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Posts from June 2013.

Thank you to Benjamin Lambiotte, technology and transportation attorney at Garvey Schubert Barer, for providing our readers with the latest and greatest on mobile payment technology and its uses in the travel and tourism industry.  - Greg  

As e-commerce continues its evolution to mobile or “m-commerce,” the travel and hospitality industry is at the center of a clash of mobile payment titans. Pack leaders in “near field communications” (NFC)-based mobile payment solutions at present include Google Wallet and Isis, a joint venture among major mobile carriers like AT&T, Verizon and T-Mobile. Generally, NFC technology enables the user to store customer and credit card account information and effect wireless monetary transactions and data transfers between two devices, eliminating the need to carry or present a credit card or fill out lengthy forms online. The potential for the travel industry as an alternative or adjunct to physical credit card transactions is clear and obvious. Every mobile device essentially becomes a point of sale and a transaction can be charged to a credit card account with a simple wave of the device.

Money coming out of a smart phoneAmid considerable fanfare, Travelocity announced that it will integrate Google Wallet into its booking application for the Android platform. Google has announced that Alaska Air has integrated Google Wallet Objects API (which permits loyalty and coupon programs to be integrated into a vendor’s mobile commerce app). Both Priceline and Alaska Air participated in demos at Google’s annual developer conference this month.  One advantage of the Google solution is that it is integrated into and able to leverage the broader Google “ecosystem,” including maps and Google+.

The travel industry presents distinct challenges along with this tremendous potential. Coupons, loyalty and reward programs are ubiquitous, and most frequent travelers participate in many such programs, often represented by multiple cards or accounts. One problem mobile payment providers are wrestling with at present is “banking in” means of transferring, recording and tracking multiple coupon and loyalty program “credits and debits.”

Another major obstacle is that, at present, Google Wallet will not work on Verizon and T-Mobile devices. Those carriers, along with AT&T, are backing a competing digital wallet technology known as Isis, which is currently available for use only on a pilot basis in two US cities. There have been proceedings at the FCC about the legality of Verizon’s efforts to block Google apps, and these are likely to continue and eventually spill into the courts. In 2012, Verizon agreed not to block downloading of most apps (with some exceptions) in a consent decree with the FCC in a case involving Google Play gaming application. Verizon’s blocking of Google Wallets has been challenged before the FCC as a violation of that consent decree. According to the position Verizon has taken before the FCC, Google Wallet uses the "secure element" on devices to store a user's Google ID which is again, according to Verizon, a secure and proprietary piece of hardware distinct from the device itself. Verizon denies that its participation and support for the Isis solution is the reason why Google Wallet will not work on its devices, but many are skeptical of Verizon’s motives.

Also, the airline industry has been grappling with convenience and security issues presented by certain applications of NFC technology, including payment and boarding passes. The IATA has formed a task force that is expected to complete its review of NFC technology and propose standards to its 240 airline members in  October 2013. IATA is examining six major uses for NFC: to enable passengers to tap NFC mobile devices at check-in, security checkpoints and gates; to drop off bags and enter lounges; and to make payments for on-board meals and ground transportation. It issued a joint report with a mobile device industry trade group in 2011 that was viewed as favoring security provided by SIM chips on the devices themselves, as opposed to other means such as dedicated chips, tag reading and peer to peer. The goal is to enable single “tap and go” processing, with no data entry or keystrokes. It remains to be seen whether the final “Fast Travel” task force standards will continue to express a pro-SIM security bias.

Despite technological challenges, some degree of uncertainty and legal wrangling, it is clear that major players in the travel and hospitality industry are positioning themselves to take advantage of the m-commerce environment. Observers continue to debate how transformational m-commerce technology will be in the industry, and who the winners and losers will be, but no one doubts that major changes driven by emerging mobile transaction processing solutions and standards are coming soon.

Please contact Benjamin or me if you have questions.

Jared Van Kirk is a member of Garvey Schubert Barer’s Labor and Employment group and previous blog contributor.  Jared has been following City Council discussions surrounding the newly enacted Job Assistance Bill for some time.  Thank you, Jared, for this timely and very important update for all hospitality industry employers in Seattle.  – Greg

On June 10, the Seattle City Council passed the “Job Assistance Ordinance,” which limits the ways in which most Seattle employers can acquire and consider the criminal history of job applicants and current employees.  This City ordinance will become effective on November 1, 2013 and will require many Seattle employers to change their hiring forms and processes and their policies and procedures related to employee discipline and discharge.

The ordinance applies to all employers with even one employee, but excludes all governments except the City of Seattle.  Employees and applicants are covered if they perform (or would perform) at least 50% of their work in Seattle.  Importantly, the ordinance does not apply to positions in law enforcement, policing, crime prevention, security, criminal justice, or private investigation services or those which may provide unsupervised access to children under sixteen years of age, developmentally disabled persons, or vulnerable adults.

The ordinance will prohibit employers from categorically excluding applicants with arrest or conviction records.  To comply, employers must eliminate such exclusions from job postings and other advertisements, as well as from their internal hiring process.

In addition, employers may only perform background checks or ask applicants for information about their arrest or conviction records after first screening applications and resumes to eliminate unqualified applicants.  As a result, applications for covered positions may no longer require disclosure of arrest or conviction history and background checks must be delayed until an applicant has passed an initial application/resume screen.

The ordinance also restricts the actions employers can take based on criminal history information.  Employers must make changes to their internal hiring, discipline, and discharge policies and procedures to be consistent with these limitations.  Employers may not take any adverse action based solely on an arrest, but may inquire about the circumstances related to the arrest.  Employers may not reject an applicant or discipline or discharge an employee based on conduct that led to an arrest, conviction, or pending charge without a “legitimate business reason.”  A “legitimate business reason” is a good faith belief that that the nature of the underlying criminal conduct will negatively impact the applicant’s or employee’s ability to perform the job or will cause harm or injury to people, property, business reputation, or business assets.

Identifying a “legitimate business reason” will add complexity and documentation to hiring, discipline, or discharge decisions based on criminal history information.  Although the standard is likely not as demanding as the “undue hardship” standard familiar in disability accommodation situations, the ordinance does require an employer to consider several specified factors before concluding that there is a legitimate business reason – consideration that a prudent employer will need to support and document.

Finally, the ordinance creates procedural rights that may also change the way many employers hire and discharge employees.  Before taking any adverse action against an applicant or employee based on criminal history information, the applicant or employee must be informed of the information being considered and given an opportunity to respond to the information.  The employer must hold a position open for at least two business days to give an applicant or employee the opportunity to respond.

The ordinance will be enforced by the Seattle Office for Civil Rights, and provides for monetary penalties and attorneys’ fees, but it does not provide applicants and employees with a private right of action.

The full text of the recently passed Job Assistance Bill is available HEREPlease contact Jared or me if you have questions. Stay tuned - Jared will keep us updated on the Bill and offer practical guidance in an upcoming installment.

Tip Pooling Update

Catch up on Joy's previous tip pooling update here and continue reading for the latest ruling.

On June 7, 2013, a federal judge in Oregon ruled that the Department of Labor went beyond its authority when it issued regulations in 2011 prohibiting the use of tips by an employer even when the employer does not take a tip credit.  Judge Michael Mosman held that Congress had intended to impose conditions on employers that take a tip credit but did not intend to impose a freestanding requirement pertaining to all tipped employees. Consequently, the 2011 tip pooling regulations are not valid in the Ninth Circuit.  The decision may be appealed, so employers aren't out of the woods yet, but for now this is a big win for the restaurant industry.

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Greg Duff
Greg Duff founded and chairs Foster Garvey’s national Hospitality, Travel & Tourism group. His practice largely focuses on operations-oriented matters faced by hospitality industry members, including sales and marketing, distribution and e-commerce, procurement and technology. Greg also serves as counsel and legal advisor to many of the hospitality industry’s associations and trade groups, including AH&LA, HFTP and HSMAI.

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