Now is the Time to Audit your Company’s Wage/Hour Policies and Practices

-"The mission of the California Lodging Industry Association is to promote, protect and advance the interests of lodging owners and their management teams statewide, and to provide a network of resources to support member efficiency, profitability and professionalism.”-

May 24, 2023

Be Prepared for an Unhelpful California Supreme Court PAGA Decision

by John A. Mavros

I. Be Prepared for an Unhelpful California Supreme Court PAGA Decision – Over the past several years, employers have been inundated with Private Attorneys General Act (“PAGA”) lawsuits threatening collective action and seeking hundreds of thousands of dollars (or more) in penalties for wage and hour violations. In Viking River, the US Supreme Court handed employers a big win, holding that arbitration agreements can be used to compel PAGA actions into individual arbitration. Further, the Court said that any remaining “non-individual” PAGA action could be dismissed for lack of standing. However, the California Supreme Court could hold in Adolph v. Uber that an employee does NOT lose standing even if the employee’s individual PAGA claim is compelled to arbitration. A decision is expected in the next 3 months or so. If the CA Supreme Court rules against Uber, I expect to see a wave of PAGA claims. Now is the time to audit your company’s wage/hour policies and practices. You don’t want to learn of a problem after getting a PAGA letter from a disgruntled employee’s attorney. Here’s a short checklist of wage and hour items to look at:

1. Update employee handbook and all wage/hour policies

2. Evaluate timekeeping practices; i.e., accurate tracking; avoid rounding; prohibit off the clock work; avoid policies that forbid overtime; appropriate employee sign-off language on time-cards.

3. Provide meal periods as required and track the same; do not combine meal and rest periods.

4. Pay meal and rest period premiums, where appropriate.

5. Classify employees properly; i.e. exempt “managers” who do not really perform exempt tasks should be re-classified

6. Calculate overtime appropriately – include all compensation in the regular rate for purposes of overtime, including any commissions/bonus pay

7. Reimburse employees for any required (or known) personal cell phone use for business reasons.

8. Pay California sick leave at the appropriate rate.

II. Strict Provisions of the “Irvine Hotel Worker Protection Ordinance” Go Into Effect May 21 – For all my Irvine hotel clients, a recent Ordinance deserves your immediate attention. You can read my Fisher Phillips Insight here, but in short, the sections governing room attendant workload limitations and square footage quotas are set to take effect on May 21. Other important requirements, such as having to provide personal security devices kicked in late last year. The Irvine Ordinance is modeled after the Los Angeles Hotel Worker Protection Ordinance. Note that other large cities like Anaheim are proposing/evaluating similar measures.

Welcome to Hotel Netflix?

Consumers Are Used to Highly Personalized Experiences and Hotels Should Adapt

By Philip Schaetz

Today's modern guests don't just want to make a reservation.

They want their preferences, interests and needs to be understood by "their brands." They are used to this from brands such as Netflix with its personalized user interface, as well as from Amazon or Starbucks.

Forbes even claims that guests are willing to pay a premium if the value of an experience is considered unique. Accordingly, brands that have recognized this achieve an additional profit of 10% to 30%.

Attitude vs. Attribute

Attribute-based selling is the idea that instead of selling hotel rooms by room category, guests can take a "pick-and-mix" approach to control their own purchase paths.

The technology transformation we have embarked upon is driven by customers longing to have personalized offers, being spoiled by the retail industry. However, today’s bookings systems still require guests to book a room before purchasing something else, or not a room at all. To achieve a personalized purchasing journey, intelligent retailing removes the dependency to book a room first, and enable the guest to book anything in any order. This includes a typical hotel room to be broken down in those selling features that create it.

PwC: US Hospitality Directions: May 2023

By PwC Hospitality Directions

Increasing economic headwinds to impact hotel performance for balance of this year and into 2024

Despite worries of recession, bank failures, and a liquidity crisis affecting the macro economy, US hotels continue to outperform expectations. In Q1 2023, US hotels exceeded Q1 2019 (pre-pandemic) RevPAR levels by 13.0 percent, based on data from STR. Room rates continue to be the primary driver in this performance recovery. While occupancy in Q1 2023 was still down 2.1 points from the same period in 2019, ADR increased 17.0 percent. Leisure travel continues to be strong, even though growth levels are slowing, and individual business travel and group business have slowly re-emerged, contributing more significantly to future growth expectations.

The Fed’s continued increases in its policy rate, the failure of three banks, and a liquidity crisis has caused greater uncertainty in the public markets, which is expected to have a downstream impact on hotel demand for the remainder of this year and into next. We now expect annual occupancy for US hotels this year to increase slightly less than in our November 2022 outlook, increasing to 63.4 percent. With slowing growth in occupancies for the balance of this year, we now expect average daily room rates to increase 4.1 percent for the year, with resultant RevPAR up 5.5 percent – approximately 114 percent of pre-pandemic levels, on a nominal dollar basis.

“While US hotels have continued to outperform expectations, recent bank failures, a liquidity crisis and rapidly slowing economy are expected to have a downstream impact on hotel performance for the balance of this year and into next.”

Warren Marr, US Hospitality & Leisure Managing Director

Hotel Marketing Podcast:

Everything A Hotelier Needs to Know About Google SERP Updates and Magi Release

What is Project Magi?

Project Magi is Google’s name for their AI integration programs in search. This includes both the capabilities of Bard, but also a suite of changes to how the user interacts with the search engine as well as the results pages.

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