Duff on Hospitality Law

The Federal Communications Commission announced on February 20, 2013, that it intends to propose new rules to govern the next generation of Wi-Fi technology. This is an important development for convention centers, large hotel/conference facilities, airports and any other facility that struggles with Wi-Fi congestion because of the insatiable appetite of high-volume wireless users. The FCC’s proposal will include making spectrum available in the 5 GHz band for ultra-high-speed, high-capacity Wi-Fi known as “Gigabit Wi-Fi”.

The success of our hospitality practice through the years has relied on the skills and experience of a number of industry consultants and advisors. John Hutson of the Seattle office of Navigant Consulting is one of those advisors. John is an Associate Director in Navigant's Dispute, Investigation & Economics practice. John has a deep specialization in the hospitality industry and regularly speaks on hospitality damage valuation issues across the country. In light of John's upcoming business interruption presentation at the Hospitality Law Conference, we asked John to provide an update on damage valuation in the industry. In his post, John discusses how insurance companies are attempting to redefine and reinterpret “suspension of operations” for hospitality firms. Thank you John for your many contributions.

Many companies have heard all the chatter about the changes to the healthcare system under the Affordable Care Act, but really haven’t had the time to figure out what the changes mean to them as an employer. After all, something entitled the “Affordable Care Act” should really just focus on dealing with the out of control costs of medicine and healthcare, right? Oh, if only it were that simple.

One of the biggest issues in healthcare is simply that many people can’t afford the cost of insurance. Additionally, a number of employers do not provide insurance benefits as a part of employment. The ACA attempts to address this problem. Of course, this is not the only issue addressed under the ACA, but for employers, it is one of the major concerns.

The ACA obligations on employers are implemented in stages. The first obligation is already in effect. This requires employers who provide “applicable employer sponsored coverage” to report the aggregate cost of the employer sponsored coverage on an employee’s Form W-2 for the 2012 year. This means the Form W-2 that is issued in January for the prior year, should reflect the cost of coverage under any group health plan made available to the employee by the employer, and which cost is excludable from the employee’s gross income, or would be excludable if it were employer provided coverage. The reportable premium is not impacted by whether the employer or employee bears the cost of the premium. There is a special rule for self-insured plans. If you have a self-insured plan, you should seek guidance on the proper calculations of the applicable premiums. If an employer is required to file fewer than 250 Form W-2s, then they are not subject to this reporting requirement. More information on this requirement can be found in IRS Notice 2012-9. (Specifically, starting on page 6.)

Last week saw another Americas Lodging Investment Summit come and go. Over the course of 3 days, nearly 2500 lodging owners, operators, investors, consultants and other industry members descended on host hotel JW Marriott and the surrounding LA Live attractions. The 2500 attendees were the third highest in ALIS history, nearing the peak achieved back in 2006 and 2007 prior to the recession.

From the many attendees I spoke with during the course of the Conference, I’d describe the mood of most attendees as incredibly optimistic. With operating fundamentals expected to continue to improve in 2013 and beyond (more on this later) and supply growth expected to stay below the industry’s 30-year average, there was much to celebrate. From the discussions I had, many owners and operators are looking at 2013 as a year of incredible growth.

While I usually don’t make many of the sessions while at the Conference, the one session I try to make each year is the annual industry forecast. This year’s forecast entitled, “The Numbers – Where Are We Now and Where Are We Headed?” featured presentations by Randy Smith (Smith Travel Research), Mark Woodworth (PKF Consulting), Art Adler (Jones Lang LaSalle) and Adam Weissenberg (Deloitte & Touche). Highlights from Randy Smith’s presentation included . . .

• • Since 2010, U.S. lodging demand has increased at an annual rate of 15.7%
  • December 2012 set a new U.S. lodging demand record – 91.7 million guest rooms
  • It has taken approximately 5 ½ years to restore U.S. ADRs from the peak achieved in 2007

First-time contributor and resident litigation expert, Don Scaramastra, has offered to update the status of the much discussed class-action involving online distributors and certain hotel operators, and to discuss antitrust laws related to online distribution. Thank you Don for this informative piece.

On December 11, 2012, the federal Panel on Multi-District Litigation ordered the consolidation of class-action lawsuits alleging that online travel agents and certain hotel chains conspired to impose a resale price maintenance scheme that fixed the retail price for hotel room reservations in violation of federal and state antitrust laws. The MDL Panel ordered these lawsuits to proceed in the U.S. District Court for the Northern District of Texas. Since last summer, over 20 such lawsuits have been filed. This outcome appears to be good news for the defendants, all of whom advocated for the transfer and consolidation of these cases to that district.

You might be wondering what these lawsuits are all about, what “resale price maintenance” (or “RPM”) is, and what the antitrust laws have to say about it.

RPM is the practice in which a seller and buyer at one link in a distribution chain agree on the minimum price that the buyer may turn around and resell the product.

RPM has something of a storied history in antitrust law. Under federal antitrust laws, RPM was deemed unlawful just over a century ago. But in the 1930s, Congress enacted a partial “fair trade” exemption from liability. Four decades later, Congress repealed the exemption, returning RPM to its former illegal status. And finally, five years ago, in Leegin Creative Leather Products v. PSKS, Inc., the Supreme Court declared that not all RPM agreements were illegal, only those that imposed an “unreasonable” restraint on trade. And that is where things stand today.

If you are a regular reader of Duff on Hospitality, you are well aware of the recent battle between the U.S. Department of Justice (DOJ), which enforces the Americans With Disabilities Act (ADA), and hospitality owners and trade associations over swimming pool accessibility regulations (see previous posts here and here). With DOJ’s twice-extended deadline for compliance right around the corner on January 31, 2013, and industry-backed legislation dead in Congress committees, pool owners need to focus on compliance with DOJ’s requirements immediately, if they have not already. Mike Brunet, a partner in our Seattle office's labor and employment group and member of our Hospitality Practice Team, has prepared this post to help readers understand the requirements and nuances of the new law. Please feel free to contact Mike Brunet directly if you have any questions.

What are the DOJ requirements?

Under DOJ’s interpretation of the applicable regulations on swimming pool accessibility, owners of pools or spas open to the public must, if “readily achievable” (more on this below), provide at least one accessible means of entry to small swimming pools, which must either be a sloped entry or a pool lift. Larger swimming pools (with more than 300 linear feet of wall) must have two accessible means of entry, one of which must be a sloped entry or a pool lift. Each pool or spa on the property (with a minor exception for clustered spas) must have a separate accessible means of entry. If the means of entry is a pool lift, which is the most popular choice given its cost relative to other means of entry, it must be affixed to the pool deck or apron in some manner, and must be in place and ready for use (including charged batteries, if using a battery-powered lift) during all hours that the pool or spa is open for use.

On November 6, Washington voters passed Initiative 502 related to the decriminalization of marijuana under state law. We understand that you may have questions about how this new law affects the enforcement of your employment policies including drug free workplace and drug testing policies.

Now that the election is over and we know who’s running the country for the next few years, is it too much to think that we might get some kind of comprehensive immigration reform? It seems that the time is right for a big change. Presidents Bush and Obama were not successful in getting Congress to take action. President Obama recently instituted some controversial but popular reforms on his own without waiting for Congress. The fact that those actions may have helped him get re-elected has not gone unnoticed by Congressional representatives, who are likely to take action. But the question is when.

The federal government does not move at the speed of business. So it’s important to plan based on current law, not on what might get through Congress next year or even later. The legislative process can take months, and laws enacted won’t go into effect until even later, after regulations have been drafted and vetted. It’s important to understand your current options and the timelines associated with them while you urge Congress to fix the broken immigration system in the future.

Here are some ideas about options the hospitality industry can expect to have available for 2013. The letter and number designations in the sections below are the government’s codes for particular employment-based classifications.

TN Status:  Canadians and Mexicans in some professions can get employment authorization quickly

The North American Free Trade Agreement (NAFTA) provides options for quick (often approved on-the-spot in less than an hour), inexpensive (as little as $50 in government fees), and long-lasting employment (up to three years at a time) of citizens of Canada or Mexico. The candidate must satisfy the minimally-described educational requirements for a limited group of professions, such as accountant, computer systems analyst and hotel manager. Management consultants are also possible, but don’t call someone a consultant just because there isn’t a NAFTA profession for the service you need.

Portland’s City Council may follow San Francisco and Seattle and soon enact an ordinance that would require all employees in the city limits to earn paid sick leave. The City Council could vote on an ordinance mandating paid sick days as early as the end of the year.

Seattle’s paid sick leave ordinance only went into effect September 1st, after lengthy negotiations to revise the original ordinance to make it workable for Seattle businesses. Seattle’s ordinance requires nearly all private-sector employers to provide employees who work in Seattle with specified amounts of accrued paid sick and safe time; employers with 4 to 250 employees are required to provide one hour of sick leave for every 40 hours an employee works. San Francisco’s paid sick leave ordinance has been in effect for about 5 years. There, workers accrue an hour of sick leave for every 30 hours worked, up to 5 paid sick days per year at smaller workplaces with fewer than 10 employees and up to 9 paid sick days per year at larger workplaces. A study in San Francisco by the Institute for Women’s Policy Research found that since the enactment of San Francisco’s paid sick leave ordinance, the average worker takes 3 sick days per year. Tipped employees take an average of 2 days off and return to work sooner because their paid leave cannot make up for lost tip revenue.

The U.S. Green Building Council is currently accepting public comments until December 10, 2012, on its draft of LEED v4 that will aim to establish LEED certification for the hospitality industry. This post discusses a few of the categories that will be considered for applicants seeking to obtain LEED certification for hotels.

LEED (Leadership in Energy and Environmental Design) is a voluntary, consensus-based, market­-driven program that provides third-party verification of green buildings. For commercial buildings and neighborhoods, to earn LEED certification requires that a project must satisfy all LEED prerequisites and earn a minimum 40 points on a 110-point LEED rating system scale. The main credit categories are sustainable sites, water efficiency credits, energy and atmosphere credits, materials and resource credits, and indoor environmental quality credits.

Here is a brief overview of some of the credits that are proposed for the hospitality industry, as well data centers, retail, and healthcare uses. Although LEED v4 does apply to renovation projects, the categories summarized here do not directly address renovation work.