Friday, March 6, 2020

Broadmoor hit with another wage and hour action, prevails on one point

Posted By on Fri, Mar 6, 2020 at 1:36 PM

click to enlarge The Broadmoor hotel: Facing another wage action. - FILE PHOTO
  • File photo
  • The Broadmoor hotel: Facing another wage action.
A battle has been raging between The Broadmoor and a former employee of the five-star hotel over wages, job title, overtime pay and other issues.

The claimant, whose name is shielded from disclosure, worked at The Broadmoor from 2013 to fall 2019 when the claimant resigned.

The claimant, a banquet server, contended the hotel, owned by multibillionaire Philip Anschutz, didn't pay according to wage and hour laws.

In fact, The Broadmoor considered the server, like it considers all its servers, part of the sales staff who are paid commissions rather than gratuities, the resort asserted at a hearing, meaning workers paid commissions don't have to be paid overtime.

In the first round, the Colorado Division of Labor Standards and Statistics ruled on Sept. 4, 2019, that the server was a tipped employee and that the resort had not paid the claimant the tipped minimum wage. It also ruled the employee was not exempt from overtime, and that The Broadmoor owed the server overtime pay.

The Broadmoor appealed. On Feb. 19, a division hearing officer, Eve Pogoriler, ruled that the division erred in deciding the resort failed to pay the tipped minimum wage, but upheld the division's ruling that The Broadmoor failed to pay overtime wages.

As a result, The Broadmoor was ordered to pay the server $7,500 in wages, which is the limit the officer could order under its administrative procedure. The order noted The Broadmoor actually owed the server $9,845 in overtime. The hearing officer also ordered The Broadmoor to pay penalties of $9,375 to the server for failing to pay the overtime when the demand was initially made last summer. Lastly, The Broadmoor was fined $1,850, which is due the Colorado Division of Labor Standards and Statistics.

Last month, the server appealed the portion of the ruling that concluded The Broadmoor did, in fact, pay the tipped minimum wage.

But before we get to that, the division's Feb. 19 decision contained some interesting information about the resort.

First, it noted the resort's senior conference manager, who was not named, testified that 70 percent of The Broadmoor's business comes from "groups and events," as compared to leisure customers.

"The Broadmoor showcases spaces to customers and 'sells' the experience through tours and wine tastings before contracts are signed," the manager said. "The Convention Services and Banquets teams help in that regard. Servers assist at all tastings, and they may 'upsell' guests by expressing a preference for a more expensive wine."

The resorts 12 conference managers host one tasting a month.

"Servers are one reason for return business," the conference manager told the Division. "People want to see certain Banquet Servers again. The more wine that is poured, the larger the check for the event, resulting in larger commissions."

Hence, the manager said, "Banquet Servers are really the ones selling."

The reference to 70 percent of the resort's business coming from groups and events underscores the motivation behind The Broadmoor's expansion of its convention facility, an addition that troubled some of The Broadmoor's neighbors, as we've previously reported.

Also during the Nov. 13 hearing, the decision noted:
[T]he Vice President of Finance testified as follows. The service charge used to be 22%, and 60.23% of the collected amount was distributed to employees. In 2018, the service charge increased to 24%. The employer keeps the entire extra 2%. The share distributed to employees is still 60.23% of 22% (i.e., the “13.25 pts” referenced in the more recent Food and Beverage Charge Distribution sheets: 60.23% x 22% = 13.25%). The employees’ share of the collected service charges (at today’s 24% rate) is about 55.21% of the total service charges.
Those gratuities can total hundreds of thousands of dollars each month, according to data tables included with the Feb. 19 decision.

On Feb. 28, the server filed a motion for reconsideration, asserting the hearing officer failed to:

• Analyze whether The Broadmoor was “engaged in any business where the custom prevails of the giving of gratuities."
• Decide whether customers intended the so-called service charges to go to the employees, not the resort.
• Determine if The Broadmoor, prior to Aug. 1, 2019, as required by law, had posted an appropriate sign informing the general public that service charges were “not the property of [its employees] but belong[ed] to the employer.” (The server alleged it did not, and, therefore, was prohibited from taking any part of those gratuities.)
• Decide whether The Broadmoor's taking a percentage of the service charges violated the Colorado Wage Act.

While The Broadmoor "rebranded" the gratuity in 2019 as a service charge and keeps up to 45 percent of it, the motion to reconsider notes that Broadmoor documents presented in the case refer to the charges as "gratuities" and "gratuity pool."

The hearing officers error in ruling against the employee "severely prejudices [the server's] right to claim the differential between the illegal wage of $2.40 per hour that he received from the Broadmoor and the Colorado Minimum Wages (currently $12.00 per hour) to which he was entitled," the motion states. "For an employee who worked for Broadmoor for more than four years, such damages are substantial."

However, the division refused to reconsider the ruling, meaning the employee now must file a lawsuit. Whether a suit could go forward, however, is questionable, because The Broadmoor requires its employees to sign documents agreeing to take any disputes to arbitration, such as in the lawsuit filed last year and then dismissed because of such a signed document.

That case and the new wage-and-hour case have one thing in common — the attorney. Adam Harrison of Denver represents Broadmoor workers in both matters.

Harrison tells the Indy, the difference between his client being paid minimum wage and his actual wage is "substantial."

We've left a message with The Broadmoor for a comment and will circle back if and when we hear back.

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