$550,000 in Back Wages and Penalties to be Paid by Two Employers Jointly for FLSA Violations

Friday, January 20, 2017

A hotel management company and the company which supplied employees to nine of its New York City hotels have agreed to resolve an investigation by the U.S. Department of Labor’s Wage and Hour Division that found violations of the minimum wage, overtime and recordkeeping requirements of the Fair Labor Standards Act.

The hotels’ management company – Hersha Hospitality Management LP – and Labor for Hire and related companies, which provide employees to work at the hotels, have agreed to take extensive remedial measures designed to ensure future FLSA compliance. In addition, the company that provided the workers has agreed to pay $275,000 in back wages and an equal amount in liquidated damages to more than 600 employees.

HHM is one of the nation’s leading hotel management investment and development companies, providing operational support, revenue management and guest service support – for more than 125 hotels in 20 states. It is headquartered in Harrisburg, Pennsylvania. Labor for Hire is based in Brooklyn. The division determined that under the FLSA, these companies are considered to have jointly employed the workers supplied by Labor for Hire for the nine HHM-managed hotels.

The division found instances where the companies:

-Misclassified some workers as independent contractors rather than employees.
-Failed to pay some employees for hours spent in training.
-Failed to pay some employees overtime for weeks when they worked more than 40 hours, including paying room attendants on a per-room basis without any overtime premium.
-Failed to make and keep adequate records of employees’ daily and weekly hours of work, or their regular or overtime rates of pay.

As part of the resolution of this case, HHM agrees to take the following actions at all HHM-managed hotels across the nation:

-Ensure that contracts with staffing agencies servicing HHM-managed hotels include provisions requiring compliance with the FLSA.
-Designate a corporate compliance officer, who will oversee a confidential employee complaint hotline and investigate and resolve complaints of wage violations and
-Train managerial employees who work at HHM-managed hotels on topics including how to properly keep time records, how to compute the hours worked by hotel workers, how to calculate and record breaks and meal periods, and on the rights of workers to engage in activities protected by the FLSA without fear of retaliation. 
-In addition, at the nine hotels covered by the investigation, HHM agrees to conduct regular audits of pay records, investigate and resolve violations, and decline to renew contracts with non-compliant staffing agencies.

LFH has signed a separate compliance agreement that, in addition to requiring the payment of back wages and liquidated damages, commits the labor provider to:

Include a written provision in all contracts with all entities to which they provide workers specifically requiring that those employers comply with all applicable laws, rules and regulations, including but not limited to the FLSA.

-Ensure that all of LFH’s managerial employees are familiar specifically with all applicable laws, rules, and regulations regarding waiting time, rest and meal periods and paying employees on a piece-rate basis.
-Train all newly hired or newly promoted managerial employees on the same topics within 30 days of their employment start date.
-Provide each LFH employee with a copy of the FLSA Basic Information Sheet, in English, Spanish and Russian. 

Labor for Hire provided room attendants, housekeepers, supervisors, housemen, stewards, engineers, engineer helpers, maintenance workers, laundry workers, kitchen helpers, dishwashers, cooks, servers, bussers, hostesses, front desk staff, and maintenance workers, among other positions to work at HHM hotels.

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