Los Angeles Hotels Crying Foul Over Raise in Minimum Wage

Los Angeles, CA It may not apply to the entire state, but jurisdiction notwithstanding, a wage law passed by Los Angeles City Council last year with the view to increasing compensation for City of Los Angeles hotel workers has the hotel industry up in arms. A California labor lawsuit dealing with the issue continues to wind through the courts. At issue, according to the hotel industry, is the applicability of the law when compared with the federal National Labor Relations Act of 1935 (NLRA), and whether or not the Act preempts the city wage ordinance.

Normally, it’s the employees litigating against an employer for nonpayment of wages. In this case, however, hotel workers in Los Angeles are quite happy about the prospect of wages increasing. It was in late September of last year that Los Angeles City Council passed the hotel wage ordinance, giving initial approval to the idea of a minimum wage for the city’s hotel workers exceeding $15 per hour in order to foster a higher living wage for workers in the city’s hotel industry. It’s not that the vote was close - in spite of the hotel industry’s objections over fears of increased costs and a slowdown of hotel development in the city because of the proposed wage increase, the ordinance passed 12-3. The City followed up last month by granting initial approval to a $15-per-hour minimum wage by way of a gradual implementation between now and 2020 for most businesses - not just hotels.

Again, this is just the City of Los Angeles talking, as opposed to the entire state through California labor code. Be that as it may, the hotel industry has cried foul, launching a California labor lawsuit to fight the new wage ordinance. Filed in December, the lawsuit suffered a setback for the litigants last month when US District Judge Andre Birotte Jr. issued an opinion on May 13 that challenged the strength of the defendant’s case for preemption of the City ordinance by the NLRA.

The judge, in his order, questioned if the lawsuit was even motivated by an alleged conflict between municipal law and the NLRA. “A review of plaintiffs’ arguments and evidence...make clear that plaintiffs’ biggest concern with the wage ordinance is that it is bad economic policy,” he wrote. “However, it is not the role of the court to interject into matters of legislative economic policy under the guise of NLRA preemption.”

The plaintiffs, identified as The American Hotel & Lodging Association (AHLA) and the Asian American Hotel Owners Association will appeal the order. Katherine Lugar, the CEO of AHLA, said in a statement issued June 11 that the organization was pursuing the appeal “to protect our member hotels from suffering irreparable harm” as a result of the ordinance.

“We continue to believe the evidence will show that the act improperly disrupts the balance of economic power between labor and management,” Lugar continued. “This imbalance creates unprecedented bargaining leverage for labor, violating the National Labor Relations Act.”

Los Angeles City Council gave final approval to the ordinance on June 10. The plaintiffs announced their appeal a day later. The clock is ticking, as the California labor employment law applicable to only hotels in the City of Los Angeles goes into effect on July 1.