U.S. Department of Labor Announces its Focus on Wage and Hour Compliance in the Hotel and Motel Industry

Submitted by: Darryl G. McCallum

Darryl G. McCallum is a partner with the law firm of Shawe Rosenthal, LLP in Baltimore, MD and is an Allied Member of the Maryland Hotel and Lodging Association.

The U.S. Department of Labor (DOL) recently announced a settlement with DoubleTree Hotel Dallas/Richmond that required the DoubleTree Hotel to pay $102,592 in back wages to 112 hotel employees as the result of the DOL’s investigation into alleged wage and hour violations.  In its press release announcing the settlement, the DOL stated that its investigation found that the hotel (1) failed to compensate employees for work allegedly performed “off the clock” (i.e., prior to or beyond scheduled shift periods), (2) took wage deductions for lunch breaks whether or not workers took a lunch period, (3) paid “straight” time for all hours worked rather than time and one half of the employees’ regular rates for all hours worked over 40 per week, (4) improperly classified non-exempt employees as exempt from overtime, (5) improperly rounded time worked on the clock and (6) failed to properly calculate overtime pay by taking into account bonuses earned by the employees in determining their regular rate.  In addition to these violations, the DOL noted that the hotel failed to keep accurate records of all hours worked by their employees. Significantly, in announcing the settlement, the DOL made the following statement regarding the hotel industry as a whole: The hotel and motel industry employs many low-wage workers who, due to a lack of knowledge of the law or an unwillingness to exercise their rights, are vulnerable to disparate treatment and labor violations. The Wage and Hour Division is concerned about the severity of noncompliance in this industry and is concentrating its resources on identifying and remedying violations, informing workers of their rights and providing compliance assistance to employers. Since 2009, the division has conducted more than 3,800 investigations of hotel and motel employers, resulting in more than $11.6 million in back wages recovered for more than 22,000 workers nationwide. U.S. Department of Labor, Press Release No. 12-1524-DAL (November 14, 2012), www.dol.gov/whd/media/press/whdpressVB3 (emphasis added).

Thus, given the Department of Labor’s focus on wage and hour compliance in the hotel industry, hospitality employers would do well now to self audit their compliance with wage and hour and other applicable employment laws.  Such an audit should include a review of policies with respect to, for example, classification of employees as exempt or non-exempt, calculating and paying overtime, timekeeping practices, hiring practices, I-9 (employment eligibility verification) compliance, and record retention, in order to make sure such policies are in compliance with applicable law.  Employers should also consider hiring counsel to perform the audit in an effort to maintain attorney-client privilege with respect to the conclusions of the audit.

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