Despite lawsuits and persistent legal uncertainties, the “sharing economy” is booming, and the companies at its forefront continue to grow. Some of these businesses are a natural complement to the hotel industry, while others directly compete with it. Whatever may become of these companies as they are reined in by regulation, one thing is certain: the rise or fall of the “sharing economy” will define the landscape of the hospitality sector in the decades ahead.
Ridesharing giant Uber raised $2.1 billion in its most recent round of funding, buoyed by a valuation of more than $65 billion – a remarkable ascendance for the five-year-old company. Its success has attracted a wave of new entrants seeking to gain a foothold in this burgeoning market. But the road to a share of the sharing economy is fraught with legal peril.
Bernice Johnson Blessing is an Associate in GSB’s Labor and Employment, and Hospitality and Corporate Law practice group. She is also the newest member of the hospitality team and has had a distinguished career in leading human resources teams for hotel management companies and major hospitality brands for more than 15 years. You can reach Bernice at firstname.lastname@example.org or 206.816.1465.
From franchisers and companies hiring workers through staffing agencies, to participants in the so-called “sharing economy,” companies and individuals today enter into a variety of contractual arrangements to reduce costs and to maximize available capital, flexibility, talent and efficiency in delivering goods and services. The recent decision of the National Labor Relations Board (“NLRB” or “Board”) in Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (2015), may change how many of these relationships function, and even, whether some of them are now too risky for some participants.
In the hospitality industry, dress code policies are very important. Diana Shukis, member of our Labor and Employment Group, brings us the latest US Supreme Court ruling regarding image-based policies. Thank you, Diana! – Greg
On June 1, 2015, the US Supreme Court ruled in favor of the US Equal Employment Opportunity Commission (EEOC), concluding that an employer cannot refuse to hire a qualified job applicant in order to avoid accommodating a religious practice – even if the applicant did not request an accommodation. An applicant must only show that her need for a religious accommodation was a motivating factor in the potential employer’s decision not to hire.
In EEOC v. Abercrombie & Fitch, Samantha Elauf, a Muslim who wore a headscarf for religious reasons, interviewed for a sales floor position at Abercrombie. Ms. Elauf wore a headscarf to the interview, but did not discuss her religion or say that she wore the headscarf for religious reasons. The assistant store manager who interviewed Ms. Elauf did not ask about the headscarf, but later testified that she assumed Ms. Elauf was Muslim. The assistant store manager gave Ms. Elauf a rating that qualified her to be hired, but was concerned that Ms. Elauf’s headscarf conflicted with Abercrombie’s dress code, which prohibited headwear of any kind. The assistant store manager checked with the district manager, who directed the assistant store manager not to hire Ms. Elauf because her headscarf would violate Abercrombie’s dress code.
The EEOC sued on Ms. Elauf’s behalf, claiming that Abercrombie’s refusal to hire Ms. Elauf because of her religious practice violated Title VII of the Civil Rights Act of 1964 (Title VII), which prohibits discrimination based on race, color, sex, religion or national origin. Abercrombie argued that it did not violate Title VII because its dress code banned all headwear, whether religious or not, and because Ms. Elauf had not requested an accommodation due to her religion.
The Supreme Court rejected Abercrombie’s argument that Ms. Elauf had to prove Abercrombie knew she needed a religious accommodation, noting that Title VII does not include a knowledge requirement. Title VII outright prohibits certain motives, including making employment decisions based on religion, regardless of an employer’s actual knowledge. The evidence showed that Abercrombie at least suspected Ms. Elauf wore the headscarf because of her religion and it refused to hire her because of it.
- Don’t stick your head in the sand. If you suspect that an applicant may need a religious accommodation if hired, you should engage in an interactive process with her. Typically this would include explaining the relevant policy and asking whether she can comply with it. If not, ask why. If it is because of religion, ask whether she would need an accommodation and what that might be. Then, evaluate whether granting the accommodation would impose an undue hardship. Remember to use caution in asking the follow up questions. Focus on the job requirements and whether the applicant can meet them – not on the applicant’s religious beliefs and practices.
- Train interviewing teams. Be sure that you provide regular training to those who interview in your organization. They need to understand what they can and cannot ask in the interview process and when they need to call in reinforcements to assist with more challenging issues. Also make sure that higher level managers have appropriate training, including on when to contact HR before making a decision. I bet Abercrombie & Fitch wishes its district manager had called HR before giving the “do not hire” instruction as to Ms. Elauf.
- Review your appearance policy. Dress codes and appearance policies are very important in the hospitality industry, but this case is a good reminder of some of the dangers lurking in and around them. The EEOC is very skeptical of image-based policies that seem to exclude people based on how they look and/or what they wear. Be sure your appearance policy is updated and in-line with what is truly important for your business.
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.