Entering 2023, businesses in the hospitality industry continue to face significant litigation risks arising out of employment-related claims. In this article, we will highlight three areas of employment-related litigation risks facing hospitality companies: wage and hour claims, BIPA and other privacy actions based on collection of employees’ biometric information, and human trafficking claims. A common tool available to manage risk in each of these areas is insurance. Accordingly, we also identify and discuss potential insurance coverage disputes common to these risk areas through examination of recent case law.
I. Wage and Hour Claims
Wage and hour claims continue to pose a high risk to hospitality companies, with companies facing investigation and litigation as a result of alleged violations of state and federal wage and hour laws, including failure to pay overtime, failure to provide meal and rest breaks as required, and misclassification of employees as independent contractors, to name a few. “Hotels and Motels” as well as “Food Services” are two so-called “Low Wage, High Violation Industries” designated by the US Department of Labor’s Wage and Hour Division (WHD), and in the 2022 fiscal year, the WHD brought over 4,000 enforcement actions against employers in those industries, recovering over $30 million in back wages for over 25,000 employees.[1]
Entering 2023, wage and hour lawsuits have been filed against hotels around the country—several dozen cases filed in...
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