InRLA 2013 April Newsletter

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April 2013

Health care law: Key dates and deadlines The health care law kicks into high gear in 2014, but significant movement is happening now as states and the federal government plan to roll out the law. Here’s a look at some key dates and deadlines: 2013 • Notification to employees. Employers are waiting for more details from the Labor Department on a new rule that will require any business covered by the Fair Labor Standards Act to notify existing employees and new hires about the new “health insurance marketplaces,” or exchanges. The requirement was supposed to take effect in March but the DOL had delayed this until late summer or early fall. • Exchange open enrollment. Beginning Oct. 1, 2013, individuals and small businesses will be able to starting enrolling in coverage through exchanges for plan years beginning Jan. 1, 2014. 2014 • Employer mandate. Employers with 50 or more full-time-equivalent employees must offer “minimum essential coverage” to all employees who average 30 or more hours a week in a given month, or potentially be liable for penalties. • Individual mandate. Most individuals will be required to obtain health insurance coverage – through their employers, state exchanges, Medicaid/Medicare or elsewhere -- or face an annual tax penalty. The penalty for an individual who does not obtain coverage in 2014 will be $95 or 1 percent of income, whichever is higher. • Health insurance marketplaces (exchanges) open. All states will have marketplaces up and running to offer individual and small group plans that are administered by private insurance companies. It’s likely that employers and employees will have a lot of interaction with exchanges, whether run by states, the federal government or a partnership between the two,. • 90-day waiting period. All group health plans are allowed up to a 90-day waiting period before offering coverage. • Automatic enrollment. Employers with 200 or more full-time employees must automatically enroll full-time employees into one of the plans the employer offers after the applicable waiting period. This auto-enroll requirement is set for 2014 but the Labor Department says it isn’t ready -- so employers won’t be required to comply until regulations are issued. The National Restaurant Association is working to repeal this section of the law. • Exchange reinsurance fee. From 2014 to 2016 health insurers and self-funded plans are required to contribute to a fund that will be used to make sure the exchanges function properly. The fee is $5.25 a month per capita, or $63 per person in the first year. Health insurers are likely to pass this cost on to small employers. 2017 • Exchanges grow. Although only individuals and small group employers are eligible to purchase coverage on state exchanges from 2014 through 2016, beginning in 2017 states may elect to allow large group plans (those with 100 or more participants) to be sold on the exchange as well. States may also form regional exchanges. 2018 • “Cadillac” plans. Beginning in 2018, the law imposes a new 40 percent excise tax on the value of coverage that exceeds certain dollar thresholds. For 2018, the dollar thresholds for the excise tax are $10,200 for individual coverage and $27,500 for family coverage. Detailed information on the health care law is available at the National Restaurant Association’s Health Care Knowledge Center, Page 1 Restaurant.org/Healthcare.


District of Columbia Sales and Use Tax: Court Denied Immediate Appeal of Online Travel Companies’ Liability The District of Columbia Superior Court denied online travel companies (OTCs) an order to permit the immediate appeal of the court’s summary judgment which ruled that the OTCs owed sales tax on the online sales of hotel rooms. Three elements must be satisfied for a court to grant a petition for immediate appeal: (1) the order must involve a “controlling question of law” ; (2) as to which there is a substantial ground for a difference of opinion; and (3) an immediate appeal from the ruling or order may materially advance the ultimate termination of the litigation or case. The court found in favor of the OTCs on the first element. The sales tax question at issue in the summary judgment, whether the D.C. Gross Sales Tax Law applies to the OTCs’ room charges, is a “controlling question of law.” However, the court found that the OTCs failed to establish that there are substantial grounds for a difference of opinion as required by the second element. The court found that its prior finding, that there is only one “natural reading” of the collective statutory provisions of the DC Gross Sales Tax Law, supports its determination that there is only one proper interpretation of the provisions. Finally, the court found that allowing an immediate appeal would unduly delay litigation of the remaining issues in the case and would lead to two appeals, rather than advance the termination of the litigation. The court agreed with the District that the remaining issues in the case would be appealed regardless of the case’s outcome.

Majority sides with hotel in lawsuit stemming from molestation A divided Indiana Supreme Court affirmed summary judgment for a hotel, its owner and the hotel franchisor that the hotel’s insurance company had no duty to defend a civil complaint brought by a minor motel guest who was molested by an off-duty employee. R.H.M. was a guest at the New Castle Holiday Inn Express owned by Anil Megha when employee Michael Forshey entered his locked room at night and molested him. Forshey has been convicted of child molestation. R.H.M.’s mom sued the hotel, the franchisor Holiday Hospitality and Megha, claiming, among other things, battery, negligent retention and supervision, and negligent hiring. AMCO Insurance Co., which insured the Holiday Inn Express, claimed it owed no coverage for any liability from the complaint and it had no duty to defend any of the defendants. Holiday Hospitality and Megha were listed as additional insureds. The policy expressly disclaimed coverage for acts of molestation or abuse by excluding any bodily injury or personal or advertising injury arising from the actual or threatened abuse or molestation by anyone of any person while in the care, custody or control of the insured.” The trial court ruled in favor of the defendants, but the Indiana Court of Appeals reversed, finding a genuine issue of material fact as to whether R.H.M. was in the care, custody or control of the hotel at the time of the molestation. In Holiday Hospitality Franchising, Inc. v. AMCO Insurance Company, 33S01-1206-CT-312, Justice Steven David, writing for the majority, affirmed summary judgment for the insurance company. Focusing on the “care, custody or control” portion of the policy and using those terms’ definitions from Webster’s Dictionary, David and Justices Mark Massa and Loretta Rush found the child was not in the custody or control of the hotel, but he was in the care of the hotel at the time of the molestation. “Simply put, we believe these facts reflect precisely the sort of scenario contemplated by the parties to be excluded from coverage when they agreed to the insurance contract,” David wrote. Chief Justice Brent Dickson concurred in a separate opinion, believing the proper understanding of “care” is established by Indiana law that a hotel guest is considered a business invitee and is entitled to a reasonable duty of care. In this case, “care” exists as a matter of law, so the exclusion applies. Justice Robert Rucker dissented, believing it should be up to the trier of fact as to whether R.H.M. was under the control or care of the hotel.

http://www.theindianalawyer.com/majority-sides-with-hotel-in-lawsuit-stemming-from-molestation/PARAMS/article/30915 Page 2


InRLA Member Featured on the Cover of "Lodging" Magazine

Endorsed Providers

Indiana Restaurant & Lodging Association (InRLA) hotel member, Michael Moros is featured on the front cover of American Hotel & Lodging Association’s “Lodging” magazine for the month of March. He is the General Manager at the newly built hotel, The Alexander in downtown Indianapolis. Prior, Moros worked as director of rooms, director of food and beverage and as a chef at different hotels. From his various experiences he has gained a wellrounded perspective on running a hotel. Moreover, Moros attributes the success of the opening of The Alexander to the people he hired. “Equipment is great, art is great, technology is great, but without the talent to provide excellent service, it’s not going to be successful,” said Moros. “We consider our staff artists. They need to understand hospitality. We can teach them the technical skills they need, but we can’t teach personality,” said Moros. For more on this story, please check out AHLA's March issue of "Lodging."

FTC Issues Warning Regarding Hotel Fees The Federal Trade Commission (FTC) posted a letter on its Website concerning fees charged by hotels. The letter was issued following an FTC investigation of hotels' alleged use of "dip pricing," defined broadly as a pricing technique in which firms advertise only part of a product's price and reveal other charges later as the customer goes through the buying process. According to the letter, "One common complaint consumers raised involved mandatory fees hotels charge for amenities such as newspapers, use of onsite exercise or pool facilities, or Internet access, sometimes referred to as 'resort fees'. These mandatory fees can be as high as $30 per night, a sum that could certainly affect consumer purchasing decisions. FTC staff has reviewed a number of online hotel reservation sites, and has confirmed that some hotels exclude resort fees from the quoted reservation price. Instead, the 'total price' or 'estimated price' quoted to consumers includes only the room rate and applicable taxes. At some of these sites, the applicable resort fee is listed nearby, but separate from, the quoted price. In others, the quoted price is accompanied by an asterisk that leads consumers to another location at the site – sometimes on the same page, sometimes not – where the applicable resort fee is disclosed, typically in fine print. A few sites fail to identify applicable resort fees anywhere, and instead inform consumers that other undefined fees may apply." According to a FTC press release, 22 hotel operators have been contacted and warned that "their online reservation sites may violate the law by providing a deceptively low estimate of what consumers can expect to pay for their hotel rooms." The FTC has encouraged these 22 companies to review their Websites to "ensure that their ads do not misrepresent the total price consumers can expect to pay. WHAT YOU CAN DO The letter can be read in full at http://www.ftc.gov/os/2012/11/121128hoteloperatorsletter. pdf. Should you receive a letter, please consult legal counsel. If you review your Website and conclude that changes possibly should be made, you should consult a lawyer before taking any further steps. Page 3


National Restaurant Association Board Member Highlights Health Care Law Challenges before Congressional Committee (Washington, D.C.) Stressing the unique characteristics of the restaurant industry, a National Restaurant Association board member and restaurant industry veteran today told members of Congress that the 2010 health care law poses costly challenges for employers and, without modifications, may sacrifice jobs. Tom Boucher, an independent restaurateur and CEO-Owner of Great New Hampshire Restaurants, Inc., testified before the U.S. House of Representatives Energy and Commerce Committee’s Subcommittee on Health hearing examining the law’s impact on jobs. “The National Restaurant Association has worked to constructively shape the implementing regulations of the health care law since its enactment,” Boucher said. “Nevertheless, there are limits to what can be achieved through the regulatory process alone. Changes in the law are needed given the challenges employers such as restaurant and foodservice operators face in implementing it.” The National Restaurant Association has worked for more than two years to highlight the restaurant industry’s challenges in complying with the law, filing volumes of comments with regulatory agencies to get the answers restaurant operators need and to ensure they have maximum flexibility as the rules are written. In his remarks on behalf of the Association, Boucher pointed to several requirements that are problematic for the industry, which is predominantly comprised of small businesses, a young and highly mobile workforce and low profit margins. “Broader transition relief is needed for employers attempting to comply with the law in good-faith as time is short to make the significant changes required by the law,” Boucher said. “The duplicative automatic enrollment provision should be eliminated as it could unnecessarily confuse and financially harm employees.” In addition, the Association has said the law should more accurately reflect the general business practice of 40 hours a week as full-time employment. The applicable large employer determination over-reaches to include more small businesses than it should through the very complicated full-time equivalent definition. Boucher added, “The National Restaurant Association looks forward to working with this Committee and all of Congress on these and other important issues to improve health care for our employees without sacrificing their jobs in the process. We also continue to actively participate in the regulatory process to ensure the implementing rules consider our industry’s perspective.” Boucher’s complete written testimony for the committee hearing can be found at http://www.restaurant.org/Downloads/PDFs/ advocacy/20130313_hc_energycommerce_nra_testimony.

Papa Roux Owner Hires Young Man With Great Work Ethic It seems Americans are generous only during the Holidays, but for Papa Roux restaurant owner, Art Bouvier, his generosity toward an 18-year old man has sparked viral attention on social media web site, Facebook. Bouvier, shared his story about hiring Jhaqueil Reagan on Facebook when he found the man trudging through snow for a job interview that was nearly 10 miles away. “I’m thinking to myself, here’s a kid walking almost 10 miles in the ice and slush and snow for the hope of a job at minimum wage,” Bouvier told Fox 59. Bouvier could tell Reagan had a strong work ethic and told him whatever the other shop offered him, he would double it. “It’s been a while since I’ve met someone so young with a work ethic like that!” Bouvier wrote on Facebook. Reagan told Fox 59 that it was hard finding opportunities. He was forced to quit school two years ago when his mother died. He completed his GED while staying home to care for his siblings. Through Bouvier's generosity, lots of people are now dining at Papa Roux and of course, having a hard worker such as Reagan is probably helping with great customer service and most importantly, creating devoted customers who will keep coming back.


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HOOSIER HOSPITALITY CONFERENCE The Hoosier Hospitality Conference (HHC) hosted its annual conference at Hilton Indianapolis Hotel and Suites in March. HHC is Indiana's only all industry educational and networking conference for people in the hospitality sector. HHC selected eight speakers that talked about informational and innovative ways to stimulate tourism and better business. Jim Knight was the key note speaker at HHC where he talked about better ways to develop a manager’s skill-set in a particular area that deals with coaching and counseling employees.

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The Indiana Restaurant & Lodging Association (InRLA) had its annual Legislative Hospitality Day at the State House in February. Members had the opportunity to meet face-to-face with Hoosier legislators and educate them about their business and the tourism industry. State House employees were able to enjoy the “Taste of Hoosier Hospitality” lunch with food provided by several popular Indiana restaurants and hotels.

Cuisine Provided by: Arni’s / 120 West / Hilton Indianapolis, Barcelona Tapas, Champions Sports Bar / Marriott, Harry & Izzy’s, Morton’s The Steakhouse, Penn Station, Slippery Noodle, St. Elmo Steak House, Triple XXX, Weber Grill, Oceanaire Seafood Room, Hyatt Regency / The Eagle’s Nest / One South / Level One, Gordon Food Service Special Thanks To: Republic National Distributing Company, Heartland Payment Systems, Coca- Cola, Sysco, Page 7


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Agreeing to the Proposed Swipe Fee Settlement Could Hurt Your Bottom Line in the Long Run Consider these points before making your decision

In February 2013, millions of restaurateurs and other merchants began receiving notices from the U.S. District Court for the Eastern District of New York informing them of a proposed settlement in a longstanding class-action case the National Restaurant Association (NRA) and other merchant groups filed against Visa, MasterCard and several large banks over creditcard acceptance fees and rules. For weeks, the NRA have been urging members to closely weigh their options in the class-action case. While the NRA opposes the settlement in its current form, ultimately the decision on how to proceed is left up to each individual restaurateur. Before you make your decision, we simply want to share some information with you. There are four options from which to choose: 1. Object to the settlement. If you object to the proposed settlement but don’t opt out, you will still receive damages. Your objection will indicate to the court that you have concerns about the proposed settlement agreement, and they will be taken into consideration when the court reviews the merits of the agreement at the Sept. 12, 2013 fairness hearing. 2. Opt out of the settlement. You may independently conclude that the settlement is bad for you and/or for merchants generally. If you opt out of the settlement, you will not receive damages. Your “opt-out” will indicate to the court that you have concerns about the proposed settlement agreement, and they will be taken into consideration when the court reviews the merits of the agreement at the Sept. 12, 2013 fairness hearing. 3. Opt out and object to the proposed settlement. If you opt out and object, you will not receive money damages. Choosing to both opt out and object will be the strongest indication to the court that you have reservations about the proposed settlement. 4. Remain in the class. Do nothing and you will automatically become part of the class. If the court approves and finalizes the proposed settlement at the Sept. 12, 2013, fairness hearing, you will need to fill out a claim form in late 2013. Class members with more than one location or at a franchise that accepts Visa or MasterCard may fill out a pre-registration. Why Did the NRA Object to the Proposed Settlement’s Terms? In September 2012, the NRA Executive Committee unanimously decided to oppose the proposed agreement, for the following reasons: 1. The agreement does very little to correct the broken marketplace in which interchange fees are set; 2. The agreement includes an overly broad waiver of legal rights to trial on related fees and card network rules, which may limit the ability to litigate future issues with Visa, MasterCard and the large banks; and 3. The changes the card networks will make to their rules as a result of the proposed settlement are not likely to provide meaningful reforms due to operational and legal challenges in implementing such changes.

Totaling $7.25 billion in damages, the proposed settlement is shared across the entire card-accepting merchant community, roughly 7 to 8 million merchants who could choose to remain in the class. The damages are comprised of two segments: 1. The cash fund, estimated at $6.05 billion, will be awarded based on the total dollar value of all claims filed. It could be reduced by up to 25 percent depending on merchant “opt -outs” in the case, and it will also be reduced by the costs of administering the settlement and attorneys’ fees (capped at 11.5 percent of the cash fund and 11.5 percent of the interchange fund). 2. The interchange fund, estimated at $1.2 billion, is the amount that will be awarded based on the sales volume of merchants who remain in the class and who allow customers to use MasterCard or Visa credit cards for an eight-month period starting Jul. 29, 2013. The damages awarded to those merchants is estimated to be roughly equivalent to one-tenth of 1 percent of the transaction volume of those merchants who accept Visa and MasterCard credit cards during that eight-month period. In addition to what may end up being limited settlement funds, the proposed settlement also requires Visa and MasterCard to modify some rules for merchants who accept their cards, including the limited changes in surcharging rules and changes in “all-outlet rules. However, most impactful of all the proposed settlement requirements would be restrictions on certain merchants to waive many future claims against Visa, MasterCard and the banks. This means that if the companies were to engage in an activity that negatively impacted restaurateurs in the future, the chance would exist that no action could be taken against the parties. In fact, if the court approves the settlement, all merchants in the “rule change” class will be bound by the terms of the settlement regarding rule changes by the networks. No merchant can opt out of this class. If the proposal gets final approval, all merchants will be required to release all claims against Visa, MasterCard or banks regarding interchange or other fees, the no-surcharge rules, no-discounting rules, honor-all-cards rules and other related rules and associated conduct. Meanwhile, merchants who remain in the cash-settlement class will receive cash damages in the case. However, this class of merchants waives all rights to file further damages claims against Visa, MasterCard or banks for substantially similar fees, rules or conduct. Merchants who opt out of the cash-settlement class may be part of future lawsuits that seek damages (not injunctive relief) on similar claims. In light of these concerns, the NRA and other state restaurant associations are encouraging members to be careful on what action they take. Each individual restaurateur

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Swipe Settlement Continued... must decide on their own how to proceed -- whether to object to the settlement, opt out of the settlement, opt out and object or remain in the class. The NRA's "Know Your Options" fact sheet outlines steps you need to take by May 28 if you want to send a message that you think the proposed settlement in the swipe-fee case against Visa, MasterCard and big banks is a bad deal for merchants. To read the fact sheet, go to http://www.restaurant.org/advocacy/All-Issues/Swipe-fees/Overview. A “Merchants Object” website provides restaurateurs with easier ways to voice their opposition in the strongest way possible: by both opting out of and objecting to the settlement. The site is open to any merchant who accepted Visa or MasterCard since 2004. Submit your statement with an e-signature by May 28 by going to http://merchantsobject.com/. To learn more, go to http://www.restaurant.org/Downloads/PDFs/advocacy/settlement_overview.pdf.

Call for 2013 Hoosier Hospitality Awards Nominations Annually, the Lieutenant Governor honors the exceptional front-line staff members of the Indiana tourism industry. These individuals exemplify Hoosier Hospitality. Nominate the person you feel makes tourism in your community a success. The nomination deadline is Wednesday, April 17. If your nominee is selected for a 2013 Hoosier Hospitality Award, you will be notified by email no later than Monday, April 22. Submit your nominations here. If questions, please contact Amanda Neyron at aneyron@visitindiana.com.

Hotels being targeted for Pool Lift ADA Violation Lawsuits A downtown Indianapolis hotel was served this week with a class action suit in regard to ADA Pool Lift Accessibility. The plaintiff described the “violation at issue” to be that he had called the hotel and asked the operator if the hotel had an accessible pool lift or other means of providing access to persons with mobility impairments. He claims the hotel responded with NO. The hotel does have a pool lift that meets all new requirements for pool accessibility.

Pool Lift Signage for Lodging Properties

At another hotel an in-house reservation coordinator received a call last night around 5:30pm. The caller spent the better part of an hour questioning her on all aspects of the ADA regulations. The caller placed the person on hold several times and came back with more questions after each time. Fortunately the hotel personnel responded yes to all the questions but felt as though there was a lot of pressure being applied to get to a no.

WARNING: To avoid risk of injury

We believe this was a group simply calling all hotels in hopes of getting a NO response.

User shall assume all risks and responsibilities for safety and proper use while using the lift. Property is not responsible for any injuries or damages suffered due to the use of the lift, including any improper methods used to exit or enter the liftchair.

Thanks to all who report scams to your Association. Please report scam activity to us to help alert your fellow operators. AH&LA provides pool lift signage AH&LA has worked with counsel to provide suggested guidelines for properties to post safety signage for guests while using pool lifts. As a reminder, properties must have a pool lift out in position and ready for use all hours the pool is open and a separate means of entry for each pool/spa, and the lift must be attached to the pool deck or apron in some manner Page 10

Lodging properties installing pool lifts may follow these steps when posting warnings at their pools and spas: 1. Put decals on the pool and whirlpool lift itself that read: NO PLAYING OR JUMPING ALLOWED. 2. Add new wall signage near pool lifts and whirlpool lifts that reads:

• Do not permit children to play on this product. • Make sure the area around the lift is clear before operating. • Never operate the lift with any person within the operating range of the lift either on the deck or in the water. • Never move the lift down while over the deck.

Report any unsafe conditions or violations to the management immediately. 1. Post Instructions on how to use pool and/or whirlpool lift. 2. Post notice that: "Pool lift is for use by guests with disabilities only. All other uses are strictly prohibited. Instructions for pool lift use located at ___________. For assistance with lift, please contact ______".


Hotels ONLY: LODGING TAX STUDY The Lodging Tax Study, commissioned to provide current information on state lodging tax structures, total lodging tax collections, and lodging taxes in the largest cities, is now available free to members. The 34-page study results include: • • • • • •

The total tax rate for 182 cities across the United States. Breakdown by state, multi-county, county, city, sub-city, and sales tax. The total lodging tax collections in 2011 for 23 states. Tax rates and total room revenue data for the top 25 markets. Terminology utilized by each state for their respective lodging taxes. Tax use table, which describes the percentage that goes toward tourism-related purposes versus government purposes.

AH&LA members can view and download a copy of the Lodging Tax Survey through the Members Only section of the AH&LA Website, www.ahla.com. This study is FREE to AH&LA Members.

I-9 Update After May 7, failure to use the revised federal Form I-9 could result in penalties, says the U.S. Citizenship and Immigration Services. Your HR or Payroll people need to use the new form for verification of employment eligibility. However, they don’t need to replace already-completed and up-to-date forms they have on file. Here’s a closer look at the changes mandated by the new Form I-9 1: Step-by-step approach The new title of Section 1 of the form is “Employee Information and Attestation.” The instructions are longer, with a more stepby-step approach to filling out the form. In addition, the legal requirements are more obvious. For example, the instructions begin: Newly hired employees must complete and sign Section 1 of Form I-9 no later than the first day of employment. Section 1 should never be completed before the employee has accepted a job offer. As for the form itself, Section 1 now takes up an entire page. Sections 2 and 3 are on another page. In Section 1 of the form, the Maiden Name data field is now Other Names Used (if any). Optional data fields have been added for Email Address and Telephone Number. Under the checkbox regarding aliens authorized to work, data fields have been added for Alien Registration Number/USCIS Number or Form I-94 Admission Number. Other data fields have been added. Section 2: What’s expected The title for Section 2 is “Employer or Authorized Representative Review and Verification.” Again, the instructions are longer and make legal expectations clearer. Note: The person who examines the documents must be the same person who signs Section 2. The instructions go on to say: [That person] and the employee must both be physically present during the examination of the employee’s documents. As for the actual form, there’s more space in Section 2 for you to record document information. Section 3: More clarity The title for Section 3 is now “Reverification and Rehires.” As throughout, the instructions are longer and clearer. There’s information about which employees you should not reverify. Also, the instructions specify: If both Section 1 and Section 2 indicate expiration dates triggering the reverification requirement, the employer should reverify by the earlier date. As for the form itself, a data field has been added in Section 3: “Print Name of Employer or Authorized Representative. “

In Memoriam The InRLA would like to commemorate two past presidents of the Indiana Restaurant Association who are no longer with us. Robert "Bob" Duane Layne Former owner of The Flamingo Restaurant, passed away on March 5, 2013. Hubert "Kel" Harvey Kelso Former owner of Hollyhock Hill, passed away on April 5, 2013.

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