Warm Reception for LA $15 Wage Law

Two hotel owners groups faced tough questioning by appellate judges Monday over an attempt to invalidate a Los Angeles ordinance that raised the minimum wage for hotel workers to $15.37 per hour.

The industry groups appealed to the 9th U.S. Circuit Court of Appeals its failed effort to win a preliminary injunction against the July 1, 2015 implementation of the minimum wage law covering Los Angeles hotel workers.

Under terms of the law, hotels in Los Angeles with 300 or more rooms, the wage went into effect July 1, 2015.  For hotels with 150 or more rooms the law takes effect July 1, 2016.  For the rest, the wage change is expected to have a ripple effect.

“The city ordinance substantially distorts labor-management relations,” argued Michael Starr, attorney for the American Hotel and Lodging Assoc. and the Asian Hotel Owners Association.

“Don’t all minimum wage requirements interfere in the negotiating process,” asked Judge Andrew Hurwitz, who pointed out the U.S. Supreme Court has recognized minimum wage laws.

But the Los Angeles law has “tilted the playing field,” Starr argued.

“I don’t understand that,” Hurwitz responded, adding, “why are they not tilted in every case?”

Judge Harry Pregerson asked, “Aren’t hotel workers among the lowest paid in the industry?”

Starr maintained that hotel maids receive over $16 per hour and only tipped employees make less than the Los Angeles minimum wage of $15.37 per hour, but when tips are added the pay jumps to over $20 per hour.

“Then why are you worried about having a minimum wage law,” Judge Kim Wardlaw asked.

Starr contends that the city law is preempted by federal statute because it aids the hotel workers’ union and that the hotel owners will be forced to bargain at a disadvantage. The law creates an exemption to the minimum wage if hotels agree to unionize and negotiate a full package of benefits.

Union attorney Paul More countered, “This is a sideshow.” He maintains the city law is a typical minimum wage ordinance. “It contains an opt-out (of the minimum wage) that has been upheld by this court,” he said.

“They are arguing that the law creates an incentive to unionize. That is not true,” he said.

Hurwitz asked why the law includes a waiver to allow for pay less than the minimum wage.

“The city concluded that workers would be able to negotiate packages of seniority, pension, retirement, wages and benefits.  If the workers don’t like the contract and want to keep the $15.37 they won’t ratify it,” More said.

He called the hotel arguments “an attempt here to distract the court from the fact that setting minimum labor standards is not preempted by the National Labor Relations Act.”

The district court denied the hotel associations’ request for a preliminary injunction and ruled that it was not the role of the courts to interject itself into legislative economic policy and that the hotels failed to show that the city ordinance was an impermissible exercise of its power.

The 9th Circuit panel is expected to rule in the coming weeks on the appeal.

Case: American Hotel and Lodging Assoc. v. City of Los Angeles, No. 15-55909


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