party Harassment
◼ Third party harassment takes place when an employee of an
organization is harassed by someone who is not an employee of
that organization. Third parties include:
◼ Suppliers
◼ Vendors
◼ Customers
◼ Contractors
◼ Visitors
◼ A organization could be held accountable for harassing behavior
by third parties if actions are not taken to stop it.
◼ All employees need to know to report and/or address any third
party harassment quickly and directly.
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
Employer Liability:
◼ Vicarious Liability – A party’s responsibility for the acts
of another which result in an injury, harm or damage
◼ You as the owner/manager will be held liable for the
actions of a supervisor/manager who harasses!
◼ Affirmative Defense….
◼ Employer must exercise reasonable care to prevent
◼ The plaintiff employee unreasonably failed to take
advantage of procedures the employer provided
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
Preventing Harassment –
Procedures to have in place…
I. Policy: Have a zero tolerance policy
I. Clear policies that prohibit sexual harassment in the workplace
II. Procedure: Communicate policy
I. Every employee should have a written copy of the policies
II. Policies should be updated to cover new technologies as
they develop.
III. Procedure: Training
I. Implement formal, ongoing training sessions (new hire
orientation, and at least annual training sessions)
II. Encourage employees to report any issues
III. Document all training efforts into personnel files
IV. Employees should sign statements that they have received
the policy and the training – maintained in personnel files
Source: Video – Harassment for Managers A New Look
Policy
Process
Procedures
IV. Procedure: Create a Safe & Respectful Work Environment
IV. Set an example – by following all policies and procedures
V. Ask employees to be on the lookout and report any inappropriate
behavior
VI. Communicate in policy and training how employees can best
report any issues
V. Procedure: Pay Attention to Employee’s Well-being
IV. Watch out for the warning signs that an employee may be
experiencing harassment. These signs include:
IV. Changes in work habits, behaviors or appearance
V. Withdrawal from co-workers
VI. Increased absences
VII. Decrease self-esteem
Preventing Harassment (continued )
Procedures to have in place…
Source: Video – Harassment for Managers A New Look
Policy
Process
Procedures
Procedures: Investigating a
complaint…
◼ Take all complaints seriously
◼ Take action immediately – always
◼ Ask for permission to investigate
◼ Written consent form
◼ If needed, investigate with no consent – you
are liable for ensuring a safe work environment
◼ Do a thorough and fair investigation
◼ Interviews
◼ Documentation! (Separate from personnel file.)
◼ Resolution.. It is illegal for the harasser to retaliate against
the victim!
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
OTHER LAWS YOU NEED TO
UNDERSTAND
Legally Managing Employees
Family and Medical Leave Act -1993
◼ Covered employer:
◼ Government and private sector
◼ Employ 50 or more employees within a 75-mile radius
◼ Covered employees:
◼ Must have worked for the employer for a total of at least 12
months
◼ Must have worked at least 1,250 hours over the previous 12
months
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
Family and Medical Leave Act -1993
(continued)
◼ Employer must grant an eligible employee up to a
total of 12 workweeks of unpaid leave for:
1. The birth of a child, and to care for the newborn child within one year from
birth.
2. The placement with the employee of a child for adoption or foster care, and
to care for the newly placed child within one year of placement.
3. To care for the employee’s spouse, child, or parent who has a serious
health condition.
4. A serious health condition that makes the employee unable to perform the
essential functions of his or her job.
5. Any qualifying exigency arising out of the fact that the employee’s spouse,
son, daughter, or parent is a covered military member on “covered active
duty.” (26 workweeks of leave)
◼ Time may be intermittent
◼ Employer must maintain group health insurance
◼ Upon return employee MUST be restored to original
job or an equivalent one!
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
Uniform Services Employment and
Reemployment Rights Act of 1994
USERRA was designed to protect the employment rights of those
individuals who voluntarily or involuntarily leave their jobs to take part
in military service or other certain types of service in the National
Disaster Medical System, including the Reserves and the National
Guard.
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
Compensation
◼ Generally and subject to conflicting laws, employers can
establish wages and salaries as they see fit.
◼ Equal Pay Act of 1963 – Equal pay must be paid to men
and women for equal work if the jobs they perform require
“equal” skill, effort, responsibility and are performed under
similar working conditions.
◼ Lily Ledbetter Fair Pay Act of 2009
◼ Significantly changed the time frame for filing charges under the Equal Pay Act of 1963 – 180-day statute of
limitation altered if the compensation discrimination situation is ongoing.
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
Fair Labor Standards Act (FLSA)
Compensation
◼ Minimum Wage:
◼ “The least amount of wages an employee covered by the FLSA
or state law may be paid by their employer.”
◼ The federal minimum wage is $7.25 per hour effective July 24,
2009. Many states also have minimum wage laws. In cases
where an employee is subject to both state and federal
minimum wage laws, the employee is entitled to the higher
minimum wage. (Tip Credit $2.13 per hour)
◼ Overtime: Covered nonexempt employees must receive
overtime pay for hours worked over 40 per workweek (any fixed
and regularly recurring period of 168 hours — seven
consecutive 24-hour periods) at a rate not less than one and
one-half times the regular rate of pay. There is no limit on the
number of hours employees 16 years or older may work in any
workweek. The FLSA does not require overtime pay for work on
weekends, holidays, or regular days of rest, unless overtime is
worked on such days.
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
Compensation: Tipped Employees
◼ Legalese:
Tips – A gratuity given in exchange for a
service performed. Literally an acronym
for “to insure prompt service”.
Tip Credit – The amount an employer is
allowed to consider as a supplement to
employer-paid wages in meeting the
requirements of applicable minimum
wage laws.
Income Tax
◼ Income tax:
◼ Employers are required to withhold state and federal
income taxes from the paychecks of nearly all employees.
◼ These taxes are paid by the employee, but collected by the
employer and forwarded to the Internal Revenue Service
and state taxation agency.
◼ The amount which is to be withheld is based on the wage
rate paid to the employee and the number of federal
income tax dependents and deductions the employee has
indicated they are entitled to.
◼ It is important to remember that tips are considered wages
for income tax purposes if they are paid by cash, check, or
credit card, and amount to more than $30.00 per calendar
month.
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
FICA
◼ FICA: Often called Social Security taxes,
the Federal Insurance Contribution Act (FICA)
funds the Social Security and Medicare
programs.
◼ Both employers and employees are required
to contribute to FICA.
◼ FICA taxes must be paid on the employee’s
wages, which include cash wages and the
cash value of all remuneration paid in any
medium other than cash.
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
FUTA
◼ The Federal Unemployment Tax Act
(FUTA) requires employers, but not
employees, to contribute a tax based on the
size of the employer’s total payroll.
◼ Again, it is important to remember that payroll
includes tip income and remuneration paid in
forms other than cash.
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
The Patient Protection and
Affordable Care Act of 2010
◼ Affordable Care Act (ACA) or Obamacare is a
controversial federal law that significantly modified
the U.S. healthcare system by enacting a
comprehensive health insurance reform intended to
increase not only the quality of health care but the
affordability of health care insurance in America.
◼ The federal mandate that requires most Americans
to maintain health insurance is hotly debated.
◼ Changes to the Act have already and are likely to
continue.
MANAGING EMPLOYEE
PERFORMANCE
Legally Managing Employees
Managing Employee Performance
◼ Employee Evaluation – “A review of an
employee’s performance, including strengths
and shortcomings; typically completed by the
employee’s direct supervisor.”
◼ A business must have consistent, nondiscriminatory procedure…
NOTE: If you have already taken HMGT 402 Human Resources
Management you will recall the procedures required
to ensure a fair, legal and ethical system of employee performance
evaluation.
Performance
Review
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
Managing Employee Performance
◼ Discipline:
◼ Must have consistent, non-discriminatory
procedure…i.e. Progressive Discipline
◼ Documentation, Documentation!!!!!
◼ Writing Skills are important!
◼ Progressive Discipline – “An employee
development process that provides increasingly
severe consequences for continued violation of
workplace rules.”
Discipline
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
Progressive Discipline Steps
1. Verbal warning.
2. Documented verbal warning.
3. Written warning.
4. Suspension.
5. Termination.
NOTE: If you have already taken HMGT 402 Human Resources
Management you will recall of the procedures required
to ensure a fair, legal and ethical system of employee discipline.
Discipline
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
Termination…
◼ Wrongful Termination:
◼ A violation, by the employer, of the employment
relationship resulting in the unlawful firing of the
employee.
◼ A termination will be wrongful if it is done….
1. In violation of employee manuals/handbooks.
2. To deny accrued benefits.
3. Because of legitimate illness or absence from work
4. For attempting to unionize co-workers
5. For reporting violations of law…. (Whistle-blower protection act)
6. For belonging to a protected class of workers
7. Without notice (WARN act)
8. If the employee has been verbally promised continued employment
9. In violation of a written employment contract
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
Guidelines for Conducting Defensible
Employee Terminations
1. Conduct and document regular employee evaluations.
2. Develop and enforce written policies and procedures.
3. Prohibit “on the spot” terminations.
4. Develop and utilize a progressive disciplinary system.
5. Review all documentation prior to discharging an
employee.
6. When possible, conduct a termination review and exit
interview.
7. Treat information regarding terminations as
confidential.
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
Policy
Process
Procedures
Dispute Resolution (ADR)
◼ In-house dispute resolution:
“A program, funded by employers, that
encourages the equitable settlement of an
employee’s claim of unfair employment, prior
to or without resorting to litigation.”
Generally – Mediation
Sometimes – Arbitration required
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
Unemployment Claims
◼ Unemployment Insurance:
◼ “A program, funded by employers, that provides
temporary money benefits for employees who have
lost their jobs.”
◼ Unemployment Claim – “A petition, submitted by an
unemployed worker to their state unemployment
agency, that asserts the worker is eligible to receive
unemployment benefits.”
◼ Generally:
◼ Employee quits – not eligible
◼ Terminated for cause – not eligible
◼ Down-sizing, business closes, lay-off – eligible
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
Employment Records & Retention
◼ Know the state and federal laws
◼ What to keep?
◼ How long to keep them?
John Smith
Employee File
Note to students: Understand the general requirements, don’t try to
memorize all the detailed requirements at this point.
Employment Posters
◼ Regulatory agencies require employmentrelated information to be posted where
employees can see it:
◼ Fair Labor Standards Act (FLSA)
◼ Equal Employment Opportunity Commission
(EEOC)
◼ Occupational Safety and Health Administration
(OSHA)
◼ Employee Polygraph Protection Act
◼ Family and Medical Leave Act (FMLA)
Workplace Surveillance
◼ Generally legal for employer to monitor, if:
◼ No expectation of privacy
◼ Provided advance notice
◼ Performed for work-related purpose
◼ Done in a reasonable & none discriminatory manner
◼ Typically monitored:
◼ Lockers
◼ Desks
◼ Bags and purses
◼ Voice mail
◼ Email
Source: Hospitality Law, Managing Legal Issues in the Hospitality Industry, Fifth Edition by Stephen Barth; Published 2017 by John Wiley & Sons, Inc.
