Workers at five hotels near Los Angeles International Airport (LAX) can now move forward with legal action to collect tips and service fees they allege their employers have withheld over the past three years, an appellate court has ruled.
The California Court of Appeal Second District Sept. 8 reversed the dismissals of class action lawsuits filed by service workers against LAX-area hotels including the Marriott, Hilton Los Angeles Airport, Four Points Sheraton, Radisson and Renaissance Montura.
The employees had first filed lawsuits in Los Angeles Superior Court in September 2007, alleging that the hotels violated a city ordinance requiring them to pass along all service fees automatically charged for large events and room service directly to the service workers. The hotel service charge reform ordinance took effect in January 2007 as part of a package of ordinances for the airport-area hotels on Century Boulevard in Westchester. Also included in that package was a law requiring the hotels to pay their service workers a “living wage.”
In its Sept. 8 decision, the appellate court held that the hotel service charge reform ordinance was not preempted by the California Labor Code provisions regulating gratuities and was not unconstitutional, attorneys for the workers said. The attorneys said they were pleased the workers will be able to proceed with their litigation to recover the service fees owed to more than 1,000 hotel employees.
“We’re very excited to have the opportunity to move forward in collecting service charges the hotels have been wrongfully withholding from their employees,” alleged Randy Renick, an attorney for the airport-area hotel workers.
“We were certain that the L.A. City Council had the authority and the power to pass this ordinance and that the Court of Appeals would recognize the right to do so.”
Renick estimated that the workers are seeking to recover more than $1 million in service charges collected from guests and customers at the five hotels since 2007.
A spokesperson for O’Melveny & Myers, the firm representing some of the hotels named in the lawsuit, said the firm cannot comment on pending litigation. Asked for comment on the appellate court ruling, a general manager for one of the hotels also said the hotels would not respond to pending litigation.
Workers alleged in their original lawsuit that despite the city’s service charge law, the hotels have continued to pocket the fees that they collected on behalf of their employees.
Following the filing of the complaint in September 2007, the council’s Travel, Commerce and Tourism Committee directed the city attorney to make recommendations on how the council could strengthen the penalties provided for in the law. The committee additionally recommended that the city attorney explore requirements that companies found to be in violation should be required to notify customers of their violations and to consider creating enforcement mechanisms to monitor compliance.
The hotels rejected the claims in the employees’ lawsuit at the time, saying that they were in full compliance with the law.
Attorneys for the plaintiffs noted that in recent years, many hotels in Los Angeles have charged hotel guests, particularly those who attend banquets and use room service, mandatory charges of up to 22 percent in addition to the traditional hotel bill for meals and services. In many cases, the hotel customers believe that these service charges are going to the employee who provides the service so they don’t tip the worker, but most hotels pay little or none of the money to the employee, Renick claimed.
“The unfortunate effect of service charges is that the customers think they are paying tips to the employees but in fact most of that money is going to the hotels’ pockets,” the attorney claimed.
Following the original lawsuit filing in 2007, a spokesman for the LAX-area hotels suggested that the litigation was part of an effort by a local union to organize the workers.
Renick expressed confidence that the employees will be successful in collecting the service fees they have missed out on over the past three years.
“The statute is clear; the court has said the employees can move forward and there should be no question that the hotels were improperly withholding the service charges,” the attorney claimed.