Hotel Industry Sues L.A. over Minimum Wage Law


Hotel industry groups on Tuesday sued the city of Los Angeles in federal court over the city’s enactment of a minimum wage ordinance requiring large non-union hotels to pay their workers $15.37 an hour.

In their lawsuit, the American Hotel & Lodging Association and the Asian-American Hotel Owners Association allege the city ordinance violates federal labor, contract and equal protection laws.

The hotel minimum wage ordinance, which passed the City Council in October on an 11-2 vote, is estimated to cover about 80 large hotels in the city. Starting in July, hotels with more than 300 rooms must pay workers the higher minimum wage; in July 2016 the measure kicks in for hotels with as few as 150 rooms.

In their suit, the groups contend that by allowing exemptions for hotels with union collective bargaining agreements, the ordinance creates an economic disadvantage for non-union hotels, thus forcing their hand to permit union organizing. That, they argue, violates the National Labor Relations Act provision that no state or local law should “regulate or interfere with the existing balance of economic power between labor and management.”

“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,” Katherine Lugar, chief executive of the American Hotel & Lodging Association, said at a press conference at the federal courthouse in downtown Los Angeles..

Ordinance supporters say federal law not only allows for these exemptions, but in essence requires them. James Elmendorf, deputy director for the Los Angeles Alliance for a New Economy – which helped craft the hotel minimum wage ordinance and pushed for its passage – said that in a previous decision, the U.S. Supreme Court recommended that local and state laws and regulations of private businesses contain such exemptions.

“That’s the reason cities across the country, including Los Angeles, often include such language in minimum wage ordinances,” Elmendorf said.

The lawsuit also alleges that by forcing hotels to rewrite wage and salary contracts to contain the new wage level, the ordinance violates the contract clause of the U.S. Constitution, which says states shall not pass laws “impairing the obligation of contracts.”

And, the lawsuit alleges, the ordinance violates the equal protection clause of the U.S. Constitution by singling out the hotel industry. Under the ordinance, food service workers at hotel restaurants must be paid $15.37 an hour, while food service workers at nearby restaurants must only be paid the state minimum wage of $9 an hour.

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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