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Paul Zimmerman

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No Relief in Sight: Ninth Circuit Refuses to Block LA Hotel Minimum Wage Ordinance

Unfortunately for Los Angeles hotel owners, the Ninth Circuit has affirmed a lower court’s refusal to block the Los Angeles Citywide Hotel Worker Minimum Wage Ordinance (Hotel Ordinance) which, among other things, raises the City’s hourly minimum wage for hotel workers to $15.37.  The unanimous ruling by a three-judge panel affirms a May 2015 decision to deny preliminary injunctive relief to hotel industry groups American Hotel & Lodging Association (AH&LA) and the Asian American Hotel Owners Association (AAHOA). The groups appealed to the Ninth Circuit, claiming that the ordinance interferes with labor—management relations and is thus pre-empted by federal labor law. For hotel properties that have been clamoring to comply with this union-backed ordinance since its passage in 2014, this decision deals a further blow to their business model, and means that full legal compliance is now an absolute necessity.

The Court of Appeals held that the new standard is not preempted by the federal National Labor Relations Act, explaining that "The district court did not err in finding the wage ordinance to be the kind of minimum labor standard that falls within the ambit of state power. By providing a basic minimum wage and time-off compensation, the wage ordinance alters the backdrop of negotiations, not the mechanics of collective bargaining. Its many provisions, including the opt-out for collective bargaining, are valid. As such, the wage ordinance is not preempted."

The appellants vigorously disagreed with the Court’s conclusion. As Chip Rogers, President of AAHOA, noted, “The entire law is an affront to fairness and equality. Not only does it discriminate against hotels, it requires employees at various hotels to be treated differently under the law, depending on their employer’s collective bargaining status."

The Hotel Ordinance went into effect for hotels with more than 300 rooms on July 1, 2015. For hotels with 150 or more rooms, the law recently took effect on July 1, 2016. In addition to an increase in the minimum wage for hotel workers in Los Angeles, the Ordinance also requires hotel employers to provide hotel workers with extensive paid time off as well as unpaid time off. When viewed in its totality, the ordinance forces hotel owners to completely re-calibrate their approach to wage and hour and leave issues.

M&R is closely tracking all developments related to the Hotel Ordinance and counseling hotel properties on how to achieve full compliance while supporting their underlying business objectives. In the wake of the Ninth Circuit’s decision, it is even more imperative that hotels move toward full compliance without delay. Los Angeles hotel executives have unfortunately been placed in a position where they must completely revisit their employee benefits models, financial benchmarks and future sustainability. We will periodically report on the latest news and information regarding the Hotel Ordinance but, in the meantime, we encourage you to peruse what we have previously written on the subject:

How Can My Property Comply With All These New Minimum Wage & Sick Leave Laws?

TIME OFF: LA Hotel Worker Ordinance is About More Than Just Wages

In Rush to Comply With Minimum Wage Ordinance, Remember Your Vendors

Looming Pay Hikes, Unions and Enforcement: A Primer on LA’s Increased Minimum Hotel Wage

Sound and Savvy Operational Solutions to Offsetting the Increased Minimum Hotel Wage

Q&A: Los Angeles’ Hotel Minimum Wage

This blog post is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.