Hotel Industry Groups Sue Los Angeles To Block $15.37 Minimum Wage Law

Daily Labor Report® is the objective resource the nation’s foremost labor and employment professionals read and rely on, providing reliable, analytical coverage of top labor and employment...

By David McAfee

Dec. 17 — Lodging industry organizations sued Los Angeles in federal court in California Dec. 16, seeking to challenge a city ordinance passed in October that increases the minimum wage at large hotels to $15.37 per hour.

The American Hotel & Lodging Association and the Asian American Hotel Owners Association said the Citywide Hotel Worker Minimum Wage Ordinance, which was codified in October, “attempts to exercise power beyond the limits of the City's authority.” The Hotel Workers Act applies to hotels in Los Angeles with more than 150 guest rooms or suites.

The plaintiffs hope to invalidate the ordinance and keep the city from enforcing its provisions. The act, they say, “fundamentally changes the dynamic between labor and affected employers.”

“For over 50 years, there has been consensus that a single set of rules governing labor relations is good for the long-term best interests of management, unions and workers,” Katherine Lugar, president and chief executive officer of the AHLA said during a Dec. 16 press conference. “However, the city's ordinance is clearly designed to put a thumb on the scale in favor of labor and disrupts the careful balance between labor and management.”

Lugar also said the organizations and local hotel owners did not take lightly the decision to file a lawsuit. Through its ordinance, Los Angeles “disrupted long-established federal labor law,” she told Bloomberg BNA Dec. 17.

Council Passed Ordinance in Fall

The Los Angeles City Council tentatively approved the Hotel Workers Act in late September. The council voted 12-3 to approve the ordinance and require large hotels to pay workers a minimum of $15.37 per hour.

“The Hotel Workers Act has as its purpose and/or as its foreseeable and ineluctable effect substantial interferences with labor relations, collective bargaining, and union organizing within the hotel industry of the City of Los Angeles,” attorneys for the hotel groups wrote in the complaint.

The groups draw particular attention to the ordinance's exemption for collective bargaining agreements, which they say empowers unions. The groups say this gives unions substantially more leverage to get concessions from hotel management during bargaining negotiations. The exemption “violates fundamental precepts of U.S. labor law and policy,” the groups said.

The ordinance masquerades as a wage initiative for the hotel industry but is actually a means to “fundamentally change the dynamic between labor and affected employers,” they said.

“Under the guise of an ordinance purported to require that a ‘fair wage’ be paid to hotel workers, the City has constructed an insidious mechanism that improperly aids the Hotel Workers' Union in its efforts to organize employees at all of the City's hotels that have until now resisted unionization,” the plaintiffs said in a Dec. 17 statement.

“This type of local regulation infringes on Congress' decision to leave the resolution of certain labor-management disputes to the free play of economic forces.”

Similar Lawsuits Have Failed

James Elmendorf, deputy director of the Los Angeles Alliance for a New Economy, called the lawsuit “disappointing.” The plaintiffs' arguments have failed in earlier, similar lawsuits, he said.

“It's disappointing, but no surprise, that hotels have yet again decided to spend their money on lawyers to sue to block a minimum wage rather than simply pay decent wages,” Elmendorf told Bloomberg BNA in a Dec. 17 e-mail. “Their legal arguments are the same ones that have failed in past lawsuits, and we are confident courts will again stand with cities that seek to raise wages of low wage workers.”

Other worker advocates also pointed out similarities between the current lawsuit and litigation brought by hotels in the past.

Ada Briceno, secretary-treasurer of UNITE HERE Local 11, said certain hotels sued Los Angeles after a living wage ordinance was put into place for the 12 hotels in the Century Boulevard corridor. “The city prevailed,” she said.

In that case, legislation that went into effect in July 2008 required the hotels along the corridor to pay employees at least $11.13 per hour without health insurance or $9.88 hourly plus $1.25 for health insurance, according to the alliance's website.

Briceno also highlighted the importance of increased wages for hotel workers.

“Hospitality is LA's biggest low-wage industry, with the most working poor,” Briceno told Bloomberg BNA in a Dec. 17 e-mail. “The LA City Council took a powerful step toward improving Angelenos' lives. It's a shame some hotel owners would rather spend money on lawyers than paying hard-working employees a decent wage.”

Representatives for the city of Los Angeles didn't immediately return Bloomberg BNA's requests for comment Dec. 17.

The plaintiffs are represented by Kristina S. Azlin, John A. Canale and Michael Starr of Holland & Knight LLP.

To contact the reporter on this story: David McAfee in Los Angeles at dmcafee@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

Text of the complaint is available at http://op.bna.com/dlrcases.nsf/r?Open=cscz-9rvucq.