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  • HFTP Research Report: Pre-opening Expenditures in Hospitality

    A study of the pre-opening budget; the timeline for these expenditures; timeline for onboarding of staff; and the selection, installation and training of the technology component. By Agnes DeFranco, Ed.

  • New Global Directors Join the 2018-2019 HFTP Board

    The HFTP 2018-2019 Global Board of Directors was installed during the association's 2018 Annual Convention and introduces new directors Toni Bau, Carson Booth, CHTP and Mark Fancourt. These extensive director profiles give insight into the distinguished professions and personal goals of HFTP's newest association leaders.

  • Internal Controls and the Important Roles They Play in Eradicating Fraud

    Although I have been preoccupied with getting in the education sessions purely related to hospitality finance, technologies and hotel pre-opening, I made sure to participate in Fun with Fraud and Enchanting Employee Embezzlement in Clubs and Hotels presented by Jerry Trieber, CPA, CHAE, CFE, CFF, CGMA, HFTP Global past president and director of audit services/support at HEI Hotels and Resorts.

  • Members Only: 2018 HFTP Compensation and Benefits Report

    By Tanya Venegas, MBA, MHM, CHIA. Results to the biannual survey conducted by Hospitality Financial and Technology Professionals (HFTP). Information includes data on compensation and benefits trends for finance and technology professionals in the club and lodging industries.

Panic Buttons: What hotel owners need to know about unions and new ordinance in Long Beach, CA

Hotel Law Blog | By Jim Butler·21 February 2019
Voters in Long Beach, California passed an initiative in November 2018 that affects all hotels in Long Beach with more than 50 hotel rooms. The Hotel Workplace Requirements and Restrictions Initiative Ordinance, known as the “Panic Button Initiative” places new requirements and restrictions on hotel owners and puts non-union hotels at a disadvantage.

Why Retail Owners Are Partnering With Hotels

JMBM ·14 February 2019
Recently, my partner, Guy Maisnik, and I spoke about hotel retail mixed-use development with Kelsi Maree Borland of GlobeSt.com. Her article, Why Retail Owners Are Partnering With Hotels ran with the subtitle, With retail evolving to be more experience-driven, retail owners are finding the benefits of adding boutique hotels to shopping centers.Retailers adding hotels to the mix is nothing new - but they may be more motivated than ever. The Hotel Law Blog has been covering hotel mixed-use projects -- where the hotel provides the catalyst for social activity at shopping centers, office complexes, and residential buildings -- since 2009. At that time, retail sales were suffering due to the Great Recession.From GlobeSt.com:"The Great Recession taught retailers that the old mantra was dead", says Maisnik. "'If you build it, they will come' may work in the movies but not for increasing retail sales. There were just too many stores and they were boring, outmoded and couldn't attract shoppers. The drivers for adding hotels to retail projects have not changed in the last 10 years but the force of the drivers and their impact has increased tremendously. Failure to adopt and grow to meet consumers' desires can be the death knell for retailers."Add to this the spectacular growth of online sales, which accounted for 19.1% of total retail sales in 2018, and it is no wonder that brick-and-mortar retailers are hurting. Some, like Sears and JC Penney are scrambling for survival.From GlobeSt.com:"To survive the challenges from online retailing, brick and mortar retail will need to create exciting environments for consumers, where art, music, events, convenience and lifestyle provide a magnet for consumers. Properly done, hotels can be an important part of creating this magic, but hotels provide new levels of complexity in mixed-use projects with their own unique norms, customs, and players." Jim ButlerWhat retail properties are good candidates for a hotel, and what should owners interested in including a hotel look for?To create a great mixed-use project, each component of the project must be strong and must be tested against the fundamentals for that type of real estate use. Just as retail developers go through their checklists to determine what will make a great retail center, if there is to be a hotel, office, entertainment, or residential component, each piece of the puzzle must be tested against its own unique criteria for success. This is particularly true for hotels which need demand, and require a rigorous feasibility analysis.A struggling retail project is almost always a bad candidate for hotel mixed-use. A potentially strong retail project is the first threshold to pass before adding a hotel or any other property type. And when you have the elements for success for the right individual components, you then need a team with the experience to bring them all together to harmonize and maximize the legal and business structure, design, development and operations.If there are good fundamentals for the component parts, experience demonstrates that adding a hotel element to retail can be synergistic at many points in the spectrum from luxury to lifestyle to midmarket. High-end luxury hotels have been very successful components for high-end malls. Boutique and lifestyle hotels have been extremely successful in hotel-retail mixed-use. And midmarket, select service hotels have been strong additions to close out malls or midmarket centers.How can retail owners create synergy between the retail portion and the hotel?Creating synergy with hotels and retail is like making great jazz music. It takes good equipment, technically excellent musicians and a certain amount of "magic inspiration" that brings it all together and makes it work.Synergy is not created by plopping a hotel into a bunch of retail stores. It takes a lot of experience to provide both the technical and the artistic inspiration that makes it all work.To adapt the basic rule of real estate, the 3 most important things for a successful hotel-retail project are experience, experience and experience. You want an experienced team in evaluating, structuring, designing, building, and operating each component of your project.If you don't have the experience, hire the best people you can find to fill in the gaps. You want the most active players who bring technical expertise, innovation and creativity. You want people who are used to dealing with their own class of real estate and integrating multiple classes in a mixed-use project with hotel and retail. You need people who understand the business and legal interaction of multiple uses, changing parking and marketing dynamics, impact of activities on lease provisions, carve outs from exclusivity provisions, and flexibility for project promotion by component parts.From GlobeSt.com:"Hotels are a unique and important addition [to shopping centers] that can be the spark plug of energy, hallmark art and design, the comfortable meeting place, and a temporary home for 200 to 500 credit cards a day for the retailers and project components," said Jim Butler.What's in it for hotels?Past studies have shown that the hotel component in a hotel-retail mixed-use environment receives a 30% to 40% premium in revenue per available room (RevPAR) over comparable hotels in the competitive set. But achieving those kinds of results requires careful planning and the right advisors. The hotel and retail worlds are very different. The relationship between the shopping center and the hotel is complex and needs to be structured so both can benefit.For more information on hotel mixed-use development, see:The 10 biggest mistakes shopping centers make when adding a hotelHotel-retail mixed-use: A wave of new hotel development is beginning to swellHotel-Retail mixed-use: hospitality industry trend for 2013.How "standards" can protect your hotel mixed-use assets . . .
Article by Robert Braun

Hotel Franchise Agreements: What happened to my Area of Protection?

JMBM ·29 January 2019
Before the mergers and acquisitions, new brand launches, and the development of soft brands, a hotel chain typically had a few iconic brands in each chain scale that customers could easily recognize and differentiate from the competition. Guests could rely on their knowledge of the brands for a predictable experience commensurate to the brand promise. Moreover, it was common for brands to operate, own, or both operate and own properties, giving brands "skin in the game" and greater ability to create a uniform guest experience. Over the years, however, franchising became the preferred model for growth, shifting more of the costs of development and costs of ownership to hotel owners. Today, you would be hard-pressed to name a hotel that owns a significant number of properties.While the move to managed and franchised hotels freed up capital to invest in new growth, the brands faced a new dilemma -- how to build or convert more hotels in a market where they already had operating branded properties. After all, brands could not rely solely on fee-based revenue from existing properties growing at single-digit RevPAR to meet expectations of Wall Street investors, but they also couldn't open the same brand next to one that already existed.As brands pursued franchised growth, they have also tried to retain the right to saturate a market with their affiliated flags. Hotel brands now uniformly reserve the right to operate competing properties in the same location as existing properties -- helping them to fulfill their goal of expanding their markets. Hotel owners, of course, have a different view -- having the only property of their brand (or of any competing property, whatever the brand) is a benefit, and allows the owner comfort that they will be able to benefit from their investment.Owners' challenges in obtaining protection from competition by their brand's other hotel owners using the same reservation system.Owners see a number of benefits to limiting competition within the brand:Avoiding market confusion - if two hotels of the same brand (or similar brands) are located close to each other, it's natural that there will be market confusion, and guests can confuse one property with another. This makes it more difficult to present a predictable guest experience and reduces loyalty.Maintaining occupancy and rate - multiple competing hotels in a market makes it more likely that each hotel will operate at less than optimal occupancy, driving lower rates and resulting in direct financial and reputational loss. Hotel owners recognize that they benefit from having an adequate number of rooms in the market; they also recognize that a surplus of rooms results in losses.Intra-brand conflicts - the entry of a new competing hotel can come at the expense of an older property. A new property may have facilities that make it more attractive than an older property. Moreover, the brand will have to allocate scarce resources (personnel and funds) to the new property, diluting its attention to the existing hotel.Benefits of new builds - there is also the likelihood that a new property will divert business from an older property - everyone wants something new, the new property will be the "bright shiny penny," and the new property may have updated facilities. To compete, an existing property may be forced into an "arms war" to spend more money to retain the same patronage.Typical terms for territorial protectionGiven the importance of a territorial protection, brands offer limited comfort to owners. First, the area of protection generally covers only the specific brand, not potentially competing affiliated brands. Thus, a brand can open multiple flags appealing to the same clientele without limitation. While brands claim that each flag attracts only a specific clientele, and different brands under the same ownership do not compete with each other, that suggests a level of differentiation among consumers that may not be clear.Second, the term of the exclusion typically covers only a portion - often a small portion -- of the term of the franchise or management agreement. Brands limit the term because of the belief that a stabilized property can compete effectively with a new property. However, as noted above, new properties have inherent advantages; in fact, an older brand might need more protection in the later years of its term than the early ones.Perhaps one of the most troubling exceptions to territorial restrictions is "chain acquisitions." Brands typically exclude "an acquisition of a minimum number of hotels from the prohibition against competition, allowing a brand to acquire management or licensing rights for a property, and convert it to a directly competing flag - allowing them to do through acquisition what they could not with a newly constructed property. While brands take the position that since this does not change the competitive landscape, it ignores the fact that a new hotel under the same name will come onto the market must create a change.Why do brands care?Brands resist territorial protection for the same reason they resist any restriction on their operations - their goal is to expand to as many properties and rooms as reasonably possible, and an area of protection that seems reasonable today may not give the brand adequate room for expansion in the future. Brands may foresee that an area that can support a single hotel property today might support multiple properties in the future.Brands also argue, with some validity, that owners are protected by markets, which will not support financing multiple properties - in effect, relying on owners, lenders and investors to ensure that a market does not become oversaturated.Brands may also point to the barriers to entry in a particular location - lack of available properties, zoning and other issues that can make it uneconomical to build a property. This does not, however, protect against developers or investors who are able to overcome those barriers, or against changes to remove the barriers.What should Owners do?The greatest threat from ineffective restrictions is likely to occur in a slowdown. In a recession, a shrinking demand pie gets apportioned in smaller shares to feed all the new franchisee growth that chains have aggressively pursued.In the next downturn, as brand awareness has been diluted, fewer customers may remember what that new brand is and what it stands for. Alternatively, they may simply compare their options online and pick the best price, without regard to a specific brand.Chains currently benefit from a low-capital and low-touch franchising model while hotel owners take the bulk of the risk -- the franchisor gets a big part of hotel gross revenues (regardless of where that revenue is generated). In many cases, they take as much as 15% or more of gross revenues, when marketing, central services, reservations and other costs are included.But when chain reservation systems start generating fewer reservations during a downturn, the effective cost of being part of a chain could be significantly higher because the owner pays fees to the brand for reservations. Owners will need to work harder to source business from other channels.Since brands fight any restrictions, what should owners consider in negotiating areas of protection?First, owners need to consider the likelihood of changes in economic conditions. A good economy today may mask potential weaknesses in the market. While a market may currently support multiple properties, when the economy weakens, the need for protection will become clearer.Owners should also be aware of the different issues facing secondary or tertiary markets, compared to a primary market. A single new competitor anywhere in a smaller market could have a greater effect than a number of new competitors in a larger market.Consideration needs to be given to the importance of an AOP in an agreement. When all is said and done, the AOP is just one issue to be negotiated in a franchise or management agreement. Where does it stand in the hierarchy of issues? Can it be used as leverage for something more important?Finally, as brands consolidate, owners will find that they are competing not against another reservations system, but against their own reservation system - one of the reasons for wanting an area of protection in the first place.Like many terms in brand-generated agreements, limits on areas of protection are often presented as a non-negotiable term. The importance of territorial protections in brand agreements should encourage hotel owners to rethink them and consider how they can gain meaningful protection, and how they can leverage their bargaining power.The Global Hospitality Group at Jeffer Mangels Butler & Mitchell LLP has unparalleled experience in negotiating all aspects of brand management and franchise agreements. Contact Robert Braun (rbraun@jmbm.com) if you have questions on how we can assist you in your negotiations.This article is one result of a dialogue with experienced professionals at Expedia, and we thank them for their insight.For more information on hotel branding, management and developmentYou will find a lot more information related Hotel Development, Hotel Franchise and Hotel Management Agreements on the Hotel Law Blog.The following are only a few of the resources you will find there:Hotel Management Agreement & Franchise Agreement Handbook 3rd edition is released for free downloadThe importance of Comfort Letters in financing franchised hotelsChecklist for negotiating Hotel Management Agreements/Hotel Operating Agreements - The HMA PRO ChecklistHotel Lawyer with insights on "How to get a great hotel operator"The 5 questions every owner should ask before selecting a hotel brandWhen should you choose a brand for your hotel? And when should the brand manage your hotel?Dual-branded hotels -- What every owner or developer should knowHotel Franchise Agreements and the 5 biggest mistakes a hotel owner can makeHotel Lawyer on Repositioning: The New York Times reports 39 percent increase in reflaggingHow to get the right hotel operator

Tax Alert: Foreign Entity Ownership Compliance - Don't Ignore the Repatriation Tax

Hotel Law Blog | By Jim Butler·23 January 2019
The tax lawyers at JMBM have significant experience in advising clients with international business interests, and keep them informed of developments that affect their businesses. Recently, JMBM issued a Tax Alert regarding the obligations of those owning an interest in a foreign entities to determine whether a repatriation tax payment must be made under the Tax Cuts and Jobs Act.

Guest Privacy - It's Your Business

JMBM · 8 December 2018
That obligation has become increasingly complex due both to the vulnerability of hotel companies to breach, and the enactment of laws and regulations, worldwide, that impose additional burdens on hotels - the EU's General Data Protection Regulation, California's Consumer Privacy Act, as well as industry developments have further heightened the concerns with guest privacy and securityThis focus must be seen in the context of two key issues: first, that hotels collect large amounts of data from their guests, both directly and through third parties; and second, that the hospitality industry has a checkered track record in protecting personal information. Both these demand that the hospitality industry take a renewed focus on data securityData CollectionHotels and hotel companies collect tremendous amounts of information, directly and through others, including vendors, credit card companies, websites, use of wifi and other systems. The fact that hotels are increasing reliant on technology - and responsive to guest demands for increased connectivity - increases both the amount of information and the risk involved in collecting and processing information.The increasing incorporation of technology into hotel operations can lead to more breaches. Hotels are seemingly in a race to become more innovative - consider the trend to allow guests to bypass the need to go to the front desk by using their mobile devices to select a room, check-in, receive texts when their room is ready, and even unlock the door to their room. Guests are encouraged to use mobile devices to customize their stay by requesting items, ordering room service, planning activities, or purchasing upgrades. Not only does this trend increase the likelihood of a breach by adding new access points to the system; these programs collect even more data, making a hotel breach more valuable.Hotels are also pressured to expand Wi-Fi networks, share data with OTAs, and proliferate other interconnected systems, making the hospitality industry more vulnerable to a data breach. Each of these factors increases the number of parties that have access - authorized or otherwise - to hotel data, and increase the number of threats to the industry.Breach VulnerabilityTrustwave's 2018 Global Security Report reported that nearly 12% of the incidences investigated by Trustwave originated at hotels - the third largest share of data breaches, preceded only by retail and the food and beverage industries, which share many of the same vulnerabilities. The hospitality industry possesses a number of factors that make them attractive to hackers: large volumes of valuable information, multiple vectors for accessing information, large workforces and dependence on vendors, to name a few. There are, however, a number of trends that make hotels more vulnerable. However, there are other reasons that contribute the frequency of cyberattacks on hotels.One of the key issues facing the industry is the prevalence of outside vendors who provide key hotel functions. Almost every breach involving hotels that have been reported over the past several years generated not with core hotel functions - check-in and check-out, reservations, etc. -- but from companies engaged by hotels to provide services to the hotel. Virtually every major hotel chain has suffered a data breach through point of sale merchants - each of Hyatt, Marriott (and before its acquisition by Marriott, Starwood), InterContinental, Hard Rock, Four Seasons, Trump and Loews has reported at least one breach in the past two years, and many have reported multiple breaches.Third parties are a common source of breaches for many industries, but the hotel industry is particularly reliant on third parties for many functions. In addition to credit card processing, hotels look to third parties for reservation services, payroll, human resources, asset management, maintenance and improvements - many hotels have determined that third parties are better qualified to provide specialized services, and thus have access to hotel systems. Many hotel companies have not fully recognized the need to monitor vendors and require them to implement adequate secure standards.It is not surprising that hotel brands are particularly vulnerable. Brands often select vendors for multiple properties and often for an entire flag. Individual hotels may have little, if any say, in the vendor, the terms of engagement, and the impact of a breach. Moreover, even when a weakness is discovered, the cost of remediation may be untenable - a security breach involving key-operated door locks required the replacement of almost every door lock in the United States! At the same time, under the typical hotel management or franchise agreement, the hotel owner is required to bear the cost of a breach, whether in terms of direct costs (including notifying potential victims and the increased cost of cyber liability insurance) and the indirect cost of diminished trust in the hotel.The widespread dependence on third party vendors is a greater problem because hotel systems are widely interconnected. To follow up on the point of sale example, these vendors must tap into basic hotel systems in order to allow for room charges and financial reporting. Hotel operators want and need single point access to hotel operations, meaning that information from separate systems must be accessible and shared by a variety of systems. Even where direct access is limited, varying systems may share a single hotel network, and often a wireless network; the network itself has the potential of breach, which can impact all systems. Ultimately, hotels face the dilemma that the system as a whole is only as strong as its weakest link, and a single vulnerability may expose the entire system.A variety of other factors exacerbate the vulnerability of hotels:Multiple Systems. Hotels use a variety of different systems for operations, ranging from off-the-shelf, commercial programs to specialty programs. Each of these programs presents the potential for breach and, as noted above, a single weakness can create a weak system. Moreover, the transfer of information from one system to another is, in itself, a source of weakness.Legacy Systems. Along with the existence of multiple systems, many hotel systems are legacy systems that were never designed with security as a key element. Legacy systems are a particular weakness.Unclear Lines of Responsibility. As the hospitality industry has developed, there is rarely a unity of ownership and management; instead, most hotel properties are owned by one party, which has entered into a franchise agreement to operate under a particular brand, and managed by yet another company. While each of these entities shares responsibility for data security, it is often unclear who is ultimately responsible - it is the manager, who operates the hotel, the franchisor, who selects or approves systems, or the owner, who has financial responsibility for the venture? The lack of precise responsibility can lead to a vacuum in leadership.The Human Factor. Hotels rely on large numbers of employees, many of whom have access to hotel information systems. Most data breaches can be traced to individuals, whether acting maliciously, negligently or with complete innocence, and training hotel personnel is time-consuming and expensive. Added to this, many hotels have high turnover rates and uneven training in privacy and security, further complicating creating a culture that promotes security.What Should Hotel Companies Do?While creating a secure environment is a daunting task, hotel owners and operators can and should begin the process, and the most important thing owners can do is to take responsibility for the security of the properties they own. Rather than leaving the issue to franchisors and managers, all involved should take actions that will start the process of creating a data secure environment.Take Control. Cybersecurity cannot be relegated to a single party; owners, operators and brands all need to take an active role in reducing cyber risks. Even where one party might contractually assume responsibility for security, all parties must conduct their operations so as to promote security. If a franchisor establishes effective security guidelines, it does no good if the manager ignores those guidelines. Taking control means conducting a detailed risk analysis of your enterprise, and determine what risks must be avoided, what risks can be assumed, and what risks must be shifted to other, including insurers. With that analysis in hand, a company can make realistic business decisions that reduce cyber risk.Prepare for the Inevitable. It is often, and accurately, said that a data breach is a matter of "when," not "if." With that in mind, all parties should be prepared to react to a breach by having a well-constructed and tested incident response plan in place - reacting in the midst of an emergency is ineffective and counterproductive. Similarly, in light of the prevalence of ransomware, wiperware and other threats, firms need to have robust and effective backup programs that allow them to recover and protect their guests, employees and properties. Finally, preparing for the inevitable means identifying means of mitigating damages, which must include obtaining effective cyber insurance that addresses and covers the actual damages hotels face.Respond to Breaches. Much of the criticism of hotel companies has been not just to the perceived insecurity of their systems, but to delays in responding to breaches. The Hyatt and Hilton incidents noted above, as well as the FTC's action against Wyndham, are all based on failure to take the existence of breaches seriously. Hotels, like all companies, need to have in place and have tested effective incident response teams and plans, including identifying all internal and external sources (attorneys, security consultants and public relations, among others) who will respond to a breach.Create a Culture of Security. Probably the hardest task, but arguably the most important, is to create a top-to-bottom culture of cybersecurity. Every individual in the organization, and every affiliate and third-party vendor, must take the task of cybersecurity seriously, and take on the responsibility of creating a cyber secure environment.A New Legal LandscapeWhile the hospitality industry continues to grapple with data breaches and the vulnerability of existing systems, recent legal developments in Europe and in the United States will have require hotel companies to re-evaluate how they collect information, how they process it, and how to comply with varying and conflicting requirements.GDPRThe European Union adopted the General Data Protection Regulation (GDPR), which became effective on May 25, 2018. The GDPR is a watershed event that will impact every business that collects personal information, wherever located, and it is likely that no industry will be more impacted that the hospitality industry. Other companies can choose not to do business with EU citizens; some companies have determined that it is impossible to comply and have actually closed. That is not an option for hotels. Hotel companies need to understand the goals and requirements of the GDPR. The nature of hotels and the various data holding sources such as OTA bookings and PMS systems escalate the regulation for travel and hospitality industries.The consequences for non-compliance can be extreme: The maximum fine that can be imposed for serious infringements of GDPR is the greater of EUR20 million or four percent of an undertaking's worldwide turnover for the preceding financial year. There is only limited experience in enforcement actions under GDPR, and those experiences have been inconsistent. No one knows yet how European regulators will apply GDPR it to firms based outside the EU, but there are already public interest groups that are targeting multinational companies, and it seems likely that there will be some fallout.GDPR is based on general principles, which allow leeway - and confusion - for companies. The rules of the road are likely to become clearer as the regulation is implemented, but for now, each company must make hard decisions. GDPR requires that an organization both comply with its principles and document compliance. It is more than just adopting a new privacy policy; it requires concrete actions, and recording those actions.And GDPR is not the end of the story. The EU is actively pursuing the adoption of an "ePrivacy Regulation." The e-Privacy Regulation will, in many respects, go beyond GDPR and create additional challenges for companies that have contacts in the European Union.CaCPAThe California Consumer Privacy Act of 2018 (CaCPA) addresses many of the concerns and requirements of GDPR. Companies that take prompt action to comply with the California Act and the GDPR will likely gain a substantial advantage over competitors who wait. While CaCPA has already been amended, and while there are a variety of attacks CaCPA that create uncertainty, businesses need to consider immediate steps to avoid the significant penalties for non-compliance. Businesses must be in full compliance on the effective date of January 1, 2020. It will not be adequate to start compliance efforts on that date.Addressing both the GDPR and CaCPA requires new policies and procedures. Hotel companies need to take initial steps to ensure compliance by creating a standardized approach for handling consumer requests for personal information; develop procedures for responding to consumer requests and data collection and processing tracking procedures to understand what data is collected, where it resides, how it is maintained, and who is responsible for it. Importantly, hotels will need to analyze the legal basis for collecting and processing personal information - businesses will need to explain their legal rationale for exemptions to the consumer's right to have their information deleted.Finally, each hotel company must review its public-facing website disclosures, including adding a description of consumers' rights under the Act, listing the categories of data collected and a conspicuous link titled "Do Not Sell My Personal Information."The hospitality industry is facing both continuing challenges protecting the personal data of guests, as well as grappling with a new legal landscape. Companies need to recognize that while the trials are great, success will create trust in the industry's most important commodity - its guests. A comprehensive approach can give companies the chance not only to confront these issues, but create brand value in doing so.Reprinted from the Hotel Business Review with permission from http://www.hotelexecutive.com/
Article by Bob Braun

Not a Good Day for Marriott

JMBM · 2 December 2018
Data breaches are back in the news, and this time, its a well-known hotel industry player: Marriott International. The company announced today that unauthorized access to their systems going back several years has exposed the names and other personal details of over 500 million guests. For hoteliers, this situation can be avoided by using the Global Hospitality Group Risk Assessment Audit, a comprehensive tool that combines your internal resources with our expertise in analyzing your risk profile, both for compliance purposes and to create effective data security strategies. Bob Braun, senior member of JMBMs Global Hospitality Group and Co-Chair of the Firms Cybersecurity & Privacy Group, sums up what Marriott is facing and what lessons other hotels can learn from this incident, below.Not a Good Day for Marriott | by Bob BraunIts unlikely that anyone in the hospitality industry perhaps anyone who watches the news hasn't heard about the data breach at Marriott. Marriotts pre-eminent position in the hotel industry, and the very size of the breach, with an estimated 500 million individuals impacted (putting it second behind the Yahoo breach) make this noteworthy.What Happened?While some of the information is available, most of the details have yet to be filled in. However, there are some key takeaways that every hotel owner, operator and brand should consider:First, this breach dates back more than 4 years, to 2014, prior to Starwoods acquisition by Marriott. This highlights a key problem with data breaches in general, and a particular problem for the hospitality industry: data breaches are difficult to discover, creating not a one-time problem, but a continuing issue. In this case, Marriott reported that the intruders encrypted information from the hacked database, possibly to avoid detection by any data-loss prevention tools when removing the stolen information from the companys network, further complicating the discovery and analysis of the breach.Marriotts statement also detailed the information that was compromised, which it said includes some combination of name, mailing address, phone number, email address, passport number, Starwood Preferred Guest account information, date of birth, gender, arrival and departure information, reservation date and communication preferences. The theft of this information raises the possibility of creating significant damage to individuals, and its ramifications will be felt for a long time.One concern that needs to be considered is that Marriott was aware of potential issues at Starwood. Just after Marriotts acquisition of Starwood, Starwood disclosed a breach involving more than 50 properties. According to Starwoods disclosure at the time, that earlier breach stretched back at least one year to November 2014.As we have noted earlier, while the size of this breach is breathtaking, Marriott is not alone. Virtually every major hotel company (and many smaller brands) have been impacted by breaches. This highlights that hotel companies are an attractive target, both for the vast amounts of information they collect, as well as systemic issues (multiple legacy systems, extensive use of vendors, and a variety of access points).There will be a significant cost to this breach, including both direct costs (including breach notification and remediation, responding to regulatory and private actions) as well as reputational costs, translating into potential loss of business. And hotel owners operating under Marriott brands will undoubtedly bear at least part of the cost, as Marriott implements new policies, procedures and systems, and as consumers reconsider the security of Marriott systems.Industry ChallengesThis breach comes at particularly sensitive time, as privacy laws in the United States and abroad are becoming increasingly strict. Marriott will have to report and consider its obligations not only under United States laws which are fragmented, and will include virtually every state, as well as the federal government but also the impact of the European Union General Data Privacy Regulation, which itself is enforced by a variety of data regulators. Beyond this, other countries ranging from India to Canada to China and Russia have varying regulatory schemes which Marriott must address.What Do Hoteliers Need to Do?The Marriott data breach, however it ultimately plays out, should be a wake-up call for the hospitality industry. Owners, operators and brands need to create effective and comprehensive policies, procedures and systems to address an increasingly dangerous data environment. Existing processes often a patchwork of uncoordinated documents simply will not work in todays new environment, which demands attention not only to the ever-increasing sophistication of hackers, but also the adoption of new laws and regulations that impose greater responsibility, and impose greater potential liability, on the collection, retention and use of personal information.The JMBM Global Hospitality Group has joined with the JMBM Cybersecurity and Privacy Group to offer a Risk Assessment Audit and cybersecurity protocols geared specifically to the hotel industry. The Risk Assessment Audit is a comprehensive tool that joins together your internal resources (including information technology, information security and corporate governance) with our expertise in analyzing your risk profile to create an inclusive suite of findings, recommendations and strategy, both for compliance purposes and to create effective data security practices. For more information, contact Bob Braun at 310-785-5331 or rbraun@jmbm.com.

JMBM Announces Sale of Marriott Warner Center Woodland Hills

Hotel Law Blog | By Jim Butler·26 November 2018
The Global Hospitality Group® of Jeffer Mangels Butler & Mitchell LLP is pleased to announce the recent sale of the Marriott Warner Center Woodland Hills. Located in the Warner Center business development in Woodland Hills, CA, the 478-room hotel sold for over $100 million. JMBM represented the seller in the transaction.

U.S. News & World Report - Best Law Firms(r) Recognizes JMBM as 2019 "Best Law Firm"

Hotel Law Blog | By Jim Butler· 1 November 2018
A hotel lawyer brings together numerous legal disciplines, depending on the hospitality project. That’s why the Global Hospitality Group® is part of a full-service law firm. My partners at Jeffer Mangels Butler & Mitchell LLP (JMBM) provide first-rate services to our hospitality clients and I am pleased that their efforts were recognized today in U.S. News & World Report’s list of Best Law Firms.

Labor & Employment Update: California hotel owners must provide human trafficking awareness training

Hotel Law Blog | By Jim Butler·11 October 2018
Starting in January 2020, California hotels and motels must provide human trafficking awareness training to their employees, to ensure that those most likely to come into contact with victims of trafficking are able to help in a way that is effective and safe for both guests and employees.

California Law Firm Jeffer Mangels Butler & Mitchell LLP Announces Formation of Legal Cannabis Group

Hotel Law Blog | By Jim Butler· 1 October 2018
Jeffer Mangels Butler & Mitchell LLP (JMBM) has announced the formation of its Legal Cannabis Group, which provides clients with all the resources and benefits of a full-service law firm on business matters involving legal marijuana and cannabis-related substances. The lawyers comprising JMBM's Legal Cannabis Group focus on the needs of business and property owners, ...

JMBM Hotel Lawyer Guy Maisnik Speaks on Private Equity at the 2018 Lodging Conference

Hotel Law Blog | By Jim Butler·19 September 2018
JMBM’s Global Hospitality Group® is pleased to announce that Guy Maisnik, Vice-Chair of the Group, will participate on the panel addressing Private Equity Sources and Deals at the 2018 Lodging Conference in Phoenix.

Take 5 steps NOW to avoid trouble with California's new privacy act

Hotel Law Blog | By Jim Butler·31 August 2018
Despite a general effective date of January 1, 2020, there are 5 steps that anyone doing business in California should take now to avoid problems under the California Consumer Privacy Act of 2018 (the Act) when it becomes effective. As a follow up to his original article explaining the important provisions of the Act, my partner Bob Braun provides us an important update on recent regulatory activity concerning the Act and provides practical guidance on what needs to be done now.
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California Adopts the California Consumer Privacy Act of 2018

Hotel Law Blog | By Jim Butler· 2 July 2018
Privacy legislation is dominating the news cycle these days–and it’s unlikely to slow down. Now, as U.S. companies are adjusting to the requirements of the European Union’s General Data Protection Regulation, the State of California has introduced new laws that will apply to California companies or companies doing business in California. Senior member of JMBM’s Global Hospitality Group® and Co-Chair of the Firm’s Cybersecurity & Privacy Group Bob Braun discusses the implications of the new legislation and how it will impact hotels, below.
Article by Jim Butler & Martin Orlick

New "accessibility" regulations for electric vehicle charging stations

JMBM ·25 June 2018
The regulations and requirements for these accessible charging stations are very specific, and the article below, written by my partner Marty Orlick, gives only a high-level summary of the scoping and technical requirements. This is an area where you really need to talk to the experts.Are Your electric vehicle charging stations "accessible" to disabled guests under California's latest regulations?With the surge in popularity of electric and hybrid vehicles, the need to provide Electric Vehicle Charging Stations (EVCS) is on the rise at hotels, theaters, stadiums, and hotel mixed-use properties. If your EVCS are not accessible to your disabled guests, here is what you need to know.California's Regulations for EVCS AccessibilityIn California, if your commercial facility provides EVCS for your customers and guests, you must also provide a certain number of EVCS that are accessible.California's accessibility regulations for EVCS are in the 2016 California Building Code (CBC), and went into effect on January 1, 2017. The regulations supersede and expand upon California's little-known "Interim Disabled Access Guidelines for Electric Vehicle Charging Stations" created in 1997.The CBC accessibility regulations include both scoping requirements (what type of EVCS and how many) and technical requirements (where to locate EVCS, and how to make them accessible).Scoping RequirementsThe number and type of accessible EVCS required is determined by the total number of EVCS at a facility. When new EVCS are added to a site with existing EVCS, the total number of new and existing EVCS is used to determine the number of accessible EVCS.The table below, provided by the California Division of the State Architect, sets forth these scoping requirements. Technical RequirementsTechnical requirements apply only to new and altered EVCS; existing EVCS do not have to be altered to meet the new technical requirements. The table above includes the minimum number of EVCS for three of the four types of accessible EVCS under the CBC's accessibility regulations: van accessible, standard accessible, and ambulatory. Each type of charging station has specific technical requirements, which are outlined in CBC 11B-812. The fourth type, "drive up," is analogous to a motor fuel pump island at a gas station, and is also included in CBC 11B-812.The technical requirements include accessible aisles, accessible routes, and electric vehicle charger requirements.Technical provisions include specific requirements for signage. EV charging time limits can be applied to all users, including disabled users. Vehicles displaying accessible placards or license plates cannot park for unlimited periods of time at accessible EVCS, if the signage is in accordance with local ordinances.Primary function areas must be accessibleWhere transient parking or vehicle storage is the primary purpose or sole use of the facility, the installation of electric vehicle charging stations is considered a "primary function area" and to the maximum extent feasible, the path of travel to the charging stations, including restrooms, pay telephones and drinking fountains, would be required to be readily accessible to and useable by persons with disabilities. Additional attention to upgrading non-compliant paths of travel outside the project area would be required, under the 20% "disproportionality test."Although there are no federal standards for EVCS accessibility, provisions are being proposed. However, consistent with general guidance provided by the U.S. Access Board, if your facility provides EVCS for use by the general public then it must also be accessible to individuals with disabilities.If you intend to (or are requested to) install electric vehicle charging stations at your property, you need to consider whether they are accessible to persons with disabilities. Since the proposed scoping and technical requirements are highly technical and complex, you should consult the experts before you design or install electric vehicle charging stations.
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New 'accessibility' regulations for electric vehicle charging stations

Hotel Law Blog | By Jim Butler·22 June 2018
As the number of electric and hybrid vehicles in California continues to grow, we are also seeing the proliferation of electric vehicle charging stations in the parking areas provided by hotels, theaters, stadiums and hotel mixed-use properties. While owners and managers of these facilities are providing a much-needed service to their guests, many are unaware that – at least in California – if their facility provides electric vehicle charging stations, a certain number of them must be accessible to the disabled.
Article by Jim Butler

What do top hotel executives see on the horizon for 2018?

JMBM ·20 June 2018
Meet the Money is a productive conference with a casual atmosphere; the executives and other hotel industry representatives who attend often speak candidly about their expectations for hotel finance, development and investment throughout the upcoming year.The short video below highlights how some of our attendees feel about 2018--watch and find out what some of the industry's most well-known brands, banks, consultants, mangers and developers have to say about what's on the horizon.For more in-depth data and research, you can view our special presentations this year, including those from STR, HVS, LW Hospitality, City National Rochdale, and CBRE.One of our founding sponsors, Hotel Business, put together a great video during the conference that will give you an idea of what it's like to attend Meet the Money and includes my thoughts on the current lending landscape.Another longtime sponsor and important industry publication, HotelNewsNow.com, has an insightful summary of the important discussions our Meet the Money panelists and presenters touched on throughout the conference-their "Head-scratcher of the day" and "Quotes of the day" are especially interesting reads.Meet the Money 2019 will be held May 6-8 at the Hyatt Regency LAX--it'll be here before we know it. Registration will open later this year. Check MeetTheMoney.com for more details.
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What do top hotel executives see on the horizon for 2018?

Hotel Law Blog | By Jim Butler·19 June 2018
Meet the Money® is a productive conference with a casual atmosphere; the executives and other hotel industry representatives who attend often speak candidly about their expectations for hotel finance, development and investment throughout the upcoming year.
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GDPR: What you need to know about the EEU's new data privacy rules

Hotel Law Blog | By Jim Butler·25 May 2018
The European Union’s General Data Privacy Regulation, rules protecting the privacy of personal information, has gone into effect and impacts every company that does business in the EU. This will impact hotel owners, developers, brands, operators and managers–any company with a hotel property in the EU or that collects information from EU citizens must adhere to the new regulations.
Article by Jim Butler & Jodi Smith

Proposition 65 Defense Lawyer: Is your hotel ready for the new Prop 65 regulation deadline?

JMBM ·14 May 2018
For many years, businesses operating in California have been plagued by "bounty hunter" and government lawsuits brought under Proposition 65 -- the California law that requires warnings about hazardous substances. The technical disclosure requirements have bedeviled many legitimate businesses for some time. From our continuous interaction with members of the hotel industry, it appears to us that many are not aware of new requirements they must meet by August 30, 2018.While the new regulations apply generally to all businesses in California, there are particular implications for hotels and restaurants given the nature of their operations. And if you are not in compliance by August 30, 2018, you can probably expect a lawsuit shortly thereafter. We expect these new requirements to stir up a lot of expensive litigation for the unprepared.In this article, Jodi Smith, a senior member of JMBM's Global Hospitality Group, explains this significant development.California Proposition 65 Warnings for HotelsNew Prop 65 regulations for hotels going into effect. The Safe Drinking Water and Toxic Enforcement Act of 1986 (better known as "Proposition 65" or "Prop 65") requires companies conducting business in California to warn consumers prior to exposing consumers to specific chemicals that have been identified pursuant to Proposition 65 as being chemicals known to cause cancer or birth defects or other reproductive harm. The Proposition 65 regulations were substantially revised in August 2016 and the new regulations go into effect on August 30, 2018. The new warnings can be used now. Given the complexity of the new warning requirements for hotels, getting a head start would be prudent.What's a hotel for Prop 65 purposes? The new regulations require the owner and/or operator of a hotel to determine which of a number of different types of warnings may be required under the new regulations. "Hotel" is defined broadly to include "any type of transient lodging establishment, including but not limited to, hotels, motels, bed and breakfast inns, resorts, spas, ski resorts, guest ranches, agricultural "homestays", tourist homes, condominiums, timeshares, vacation home rentals, and extended stay establishments in which members of the public can obtain transient lodging accommodations." (Title 27 California Code of Regulations (CCR) SS 25607.32(a))Warnings required for registration desk or online. The Proposition 65 warning must either (1) be provided on a sign posted at the hotel's registration desk in no smaller than 22-point type in a location where it will be likely to be seen, read, and understood prior to the completion of the registration or check-in process, or (2) provided to the hotel guest in electronic (directly or via a hyperlink) or hard copy form in the same size type as other consumer information prior to, or during the registration or check-in process. (27 CCR SS 25607.32.(b)) In addition, if written or electronic consumer information is given to hotel guests during the registration or check-in process in any language other than English, the warning must be given in both English and that language. (27 CCR SS 25607.32(c))Other Prop 65 warnings. However, in addition to the hotel warning discussed above, hotels must also provide warnings (1) for designated smoking areas or smoking rooms in nonsmoking hotels, (2) alcoholic beverages, (3) certain foods, (4) consumer products, where such products are offered for sale, and (5) enclosed parking facilities, where an onsite parking garage is available for guest parking. (27 CCR SS 25607.32(d))The devil is in the details and technical compliance is important. Each type of warning has specific requirements as to the content of the warning, the size of the font, and is some cases, the location in which the warning is posted. Jeffer Mangels Butler & Mitchell LLP can assist in your analysis of which specific warnings are required in your hotel(s) and how best to manage the multiple warnings required under the new regulations effective on August 30, 2018.
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2018 LIIC Top 10 - Annual survey of lodging investment challenges and opportunities

Hotel Law Blog | By Jim Butler· 8 May 2018
Today, at Meet the Money® – National Hotel Finance & Investment Conference, Mike Cahill, co-chairman of the Lodging Industry Investment Council (LIIC) and CEO and Founder of HREC Hospitality Real Estate Counselors, presents the annual LIIC Top Ten. For more than ten years, LIIC, the industry’s preeminent think tank, has surveyed its members to determine challenges and opportunities for the coming year. LIIC’s members represent the direct acquisition and disposition control of more than $40 billion and include industry investors, lenders, corporate real estate executives, REITs, public hotel companies, brokers, and equity sources.
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Proposition 65 Defense Lawyer: Is your hotel ready for the new Prop 65 regulation deadline?

Hotel Law Blog | By Jim Butler· 7 May 2018
For many years, businesses operating in California have been plagued by “bounty hunter” and government lawsuits brought under Proposition 65 — the California law that requires warnings about hazardous substances. The technical disclosure requirements have bedeviled many legitimate businesses for some time. From our continuous interaction with members of the hotel industry, it appears to us that many are not aware of new requirements they must meet by August 30, 2018.
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Who will you see at Meet the Money?

Hotel Law Blog | By Jim Butler·18 April 2018
It’s almost May, so our annual Meet the Money® Conference is almost here! JMBM’s Global Hospitality Group® will host the 28th year of our national hotel finance and investment conference May 7-9, 2018 at the Hyatt Regency LAX. This must-attend event gives you access to plenty of efficient networking and the latest insights into industry trends and strategies.
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The hotel industry salutes Larry Shupnick!

Hotel Law Blog | By Jim Butler· 5 March 2018
On Saturday, March 3, 2018, the hospitality industry gathered at the JW Marriott LA LIVE to honor industry icon Larry Shupnick, senior vice president of development & acquisitions at Interstate Hotels & Resorts. The sold-out event was the annual fund raiser organized by Cal Poly to benefit The Collins College of Hospitality Management.

Important News for Hospitality Executives: How the new Tax Act could affect your estate plan

JMBM ·30 January 2018
If you are a hotel executive or other highly compensated individual in the hospitality industry, you need to be aware of how the new Tax Act (H.R. 1 - Tax Cuts and Jobs Act) might affect your estate plan. In some cases, the impact will be significant. In the brief article below, JMBM's tax attorneys recommend that you review your existing estate plan to ensure that the Tax Act does not alter your plan's original intentions. They also point to substantial new planning opportunities provided by the Tax Act, and you will want to be advised of those, as well. What better way to start the new year than by making sure your assets, and your family's future, are protected?How the New Tax Act Could Affect Your Estate PlanPresident Trump signed into law H.R. 1, which has a major impact on estate planning. The new law doubled the federal exemption for estate tax, gift tax and the tax on generation-skipping transfers (GST), starting January 1, 2018; the lifetime exemption for each of these taxes is now $11.2 million per taxpayer. Married couples together have a total of $22.4 million of lifetime exemption. The exemptions are reduced by lifetime transfers prior to 2018 and are indexed for future inflation. The annual gift tax exclusion amount also increased to $15,000 per donee per year.The increased gift, estate and GST tax exemptions are not permanent. This part of the Tax Act is scheduled to expire in 2026 and return to the prior exemption amounts ($5.6 million plus inflation after 2018). Changes in control of Congress and the Presidency could also terminate the increased exemptions. While it may make sense for some clients to take advantage of the increased exemptions to engage in additional estate planning, there is also a potential risk that the new exemptions will unintentionally alter existing estate plans, requiring important immediate changes.As the increased exemptions may significantly skew a client's existing estate plan, it is important for all clients to review their estate planning documents to make sure they continue to reflect their intentions. Many estate plans for married couples use a formula to divide assets at the first death between a "marital" portion passing to or held in a trust for the surviving spouse and a "bypass" portion intended to bypass the estate of the surviving spouse. The bypass portion may be allocated to a trust for the surviving spouse and/or descendants. It may also be allocated directly to descendants, skipping the surviving spouse entirely, or may provide fewer benefits to the surviving spouse than the marital trust. Similarly, at the second death, the estate plan may have a formula dividing assets, based on the GST exemption, between children and grandchildren.Depending on the exact language of the document, these divisions may be very different now because of the larger exemptions. For some clients, the new division will be acceptable. For others, it will be important to update the language of their estate planning documents to avoid a sharp reduction in what the surviving spouse receives and what the children and grandchildren receive.Clients may also want to take advantage of the opportunity to pass larger portions of their wealth to younger family members at minimal tax cost, through lifetime gifts and other traditional wealth transfer techniques.The estate, gift and GST provisions of the new Tax Act present substantial new planning opportunities. They also have a potentially significant impact on existing estate plans. Clients need to review their existing documents to determine this impact. We are ready to help you with all aspects of this analysis and to advise you on the various available alternatives.
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Cyberattacks on Hotels - What Should Hotel Owners and Operators Do?

Hotel Law Blog | By Jim Butler·22 January 2018
Protecting guests’ information (and employees’ information) from hackers is one of the biggest business challenges faced by hotel owners today. Data breaches can result in loss of reputation and loss of revenue, and can trigger costly lawsuits and government investigations.
Article by Jim Butler

California Labor & Employment Law Update: Key Changes in 2017 and What's Slated For 2018

JMBM ·13 December 2017
California Labor & Employment Law Update: Key Changes in 2017 and What's Slated For 2018by The JMBM Labor & Employment GroupThe legal landscape for California employers continues to evolve at the state and local level - ranging from prohibitions on inquiries into an applicant's salary and conviction history, additional sexual harassment training requirements, to new immigration obligations. The following is a high-level summary of the most significant changes in state and local labor and employment laws, which go into effect on January 1, 2018, unless otherwise noted.EXPANDING POWERS OF THE DEPARTMENT OF LABOR STANDARDS (DLSE)DLSE can now independently commence investigations; petition for injunctive relief; and issue citations for suspected discrimination or retaliation based on a wage claim (SB 306). The DLSE has new powers starting January 1, 2018. With SB 306, the DLSE will now be authorized to commence an investigation of an employer, with or without a complaint being filed, when specified retaliation or discrimination is suspected during the course of DSLE investigations. The new law also authorizes the DLSE to petition a superior court for immediate injunctive relief based on a finding of reasonable cause. Such relief can include a court order that the employer reinstate employment or otherwise reverse its alleged retaliatory action against the employee. This is a huge departure from existing law which does not allow for the DLSE to seek this type of relief during an investigation.The new law also authorizes the DLSE to issue citations directing specific relief to persons determined to be responsible for violations. The law establishes review procedures, including procedures for requesting a hearing before a hearing officer, and for a petition for a writ of mandate. The law subjects an employer who willfully refuses to comply with a final order to civil penalties payable to the affected employee. The law also allows employees to seek injunctive relief in court.Contractors can now be directly liable for wage claims against subcontractors (AB 1701).On or after January 1, 2018, a direct contractor which undertakes a contract in the state for "the erection, construction, alteration, or repair of a building, structure, or other work," must assume, and be liable for, specified debt owed to a wage claimant that is incurred by a subcontractor, at any tier. The DLSE is authorized to bring an action to enforce this liability. It authorizes private civil actions to enforce the liability against a direct contractor. The new law does not apply to any work being done by an employee of the state or any political subdivision of the state. It requires a subcontractor, upon request from the direct contractor, to provide specified information regarding the subcontractor's and third party's work on the project and allows the direct to withhold disputed sums upon the subcontractor's failure to provide the requested information.NOTICE REQUIREMENTSHuman trafficking notice requirements extended to hotels, motels and bed & breakfast inns (AB 260 and SB 225).Two new laws which take effect on January 1, 2018 address human trafficking. AB 260 adds hotels, motels, and bed and breakfast inns, not including personal residences, to the list of specified businesses and other establishments required to post a notice with information related to slavery and human trafficking, including information related to specified nonprofit organizations that provide services in support of the elimination of slavery and human trafficking. SB 225 adds to the notice a specified number which a person may text for services and support, and revises the names of the nonprofit organizations listed in the notice. While not specifically addressed to employee issues, the required notice must be posted "in a conspicuous place near the public entrance of the establishment or in another conspicuous location in clear view of the public and employees where similar notices."Employers must specifically provide written notice concerning the rights of victims of domestic violence, sexual assault, or stalking (AB 2337).Existing law (Labor Code section 230.1) prohibits employers from discharging, discriminating, or retaliating against an employee who is a victim of domestic violence, sexual assault, or stalking for taking time off from work to: seek medical attention for resulting injuries; obtain services from a domestic violence shelter or rape crisis center; undergo counseling, or participate in safety planning. Last year, California passed AB 2337, which requires employers to provide written notice to employees about the rights of victims of domestic violence, sexual assault, or stalking. However, employers did not have to comply with this requirements until the Labor Commissioner developed a model notice. In June 2017, the Labor Commissioner posted the model notice. Employers may use the Labor Commissioner's notice, or create their own as long as it is substantially similar in content and clarity. The notice must include the following content:Inform employees that they have the right to take time off to obtain a restraining order/court order, seek medical attention, seek services from a domestic violence shelter, program, or rape crises center, seek counseling, or safety planning.Inform employees that they can use available vacation, personal leave, accrued paid sick leave, or compensatory time off for such purposes, unless they are covered by a collective bargaining agreement which provides different leave uses.Inform employees that they have a right to take time off for these purposes even if they do not have paid leave.Advise employees that they should give advance notice before taking leave. But, if they cannot give advance notice, they will not be disciplined if they provide proof for the absence within a reasonable time. Proof can be a police report, court order, or a doctor's/counselor's note.Inform employees that they can request as a reasonable accommodation that the employer make changes in the workplace to ensure the employees' safety. Advise employees that their accommodation request will be kept confidential.Inform employees that they have a right to be free from retaliation and discrimination and that they cannot be discharged because they are a victim of domestic violence, sexual assault, or stalking; because they asked for leave to get help; or because they asked the employer for an accommodation so they can feel safe at work.Advise employees that they can file a complaint with the Labor Commissioner's Office if they believe their rights have been violated.Employers must update their new hire/orientation materials to include either the Labor Commissioner's model notice or their own notice that satisfies the statutory requirements. Note, while employers must provide new hires with a notice of their rights under Section 230.1 (and other employees upon request), employers should consider providing a standard notice to all employees, not just new hires.PROHIBITED INQUIRIES OF JOB APPLICANTSEmployers cannot seek or use job applicants' salary histories as a factor in determining whether to offer a job (AB 168).Add this to the growing list of questions to avoid asking during a job interview: How much do you make in your current job? AB 168 prohibits an employer from seeking salary history information from a job applicant or using salary history as a factor in determining whether to offer a job. An employer also is not allowed, orally or in writing, personally or through an agent, to seek a job applicant's salary history information. Also, the law requires an employer "upon reasonable request" to provide the pay scale for a position to a job applicant. It does not apply to salary history information disclosable to the public under federal or state law.San Francisco mandates additional requirements on the prohibition of job applicants' salary histories (San Francisco's Parity Pay Ordinance.)San Francisco's Parity in Pay Ordinance is similar to AB 168, discussed above. Under the ordinance, an employer may not do any of the following:Ask about current or past compensation in the applicant's current position, or in any prior position (whether with the current employer or a prior employer).Consider an applicant's salary history as a factor in determining what salary to offer an applicant--even if the applicant voluntarily discloses his or her pay without prompting.Refuse to hire, disfavor or retaliate against an applicant for not disclosing pay history.Release the salary history of any current or former employee to an employer or prospective employer without written authorization.The Ordinance allows an employer to ask about the applicant's expectations with respect to salary. For example, it is permissible to ask about unvested equity or deferred compensation or a bonus that an applicant would forfeit or have cancelled if he or she quit a current job. This may be a way for employers to obtain salary information without asking directly for it. The Ordinance becomes operative on July 1, 2018, with penalties of up to $500 beginning on January 1, 2019.Limitations set on an employers' ability to inquire about a job applicant's criminal history (AB 1008).AB 1008 adds Government Code section 12952, which creates a new protected class under the Fair Employment and Housing Act (FEHA). Employers with five or more employees are prohibited from:Inquiring about an applicant's criminal history on a job application or at any time (i.e. during the interview process) before extending a conditional offer of employment.If employers run a conviction background check in connection with an application for employment, it is prohibited from considering, distributing, or disseminating information about (a) an arrest not resulting in a conviction, except as permitted in Labor Code section 432.7, (b) referral to or participation in a pretrial or post-trial diversion program, and (c) convictions that are sealed, dismissed, expunged, or statutorily eradicated.An employer who intends to deny an applicant a position of employment solely or in part because of the applicant's conviction history must first perform an individualized assessment. The assessment requires analysis of various enumerated factors, including whether the applicant's conviction history has a direct and adverse relationship with the specific duties of the job. If the employer decides to deny employment, it must provide the applicant written notification of its decision. The applicant then has the opportunity to respond by providing evidence challenging the accuracy of the conviction history report and/or evidence of rehabilitation or other mitigating circumstances. The employer must consider any information the applicant submits before making a final decision. If the employer's final decision is to deny employment, the employer must provide written notification to the applicant, including information on any additional appeal process and the applicant's right to file a complaint with the Department of Fair Employment and Housing (DFEH). AB 1008 does not apply to situations where employers (public and private) are required by law to conduct criminal background checks or to restrict employment based on criminal history.Employers should review their job applications, postings, and recruitment procedures to ensure they comply with AB 1008. Employers should also keep written records which demonstrate that they performed the required individual assessments and considered any applicant responses before making final employment decisions. Furthermore, employers need to comply with any related local ordinances, such as the San Francisco and the Los Angeles Fair Chance Ordinance. To the extent a local ordinance provides applicants greater protection, employers must comply with that standard.Los Angeles sets additional prohibitions on criminal history inquiries (Los Angeles Fair Chance Ordinance).Individuals with criminal records may have a better chance of finding a job in Los Angeles under the city's new Fair Chance Initiative for Hiring. Under the Ordinance, a prospective employer is not permitted to ask an applicant questions about criminal history before making a conditional offer of employment - meaning an offer that is conditioned on an assessment of the applicant's criminal history and how it relates to the duties of the job being offered. The meaning of "employment" here is broader than normal, because the law also applies to the retention of independent contractors and unpaid interns. The Ordinance became effective on January 22, 2017. The Ordinance applies to all employers located or doing business in the City of Los Angeles and that employ 10 or more employees.INCREASED EMPLOYEE PROTECTIONSEmployers cannot comply with certain requests from immigration enforcement officers unless a judicial warrant is provided (AB 450).A new law limits how much California employers may accommodate some requests from federal immigration officials. Beginning January 1, 2018, California employers "shall not provide voluntary consent to an immigration enforcement agent to enter any nonpublic areas of a place of labor," unless the immigration enforcement agent provides a judicial warrant. Similarly, employers will not be allowed to "provide voluntary consent to an immigration enforcement agent to access, review, or obtain the employer's employee records" without a warrant, except for I-9 employment eligibility and verification forms and other documents for which a Notice of Inspection has been provided to the employer. Employers must post a notice of any inspections of I-9 Employment Eligibility Verification forms or other employment records conducted by an immigration agency within seventy-two hours of receiving notice of the inspection. Upon reasonable request, the employer must provide a copy of the Notice of Inspection to an affected employee. AB 450 also provides that an employer "shall not reverify the employment eligibility of a current employee at a time or in a manner" not required by federal law. The Labor Commissioner has enforcement authority, and penalties for violations can be up to $10,000.Smaller employers (20+ employees) are now required to provide parental unpaid leave (SB 63).Small employers will need to be ready to give time off to new parents starting January 1, 2018. SB 63 will require California employers with at least twenty employees within a 75-mile radius to provide up to twelve weeks of job-protected unpaid leave to new parents for the purpose of bonding with a newborn child, adopted child, or foster-placed child. SB 63 is similar to the California Family Rights Act (CFRA), which requires employers with fifty or more employees within a 75-mile radius to offer these parental leave protections to new parents. Employers may not "interfere with, restrain, or deny the exercise of, or the attempt to exercise, any right" provided by the new law. Employees may use accrued vacation pay, paid sick time, other accrued paid time off, or other paid or unpaid time off negotiated with the employer, during the parental leave.Public employers who receive state funds are prohibited from discouraging or deterring public employees from becoming or remaining members of an employee organization (SB 285).Under Government Code section 16645.6, public employers who receive state funds are prohibited from using those funds to deter union organization. SB 285 goes a step further - prohibiting public employers from discouraging or deterring public employees from becoming or remaining members of an employee organization. Notably, this statute applies to all public employers regardless of the source of funds, including employers subject to the MMBA, Dills Act, EERA, HEERA, Trial Court Act, Court Interpreter Act, TEERA, and Section 12302.25 of the Welfare and Institutions Code. The Public Employment Relations Board has jurisdiction over any violations. Since the statute does not define what constitutes to "discourage" or to "deter," public employers must be cautious in their interactions with union members and the information they transmit about union membership. Significantly, SB 285 likely attempts to protect labor unions if the Supreme Court holds that agency fees cannot be imposed on public sector employees in Janus v. AFSCME.Amendment to the Military Veterans Code expands protections for military veterans by prohibiting discrimination in terms, conditions, or privileges of employment; violations of the law can result in criminal and civil penalties, and attorneys' fees (AB 1710 and SB 266).AB 1710 and SB 266 amends section 394 of the Military Veterans Code. Existing law prohibits discrimination against service members. These bills expand the scope of the protection for military personnel by prohibiting discrimination in terms, conditions, or privileges of employment. The law covers discrimination by individuals and public and private sector employers. Violations of the law result in criminal and civil penalties, including actual damages and reasonable attorney's fees. Given these remedies, employers need to ensure that their recruiters and supervisors are trained on service member anti-discrimination laws.Health care facilities face increased penalties for whistleblower retaliation/discrimination (AB 1102).Existing law (Labor Code section 1278.5) prohibits a health facility from discriminating or retaliating against a patient, employee, medical staff, or any health care worker because that person filed a grievance, complaint, report with the facility, or participated in an investigation or administrative proceeding related to the quality of care, services, or conditions at the facility. A violation of the statute results in a civil penalty of up to $25,000 dollars. Under AB 1102, a person who willfully violates section 1278.5 is also guilty of a misdemeanor punishable by a fine of up to $75,000 .California's recognition of nonbinary as a gender could result in new employer requirements (SB 179).Through SB 179, California now recognizes three genders - female, male, and nonbinary. This legislation allows individuals to update their gender on a birth certificate, a driver's license (beginning January 1, 2019), and obtain a court judgment (beginning September 1, 2018) without undergoing clinical treatment. Instead, the individual has to attest, under penalty of perjury, that the request for a change in gender is to confirm the person's legal gender to the person's gender identity and not for fraudulent purposes. While the impact of this legislation is unclear - it may impose new requirements on employers and educational institutions to provide additional restroom and locker room facilities.Anti-harassment training requirements expanded to include gender identity, gender expression, and sexual orientation (SB 396).FEHA currently requires employers with fifty or more employees to provide at least two hours of sexual harassment and abusive conduct prevention training to all supervisory employees within six months of an individual's assumption of supervisory duties and once every two years thereafter. SB 396 requires covered employers to include training on harassment based on gender identity, gender expression, and sexual orientation. The training must include practical examples and the trainer must have pertinent knowledge and expertise. SB 396 also requires employers to display DFEH's poster on transgender rights in the workplace.Given that sexual harassment allegations have permeated every industry and have dominated the news cycle - employers must be vigilant in providing anti-harassment training, investigating complaints, and taking prompt corrective action. Employers should review their anti-harassment/anti-discrimination trainings and policies to ensure compliance with SB 396.The Equal Pay Act now applies to both public and private sector employers (AB 46).Existing law prohibits employers from paying workers of one sex/race more than the workers of the opposite sex/race for "substantially similar work," unless the employer can show that any pay gap is justified. AB 46 amends Labor Code section 1197.5 by extending the definition of employer. The Equal Pay Act will now apply to both public and private sector employers. That said, employees still cannot sue public sector employers for penalties under Labor Code section 1199.5.Emeryville requires employers to offer additional work hours to current qualified part-time employees before hiring new employees or using contractors (Emeryville Fair Workweek Ordinance).Emeryville has enacted its Fair Workweek Ordinance which became effective on July 1, 2017. Under the Ordinance, employers must offer additional work hours to current qualified part-time employees (those with fewer than thirty-five hours of work in a calendar week) in writing before hiring new employees or using contractors or staffing agencies. In addition to being qualified to do the work, covered employees are those who perform at least 2 hours of work within the geographic boundaries of the city in a week; and qualify as an employee entitled to minimum wage under the Labor Code. Also, employers must provide new employees with good-faith written estimates of their work hours and schedules. Employers must provide employees with at least two weeks' notice of their actual schedules; notify employees of schedule changes and allow employees to decline schedule changes made without two weeks' notice; pay employees a premium for schedule changes made with less than two weeks' notice; ensure that employees have at least eleven hours off between shifts; and allow employees to request flexible work arrangements without retaliation.San Jose requires employers to offer additional work hours to existing qualified employees before hiring additional employees or subcontractors, and use a transparent and nondiscriminatory process to distribute work hours among existing employees (San Jose Opportunity to Work Ordinance).San Jose has enacted its Opportunity to Work Ordinance which became effective on March 13, 2017. Under the Ordinance, employers must offer additional hours of work to existing employees who (in the employer's good faith and reasonable judgment) have the skills and experience to perform the work before hiring additional employees, subcontractors, temporary services or staffing agencies, and use a transparent and nondiscriminatory process to distribute work hours among existing employees. In addition to being qualified to do the work, covered employees are those who, in a calendar week, perform at least two hours of work for the employer; and who qualify as an employee entitled to the California minimum wage, or is a participant in a Welfare-to-Work Program. A Welfare-to Work Program means the CalWORKS Program, County Adult Assistance Program (CAAP) which includes the Personal Assisted Employment Services (PAES) Program, General Assistance Program and any successor programs that are substantially similar.Please contact us if you would like to discuss any of the issues presented in this Update.JMBM's Labor and Employment attorneys counsel businesses and management on workplace issues, helping to establish policies that address problems and reduce job-related lawsuits. We act quickly to resolve claims and aggressively defend our clients in all federal and state courts, before the Department of Labor, the NLRB, and other federal, state and local agencies, as well as in private arbitration forums. We represent employers in collective bargaining negotiations and arbitration.This Update is provided to our clients, business associates and friends for informational purposes only. The Update included only brief descriptions of the laws at issue. Legal advice should be based on your specific situation and provided by a qualified attorney.

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