Two hospitality groups sue Los Angeles over wage increase

After successfully pushing for an increased minimum wage for hotel workers in Los Angeles earlier this year, two groups in the industry are banding together to sue the city over the wage hike.

According to The Los Angeles Times, the American Hotel and Lodging Association (AH&LA) and the Asian American Hotel Owners Association claim the city's law improperly interferes with labor relations, with the scheduled increase to $15.37 tipping the balance of power too far into the hands of unions. Both organizations also want to avoid setting a national precedent in Los Angeles, and are concerned that other U.S. cities will adopt similar increases in the future.

Attorney Michael Starr told The Los Angeles Times that the wage law creates an exemption for unionized hotels from the wage increase if workers agree in their contract to relinquish the bump. Starr says this provision will in turn pressure more hotel managers to give in to demands from labor leaders to allow employees to join a union.

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The Los Angeles Business Journal reported that the suit is arguing that the provision creates an economic disadvantage for non-union hotels, and violates the National Labor Relations Act provision. This determined that no state or local law should “regulate or interfere with the existing balance of economic power between labor and management.”

“The city’s ordinance is clearly designed to put a thumb on the scale in favor of labor and disrupts the careful balance between labor and management,” Katherine Lugar, chief executive of the American Hotel & Lodging Association, told the Los Angeles Business Journal.

Earlier this year, the AH&LA and WageWatch released research showing the hotel industry is offering high paying jobs and a fast track to senior positions. As it stands right now, the wage increase is set to go into effect in July for hotels with at least 300 rooms, and one year later for hotels with at least 150 rooms.

James Elmendorf, deputy director for the Los Angeles Alliance for a New Economy and a leader in the worker campaign to raise wages in Los Angeles, told The Wall Street journal that hotel employees are confident the courts will uphold the latest statute. He argues that federal law allows and requires exemptions such as these, and noted that a previous decision by the U.S. Supreme Court recommended local and state laws and regulations of private businesses contain similar exemptions.

“Instead of wasting money on a suit, hotels should be spending money on paying their workers,” Elmendorf told The Wall Street Journal. Elmendorf also said that L.A. hotels were paying 37 percent of their room revenue in wages compensation, but by 2013 they were paying 31 percent.

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