Securing Complete Vindication in WHD Investigation of Hotel Client’s Pay Practices
Epstein Becker Green recently achieved a significant and favorable result for a hotel client. Within days of our client temporarily closing its hotel in the Midwest due to COVID-19, the U.S. Department of Labor’s Wage and Hour Division (“WHD”) notified our client that it was commencing an investigation of the closed hotel’s pay practices. Paul DeCamp (who used to run the WHD) worked with the investigator to narrow substantially the information our client needed to produce, while taking steps to guard against the scope of the investigation broadening to reach any of our client’s more than two dozen other domestic properties. After reviewing time and pay records for hundreds of workers, the WHD wrapped up the investigation in under two months, concluding that our client owed nothing in back wages or penalties.
An investigation at a hospitality establishment resulting in a finding of no minimum wage or overtime violations is exceedingly rare. For an industry already under tremendous pressure due to near-total business disruption caused by COVID-19, investigations such as this one cannot come at a worse time. However, achieving a complete vindication in our case in spite of the challenges created by the pandemic made the outcome all the more satisfying for our client and Epstein Becker Green.
Shaping the Law Through Litigation and Government Relations
Epstein Becker Green’s capability to shape the law through litigation as well as government relations has proven to be of great benefit to our clients. For instance, we recently achieved a major win for the National Restaurant Association and several state restaurant and hospitality associations in a litigation matter involving U.S. Department of Labor (DOL) sub-regulatory guidance known as the “80/20 rule.”
The 80/20 rule prohibits employers from paying a tipped minimum wage to workers whose untipped side work—such as wiping tables—accounted for more than 20 percent of their time. In recent years, class actions against restaurants have flooded courts across the nation, all contending that the restaurants owe the tipped employees extra money because of the 80/20 rule.
In July 2018, Epstein Becker Green, on behalf of the Restaurant Law Center (the litigation arm of the National Restaurant Association), filed a declaratory judgment action against the DOL in a federal court in Texas challenging the validity of the 80/20 rule under the Fair Labor Standards Act (FLSA), the Administrative Procedure Act, and the U.S. Constitution. In the midst of our federal court challenge, on November 8, 2018, the DOL issued an opinion letter reversing its position, withdrawing the sub-regulatory guidance at issue in the lawsuit, and clarifying that employers may use the tip credit provisions of the FLSA without being subject to the onerous requirements that the DOL had imposed in recent years. This policy reversal undermined or effectively ended many FLSA lawsuits that the National Restaurant Association and other restaurant industry clients collectively faced across the country.
Epstein Becker Green attorney Paul DeCamp played a leading role in the litigation opposing the 80/20 rule.