Mosqueda, Gonzalez introduce tweaked version of I-124, with improvements

After several hearings in which the Council members took input from both hotel employees and employers, this week Council members Mosqueda and Gonzalez are officially introducing a modified version of Initiative 124 to run through the Council’s legislative process. Their version attempts both to circumvent the issues that led to legal challenges to I-124, as well as to fix some of the most problematic aspects of the voter initiative.

After Initiative 124 passed in November 2016, two legal challenges were filed: one against the entire initiative for violating the “single subject rule” for legislation, and another specifically for the provision in the law that requires hotels to purchase health insurance for their employees or pay them the equivalent to the cost of health insurance.  The first challenge led to the state Court of Appeals ruling that I-124 did, in fact, violate the single-subject rule and tossing out the law in its entirety; that ruling has now been appealed to the state Supreme Court, which has agreed to hear the case in September.  The second challenge obviously is moot if the Supreme Court affirms that I-124 is illegal, and that case is on hold until the first challenge is fully resolved. Nevertheless, the new bill from Mosqueda and Gonzalez tries to address issues raised in both lawsuits.

It addresses the “single subject rule” objection by breaking up I-124 into four separate ordinances:

  1. a limit on the square footage that hotel employees may be asked to clean in a single shift;
  2. a required process that must be followed when a hotel changes ownership in order to promote employee retention;
  3.  steps that hotels must take to “prevent, protect and respond to violent or harassing conduct by guests;”
  4.  a requirement for hotel employers to make healthcare expeditures to or on behalf of their employees.

Let’s take these one at a time and look at how they differ from the text of I-124.

Limits on square footage cleaned.  The new bill, at a high level, is largely the same as I-124: it limits the total square footage of hotel rooms that an employee can be required to clean in a single shift. It also places limits on the number of “strenuous” cleanings in a single shift, such as after a guest checks out or when cots and other furniture need to be removed from a room. The differences are in the details, based upon feedback on where I-124 was unworkable. For example, where two or more employees “team clean” a room, in the new bill the square footage of the room accrued to the employees is divided evenly between them (I-124 accrued the full square footage to each of them, creating a strong disincentive for employers to allow team cleaning). However, there are still problematic aspects in the details, such as the the way overtime pay is structured: if an employee exceeds the square footage limit in a workday, the employer must pay 1.5 times wages for the entire shift — not just the excess above the limit.

Promoting employee retention when ownership changes. The ordinance says that when a hotel changes control, the outgoing employer must provide the incoming employer with a “preferential hiring list” of all employees who had worked for the hotel for at least the 30 days prior to the transfer. The incoming employer is required to hire from that list, by seniority within each job classification, for the first 180 days to the extent that comparable job classifications exist. Employees hired through this process must be kept on for at least 90 days, with exceptions for layoffs (by seniority) and just cause. After 90 days, the employer must provide a written performance evaluation to each employee and if the evaluation is satisfactory “shall consider offering the employee continued employment.”  There are also notice requirements related to the change in conntrol and the hiring requirements that the employers must post onsite.

Dealing with harassment and violence against hotel employees. Hotels must provide panic buttons to all employees who work in guest rooms or are required to deliver items to guest rooms. Hotels must also post a notice on the back of every guest room door regarding the protections that the hotel provides for its employees.

If an employee alleges that a guest harassed or attacked them, the employer must conduct a fair and impartial investigation into the alleged conduct, including providing the accused guest a written notice of the allegation and the alleged victim with written notice that the employer has started an investigation, The investigation must be done promptly and the determination must be given in writing to both the accused guest and alleged victim.

The bill rewrites the rules for the controversial “blacklist” of guests banned from the hotel that was a particularly problematic part of I-124. Guests found to have harassed or attacked employees where the incident involved physical or bodily injury, bodily harm, or unwelcome or inappropriate sexual contact must be declined service for at least five years from the date of the determination. In cases where guests are found to have harassed or attacked employees where the incident did not involve physical or bodily injury, bodily harm, or unwelcome or inapprporiate sexual contact, the hotel can still serve that guest, but it must not assign any of its employees to work in the guest’s room, make deliveries to the guest’s room, or provide services to the guest for at least five years (it’s unclear how the hotel would serve the guest under this rule). The bill also provides that a guest can appeal the hotel’s determination within 30 days by requesting a contested hearing before the Hearing Examiner (I-124 did not require hotels to inform guests that they had been blacklisted, nor did it provide a means for guests to challenge their listing).

When an employee reports an incident of harassment or violence by a guest, the employer must immediately offer the employee reassignment to a different work floor or work area “for the entire duration of the guest’s current stay and at least until making a determination” (this section seems awkwardly written — it might be intended to apply to future stays by that guest until the investigation/determination is complete, and not to reassign the employee when the guest is not there).

Requiring healthcare expenditures. Hotels must make “a monthly required healthcare expenditure to or on behalf of each employee” according to a schedule based on family unit size:

  • $560 per month for an employee with no spouse, domestic partner, or dependents;
  • $952 per month for an employee with only dependents;
  • $1,120 per month for an employee with only a spouse or domestic partner;
  • $1,680 per month for an employee with a spouse or domestic partner and dependents.

The payments must be made either as additional pay to the employee, payments to a third party for the purpose of providing healthcare services to the employee and family, or average per-capita monthly expenditures for healthcare expenditures. The dollar amounts would increase annually based upon the approved rate increases for Washington health insurance providers.

This applies for all employees working an average of 80 hours or more per month, i.e. half-time or greater.  The requirement can be waived by employees if they receive healthcare through another employer or a family member that is equivalent to a Gold-level policy as found on the state healthcare exchange. The payments required under this ordinance do not count toward meeting Seattle’s minimum wage requirement. The ordinance also creates a private right of action for employees to sue their employers over violations, which is consistent with existing private rights of action under the city’s laws when employers withhold wages due.

This ordinance corresponds to the section of I-124 that drew the second legal challenge, based on the federal ERISA law’s preemption of state and local regulations on employee benefit plans (including healthcare).  The new bill carefully avoids some of the language in I-124 that most egregiously violated ERISA, but there is still an argument to be made that it is regulating employee healthcare plans since it specifies a minimum amount that hotel employers must spend on providing healthcare to employees.

It will also be very expensive for employers, especially with the requirement that it applies to those employees working only 80 hours a month (i.e. half time). At the lowest cost for an indivdual, that works out to $7 an hour for a half-time worker. For a half-time employee with a spouse and dependents, it’s $21 an hour — likely more than the base pay for many hotel workers. The counter-argument is that many of the low-paying jobs in hotels are physically demanding and some of them involve exposure to a variety of chemicals, which makes healthcare a necessity. Nevertheless, adding a significant cost for employers — particularly for part-time workers — raises a serious concern that employers will reduce employment and eliminate part-time positions.

Much of the text of all four bills is substantially similar, dealing with all the general provisions and regulatory overhead required for these sorts of labor laws: enforcement, investigations and penalites for alleged violations, appeals processes, prohibiting retaliation, etc. All four ordinances would apply to “large” hotels, meaning those with at least 100 rooms or 50 employees. They also allow for the employees’ rights under the agreements to be waived under a collective bargaining agreement in return for other concessions.

The bills potentially create a significant additional workload for the Office of Labor Standards for investigation and enforcement, and potentially for the Office of the Hearing Examiner to adjudicate appeals. They don’t however, allocate any funding to address that workload despite the fact that they would come into effect 30 days after being signed into law by the Mayor.

Equally problematic is the requirement that the Hearing Examiner adjudicate guests’ appeals of being placed on the “blacklist” of a hotel. That would set a precedent where the Office of the Hearing Examiner is deciding matters between two private parties (a hotel and a guest), instead a typical case where it is adjudicating matters related to actions taken by city agencies. The Seattle Municipal Code is written vaguely enough that it’s probably allowed, but it would probably violate the state law that authorizes local hearing examiners.

Even with the remaining problems, which may get worked out through Council deliberations, these bills point to a problem inherent in the voter initiative process: initiatives are one-shot deals where the voters must either approve or reject the initiative as written. While the City Council had the option to write an alternative, improved version to appear side-by-side with I-124, the limited time available between when initiatives qualify for the ballot and the deadline for submitting bills means that in practice it’s rarely possible for an alternative to be written — and certainly not given the weeks, or months, of discussion, review and deliberation that these kinds of labor laws require to get the details right.

There’s also the interesting question of what happens to these ordinances if they are adopted into law and subsequently the state Supreme Court reverses the Court of Appeals and finds that I-124 is indeed valid. One might assume that the law reverts back to I-124, but under the City Charter once two years have passed since an initiative’s enactment the legislature may amend it. I-124 was passed by the voters in November 2016, so it’s fair game for the Council — even though it’s never taken effect.

The bills as introduced by Gonzalez and Mosqueda are clear improvements in many ways over I-124, and offer some important protections to hotel workers. That said, even if the new bills are passed by the City Council, they aren’t out of the legal woods. At the very least, the ordinance requiring hotel employers to pay healthcare expenditures will almost certainly be challenged again in court.