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Inside
wahospitality.org
Features 11
The Future of Telehealth
18
Retaining and Growing Great Employees
23
How to Raise a Hospitality Leader
26
Legally Valid Unpaid Internships are Rare
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In Every Issue
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WA S H I N GTO N
INVESTING IN YOUR a WORKFORCE
August 2017
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LEADER
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From Your President and CEO
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News Briefs
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Industry Events
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News from Around the State
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Local GA Update
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State GA Update
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Calendar/New Members
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Ask the Expert
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EDITORIAL STAFF Publisher, Anthony Anton Executive Editor, Lex Nepomuceno Editor-in-Chief, Marianne Scholl Art Director, Lisa Ellefson Managing Editor, Paul Schlienz Contributing Editor, Andy Cook Contributing Editor, David Faro Contributing Editor, Jillian Henze Contributing Editor, Morgan Huether Contributing Editor, Stephanie McManus Research Editor, Sheryl Jackson EXECUTIVE COMMITTEE Co-chair, Phil Costello Stop n’ Go Family Drive In Co-chair, Frank Welton Hilton Worldwide EXECUTIVE TEAM President and CEO, Anthony Anton Vice President, Teran Haase Director of Business Development, Ken Wells Director of Communications & Technology, Lex Nepomuceno Director of Local Government Affairs, John Lane Director of State Government Affairs, Julia Gorton Director of Internal Operations, Kylie Kincaid Director of Membership, Steven Sweeney Education Foundation, Naja Hogander
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President and CEO The days of a readily available workforce are gone. Like it or not, getting 50 to 70 applications in response to a single job posting is probably a thing of the past. Changing population patterns, Boomers retiring en masse, competition from other industries, the crackdown on immigration that started several years back… all of these trends are putting a squeeze on available workers. This fact, together with a higher minimum wage, is one of the reasons we have to work out a new business model. And as we work on our new model, we should be asking ourselves how we will address worker development and worker loyalty. If we don’t focus on the success of our employees, we just aren’t going to have enough people showing up, and we can’t provide great hospitality without them. Many companies are already doing an excellent job on this front, and the benefits they provide employees are providing paths to help these employees help themselves. By focusing on helping workers expand their skills and education, these companies in return attract great employees who are invested in creating a better future for themselves. They do better at work, becoming more efficient every day and more loyal to you for believing in their future. While I wouldn’t yet call this a broad trend, truly investing in our workforce for their education and skill development is another intriguing development. Education — Here in Washington, Dick’s Drive-In has a long tradition of providing college tuition assistance for its workers. Other local and national stakeholders now also have educational initiatives. Starbucks employees can earn college degrees from Arizona State University’s online program tuition-free, and Chipotle now has a four-year degree program. Training — With McDonald’s massive investment in technology, both in kiosks and in app ordering, they are now actually training their workers to be “OTPs” or onsite technical professionals. There will be three levels of OPTs, and I’m told that an OTP 3 should be able to walk into any retail company and be their tech expert. This should be a huge attraction to ambitious employees. It’s important to recognize that this technological change is coming. We may not have people at the counter anymore in quick service restaurants, but we’ll have professional technical people working onsite so that when a kiosk goes down or a system order has trouble they can act immediately to start fixing it. Flexibility — I was in Bellingham recently and heard about a crew at a local brewery that has figured out a server rotation that gives workers three-months a year to pursue what they love. Some are adventure seekers who head down to South America, another group is skiers and another is students. They keep coming back because this job lets them live exactly the life they want to live. Some of these ideas are new to the industry. Some of these ideas are old staples. Worker flexibility has long been valued by employees in our industry. Flexibility allows them to pursue an education or to cultivate a special talent or interest, or to simply live a less restrictive life by giving them more control over their work hours. As one of my counterparts at another state association is fond of saying, when we hire an employee we are making an investment, not unlike being an investor in a start up. We believe in their abilities and in hiring them, we’re offering start-up capital to help them get to where they want to go in the future. Offering benefits like tuition credits, flexibility or on-the-job training may be what the most promising start ups require. I think that’s a good mindset to have as we revamp our business model because labor costs will continue to be our biggest investment in our shared success. Anthony Anton
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Primary Source of Information | News Briefs
intentions to act in the next 12 months, but this is subject to change.
Labor Department Indicates It Will Rescind TipPooling Restrictions The U.S. Department of Labor has signaled its plan to rescind its controversial tip-pooling restrictions at least as it applies in states like Washington where tips cannot be used to offset the federal minimum wage. On July 20, it published in its agenda that it will issue a “Notice of Proposed Rulemaking,” the first step in making a change in the tip regulations issued in 2011 under the Obama administration. “This does not immediately change existing law, but merely sets the table for future action,” says Catharine Morisset, a partner in Fisher Phillips’ Seattle office. She also points out that the agenda reflects DOL’s
For now, the tip pool rule remains in place, and our appeal with the National Restaurant Association and others to the Supreme Court remains active. No action from the high court is expected before Sept. 8, which is the new deadline for DOL to respond to the NRA’s certiorari petition. Restaurateurs should be aware that during an eventual new rulemaking process, despite DOL enforcement being stayed while the Supreme Court decides on the certiorari petition, an individual employee could still file a private lawsuit against an employer over tip pool practices. If the employee were to prevail, there could be a significant lookback period. Employers should also know that mandatory tip pools come with their own set of risks under Washington state law. Initiative I-1433, the voter-approved statewide minimum wage initiative, expressly states that an employer “must pay” all tips “to its employees.” The regulations on this new law are not yet final, but at a minimum, it likely means that employees cannot be required to share tips with managers or owners.
Business groups and 21 states are challenging DOL’s right to establish a salary threshold. In a brief it filed in June, the Labor Department under the new administration said it wants salary level to count in deciding who is eligible for overtime pay, but it is holding off on setting the maximum pay a worker can get and still qualify. DOL Takes Step Toward Dismantling Obama-Era Overtime Rule In June, the Department of Labor signaled that it would revisit the overtime-exempt salary threshold in the Obamaera federal overtime rule. That rule, which would have doubled the overtime exempt salary threshold to $47,000, was put on temporary injunction nationwide by a federal court judge in Texas just days before its Dec. 1, 2016, implementation date.
Then, on June 27, DOL sent a formal Request for Information on the rule to the Office of Management and Budget, taking the first procedural step to open the regulation back up for public comment. Labor Secretary Alex Acosta said the request will, when approved, kick off a notice-and-comment process that will inform DOL’s decision-making process on changes to the rule. He also said that the $47,000 threshold is too onerous for some parts of the country, and that the rule’s provision of only two-months notice before raising the overtime threshold did not give employers enough time to prepare.
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Industry Events Reinventing Service in a New Hospitality Climate,” and Gary Hernbroth on “How to United Sales and Operations to Turn Guests into Fanatical Customers.” Other sessions include “The War Rages: Hoteliers Vs. Distributors,” “The New ICE Age: Immigration & Customs Enforcement Investigations,” “Tackling Cybersecurity Risk in Hotel Asset Management,” and “What’s on the Economic Horizon for Washington Hoteliers.”
Support the future of hospitality at this year’s Golf FORE! Education On Sept. 19, the ninth annual Golf FORE! Education tees off to raise money for Washington Hospitality Education Foundation’s ProStart program. This culinary arts and culinary management program introduces high school students to careers in hospitality through hands-on learning and mentorship. Golf FORE! Education features a shotgun tournament at the Washington National Golf Club, followed by dinner, prizes and an auction. In addition to supporting the ProStart program itself, this fundraising effort makes it possible for the Education Foundation to give scholarships to stand-out ProStart students. Last year, 150 plus restaurant and hotel professionals participated in the sold-out tournament. Register soon at http://golf. wahospitality.org. Sponsorship opportunities are still available. Visit the website or contact Michele Holmes at micheleh@ wahospitality.org or 206.423.3902 for details.
Lodging Convention’s Agenda Focuses on Helping Hoteliers Weather Changes in the Industry This year’s Washington Lodging Convention, which takes place Oct. 22-24 at Tulalip Resort Casino, offers an educational lineup designed to help attendees meet the challenges and find the opportunities presented by changes in the economic, consumer and market climates. Keynote speakers include Glenn Haussman, editor-at-large for Hotel Management Magazine on “Myths and Mayhem:
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The convention features the state’s largest lodging trade show, giving attendees a low-pressure way to connect with a wide range of vendors who offer the latest and greatest in hospitality products and services. Numerous networking and social events over the course of three days also offer the industry’s movers and shakers, as well as emerging leaders, the chance to socialize and strengthen ties. Learn more, and then register, at www.lodgingconvention.org. Limited sponsorship opportunities and exhibitor space are still available. Visit the website for details. Stars of Washington Lodging Awards Program Helps Members Celebrate Team Members It’s August and time to nominate the exceptional members of your lodging team for this year’s Stars awards. The Stars of the Industry Awards have a long and hallowed tradition at both the national level through the American Hotel & Lodging Association and in Washington State, where hoteliers have been celebrating Stars winners since 1999. Award categories include Emerging Hospitality Leader of the Year for inspiring professionals under 30; Lodging Employee, Manager and General Manager of the Year; and the new Paving the Way Award that honors women who are leaders, mentors and role models in the community. There is also a new Innovation Award introduced by AH&LA to honor a person, property or company that has initiated innovative practices and helped create a climate that encourages others to do the same. Washington’s Stars winners in most categories will go on to compete for national awards in the AH&LA’s Stars of the Industry Awards in May 2018. (Washington has three categories, Manager of the Year, Good Earthkeeping and Community Service that are no longer offered by AH&LA.) Member properties are encouraged to submit nominations by Sept. 22. Every nominee will receive an honorable mention, and winners will be celebrated at a special awards dinner on Oct. 23 at Tulalip Resort Casino in Marysville during the Washington Lodging Convention. The nomination process is simple and cost-free. Learn more at lodgingconvention.org/stars.
The Future of Telehealth Is Closer Than You Think
HIHIT now offers telehealth services as a creative and cost-effective way to connect your employees with the services they need in times of health crisis. By Dan Trencher, Senior VP of Product and Strategy at Teladoc
As you know, technology has fundamentally changed the travel experience, with smartphones now able to deduce where you are headed based on your calendar entries, talk you through directions turn by turn, steer you away from traffic and recommend highly rated local restaurants. Or you can leave your car and get a ride at the tap of a button. In health care, we are well on our way to seeing an analogous change in how we, as patients and consumers, experience health care – the creation of an integrated virtual tele-health ecosystem. Washington Hospitality members are now able to participate in this rapidly expanding ecosystem through the Hospitality Industry Health Insurance Trust known as HIHIT. Expanded Primary & Specialty Care Access HIHIT offers telehealth services by partnering with Teladoc, a telehealth company that uses telephone and videoconferencing technology to provide on-demand remote medical care via mobile devices, the internet, video and phone. When Teladoc launched the telehealth market, we focused on services for common, acute conditions. We then expanded into specialties like behavioral health and dermatology — both a natural fit for telehealth. What’s next? Integrated telehealth experiences that include a range of specialists, screenings/testing, pharmacists, and other non-physician providers who are integral to managing chronic conditions like diabetes and congestive heart failure.
providers to have a longitudinal view on a patient’s temperature for up to 10 days, but it’s affordable and consumer-centric, enabling ubiquitous access. The future will include more devices with this balance of clinical and consumer benefit, such as seamless integration with home testing devices (e.g., blood glucose readers), multi-function diagnostic devices, and biosensors that will bring an Internet of Things (IoT) experience to remote patient monitoring, chronic condition support, and health improvement. Ubiquitous Entry Points If technology can turn on your lights and help you order online, why shouldn’t it help you communicate with a health care provider? As rapidly as consumers have migrated from web to mobile platforms for digital health care, new access points are already emerging in the form of voice-based systems like Amazon Echo, interactive TV interfaces like Roku, smart watches, and yes, even smart cars. Soon you will be able to request a physician consult without lifting a finger. Integration with the Broader Healthcare Ecosystem As we move forward, telehealth integration can be woven into the fabric of how healthcare is delivered to you and your employees. Teladoc already has implemented two-way exchange of clinical data with electronic health records (EHR) systems and can “tier” provider networks to incorporate a health system’s own physicians with our physician network. These improvements augment Teladoc’s ability to ensure 24/7 access. Teladoc is working to also implement value-added features such as built-in formulary compliance, and automatically presenting patients with savings opportunities on the prescription drugs they take will be the new standard.
Connected Devices & Wearables While healthcare saw a burst of activity around apps and wearables such as Fitbit, we are still in the very early stages of meaningful device connectivity in health care. Meaningful connectivity like the Kinsa smart thermometer, for example, is not only clinically relevant, enabling
This is the future of immediate health care that does not require emergency care or expensive trips to the doctor. Teladoc cuts doctor visit times and makes life easier for shift workers with transportation challenges. One does not have to think very hard to imagine scenarios where a quick diagnosis and care plan would greatly reduce stress on employees and your business. For more information on Teladoc and how Washington Hospitality’s Industry Health Insurance Trust can connect you with Teladoc services call Joe Peoples at 877-706-5243. August 2017 │ 11
News from Around the State Spokane Ridpath Hotel Conversion to Workforce Apartments Finally Underway The Ridpath Hotel in Spokane is making its return as a local landmark. A $22 million restoration will convert the hotel into workforce apartments for people earning less than $30,000 per year. The project benefited from historic building tax credits and affordable housing tax credits.
Renton Hyatt Regency Lake Washington Opens Seco Development opened the Hyatt Regency Lake Washington on July 10. Located in Renton’s Southport development, the 347-room hotel features 60,000 square feet of indoor/outdoor meeting and event space overlooking Lake Washington. It also includes the 236-seat restaurant Water’s Table, which is the only full-service waterfront restaurant and bar on the southern end of Lake Washington. The 12-story hotel added 175 career-oriented hospitality jobs. Vancouver Craft Brewers Lead Push for Tax Cut Bill Craft brewers met with U.S. Rep. Jaime Herrera Beutler, R-Vancouver, in July to advocate for a bill that would cut their federal taxes. Herrera Beutler co-sponsored the Craft Beverage Modernization and Tax Reform Act, which would reduce federal excise taxes brewers pay on their first 60,000 barrels a year according to The Columbian. The bill would reduce the tax per 31-gallon barrel from $7 to $3.50. At a round table held by Herrera Beutler in Vancouver, local brewers made the case that the money saved by reducing taxes could go toward providing more benefits for employees and increasing production. Yakima Informal Police Policy of Not Asking about Immigration Status Will Remain the Same At a heated council meeting in July, Yakima City Council members said they would no longer talk about passing an ordinance that would formalize the city’s informal police policy of not asking residents about their immigration status. Formalizing this policy was proposed after more than six months of discussion about how the city’s minority populations could be made to feel safer when reporting crimes and using city services. Minorities make up about half of the city’s population.
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The first phase of apartments should be ready by late October. The units will range from “micro” small studios with around 249 square feet of living space up to two-bedroom lofts. It will also include penthouse condos and street-level restaurants. A Frenchthemed Ridpath Brasserie and the Octopus Gin Bar are slated to occupy some of the 5,900 square foot retail space. The iconic hotel, which was built in 1952 and added to the National Register of Historic Places program in 2013, had fallen into disrepair and closed in 2008 after the owner went bankrupt. After several years of competing bids for the property, the conversion project is now under and expected to take about 12 months. Bainbridge Island 40 Years of Grape Success Despite common misconceptions that grapes couldn’t be grown on the western side of the Cascades, Bainbridge Island is celebrating 40 successful years of grape growing. The first grape vines planted 40 years ago by Gerard and JoAnn Bentryn were on a one-acre plot. The Bentryns founded Bainbridge Island Vineyards in 1977 and released their first estate-grown wine in 1982. The estate was the 84th bonded winery in Washington state.
Local GA Update Short-term Rental Policy Developments
Vancouver City Council Considers Relaxing Short-Term Rental Policy In July, the Vancouver City Council re-examined restrictions placed on accessory dwelling units (ADU) like garage apartments that homeowners rent to long-term tenants. The council is not yet in total agreement about the proposed changes and will have a hearing next Monday, July 17, to discuss potential concerns and changes. The existing policy and proposed changes do not qualify what constitutes a short-term rental, so all ADU policies will apply to any rental property type. The council is considering loosening some of the restrictions including eliminating the requirement that an ADU must be owner-occupied, which would allow units to be rented out in whole all year. This could allow homeowners with ADU to rent units out through short-term rental sites with fewer restrictions. The council is scheduled to have a hearing on the proposed changes Monday, August 7. Walla Walla City Council Reviews Short-Term Rental Policy The Walla Walla City Council had a work session to consider changes to its short-term rental policy at its meeting on July 10. The council came to a few firm conclusions regarding policy changes but was split on whether and how to regulate short term rentals that are not owner-occupied. A draft ordinance will be reviewed regarding owner-occupied shortterm rentals in anticipation of a second ordinance drafted to regulate rentals operated by off-site owners. The council intends to continue to address owner-occupied short-term rentals and non-owner-occupied rentals separately. Seattle: On Hold Seattle is not likely to see short-term rental legislation enacted this year. The State Environmental Policy Act determination on the land use changes associated with the proposed short-term rental ordinance has been appealed by a firm representing short-term rentals.
The appeal hearing is scheduled for early September and the decision may come in late September. At that time, the city council will be entering its annual budget process. Regular committee hearings are generally canceled from late September through late November while councilmembers work on the budget, making it unlikely that short-term rental legislation will progress in committee this year. The legislation might also need new backers in 2018. Mayor Ed Murray, who joined Councilmember Tim Burgess in calling for a short-term rental policy to help address the city’s housing crisis, is not running for reelection. Tim Burgess, who has been leading the process and was planning to sponsor the ordinance, has also decided not to seek reelection this year and will not be on the council in 2018. At this time, city hall staff members are considering how the delay impacts the next steps for the legislation. The Seattle Hotel Association and its government affairs team will continue to track this issue.
Endorsements in Local Primary Elections
Seattle Hospitality for Progress, the political arm of the Seattle Restaurant Alliance and Seattle Hotel Association, made several endorsements in the 2017 primary elections for city offices. The group endorsed Jenny Durkan for mayor, Sara Nelson for city council position 8 and Scott Lindsay for city attorney. On the other side of the state, the Spokane chapter of the Washington Hospitality Association endorsed Matthew Howes for Spokane City Council District 3. Howes is a local restaurateur whose restaurant has been a part of the Spokane community landscape for about 10 years. Spokane chapter co-chairs Sonja Halverson and Barbara Richardson said Howes is familiar with the issues local business owners face and he will be an advocate for issues that matter to hospitality business owners in the Spokane area.
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Dueling Minimum Wage Studies Released
University of California, Berkeley’s Institute for Research on Labor evaluated Seattle’s restaurant industry and concluded that, in 2016, wages had increased without any reduction in employee hours and without jobs being lost.
In 2015, when Seattle approved its ordinance to incrementally raise the minimum wage in the city to $15 per hour over seven years, the city council committed to closely studying the impacts. In 2015, it selected the University of Washington to conduct the research on a twoyear contract.
Why did the University of Washington get different results than the Berkeley study? As a state institution, the University of Washington has special access to data from the state that allowed researchers to analyze data on work hours across industries. Washington is one of only four states that collects data on both hours and earnings, making this a rare dataset for minimum wage studies.
Two recently released minimum wage studies draw opposite conclusions about the impact to date of Seattle’s minimum wage increase on workers.
In June of this year, the UW researchers released their study of the 2016 minimum wage hikes, which were the second increases in the ordinance’s phase-in schedule. For large businesses that do not provide health care benefits, the jump was to $13/hour. For large businesses that do provide health benefits, the increase was to $12.50/hour. Businesses with fewer than 500 employees nationwide were required to start paying a minimum wage of $12/hour if they do not provide health benefits and $11/hour if they do. The UW data showed that the wage increase reduced hours worked in low-wage jobs by 9.4 percent. It also revealed that earnings fell for employees in low-wage jobs. Despite the minimum wage increase, employee’s earnings in this category saw a reduction on average of $125 per month.
The UW researchers had previously released a study of the impact of the first increases in 2015. That study showed 62 percent of Seattle businesses had already raised prices, 30 percent had added service charges or fees, 30 percent had reduced the number of employees and 11 percent had moved their business from Seattle entirely. Anecdotes from our members echo these patterns. There is clearly evidence that the business model is evolving in Seattle because of the new minimum wage and other employment-related ordinances. Employees are the hospitality industry’s greatest asset, and we are committed to complying with the law while also seeking to balance equality for our front- and back-of-the house employees.
In June, to mark the third anniversary of the passage of the minimum wage ordinance, the Seattle Mayor’s Office publicized the results of another study. Researchers at the
For questions about Seattle advocacy or issues, email jillianh@ wahospitality.org.
University of Washington, Seattle
University of California, Berkeley
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State GA Update THE STATE BUDGET Narrowly averting a partial government shutdown, the state legislature adopted the 2017-19 general fund budget late in the evening on June 30, just hours before the current budget ran out. State lawmakers worked at a frenetic pace into the early morning hours of July 1 to also pass a landmark paid family and medical leave bill and a significant bill promoting solar power. What lawmakers failed to do was pass a capital expenditures budget or find a fix to meet the State Supreme Court’s Hirst and Foster decisions around water rights. Capital expenditures and the Supreme Court decisions are linked politically, and despite working until 3:30 a.m. on July 1, they were ultimately unable to reach a budget compromise. That they were able to adopt a general fund budget to fully fund education—and likely satisfy the McCleary decision—is significant. That they did it without adopting any substantial tax increases is remarkable. For most of the regular session and during the special sessions, Democrats called for $3 billion in new taxes. The final agreement, however, does not contain increases in the B&O tax, capital gains taxes, carbon taxes or real estate excise taxes. As of press time, lawmakers had not reached an agreement on the capital budget, and the 2017 Legislature will not “sine die,” or adjourn, until it does.
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PAID LEAVE This legislative session delivered a huge win for the hospitality industry: the passage of Senate Bill 5975, which establishes a paid family and medical leave program at the state level. On July 5, in a rare demonstration of bipartisan agreement, legislators, business leaders, and labor reps celebrated Gov. Inslee’s signing the bill into law. Background Washington’s hospitality industry has been more significantly impacted by voter initiatives than any other industry in the state. They’ve been hard hit by minimum wage initiatives, from I-688 in 1998 which established annual increases in the minimum wage tied to inflation to last year’s I-1433, which not only increased the state minimum wage to $13.50/hour by 2020, it established a paid sick leave requirement without a mechanism to pay for leave. Washington Hospitality and its precursors, the Washington Restaurant Association and the Washington Lodging Association, have long advocated that the state legislature is where employment-related policy and programs should be addressed. Legislatures work by consensus-building and generally create more carefully thought-out policies. The initiative process, on the other hand, leads to blunt, one-sided policy that fails to take all possible consequences of a proposal into account. And when employment law
is enacted at the local level, it creates a patchwork of requirements that become a nightmare for businesses that cross city boundaries. With this in mind, in early 2017, the Association invested with other business associations in a statewide voter survey on paid family leave. That data predicted with great certainty that, absent action by the state Legislature, an initiative to establish a statewide paid family leave policy would go before voters, and pass, by 2019 at the latest. This year, with the Majority Coalition Caucus in control of the State Senate as our greatest strength, the Association partnered with lawmakers to create a statewide paid family leave program that would work for businesses, employees and the entire state. Washington Hospitality was selected by legislators to participate in the crafting of the paid family leave bill. Our association worked with Sen. Joe Fain, R-Auburn; Senate Majority Deputy Leader Sharon Brown, R-Kennewick; Democratic lawmakers and labor representatives to see if a reasonable solution was possible. As a result of our work, and with the support of a balanced legislature, Washington will become one of five states, plus the District of Columbia, to have statewide paid family and medical leave. Washington’s program is the best model in the nation for both business and workers. What does that mean for you? The legislation establishes a paid family and medical leave program that will be funded through paycheck contributions made by both employers and employees. Premiums will begin in 2019, and starting in 2020, 12
weeks of paid family leave or 12 weeks of paid medical leave, financed by the pool, will be available to employees who have worked at least 820 hours at one business. Paid leave will cap out at 16 weeks per calendar year, although an additional two weeks will be available in the event of complications to a pregnancy. Employees will be able to carry benefits from job to job. Businesses with fewer than 50 employees are exempt, but they can opt in if they so choose. Additionally, small and medium-sized businesses can receive financial assistance when hiring temporary employees to cover duties or when training and overtime costs are incurred due to an employee taking paid family leave. Unlike Washington, the programs in California, New York, New Jersey, Rhode Island and Washington, D.C., do not take small- and medium-sized businesses into consideration. Large businesses that already have superior leave programs can opt out of the state program. Companies that already offer paid leave and disability programs may see a cost reduction if they decide to participate the statewide insurance pool. Finally, this law ensures that local governments cannot enact their own programs, putting a stop to local paid leave requirements which create a confusing patchwork of laws that unfairly burden employers and employees. Look for more information on the 2017 Legislative session and the paid leave bill in the next issue of this magazine. It will be our Legislative Review issue and will arrive in mailboxes this September. August 2017 │ 17
Getting Creative: Retaining and Growing Great Employees in a Tight Labor Market By Paul Schlienz
It’s tough out there. Employers are facing a challenging environment with a tight labor market where job seekers may just have the upper hand. According to U.S. Bureau of Labor Statistics, unemployment, which peaked at 10 percent during the Great Recession, is now at 4.3 percent. This is very low in comparison to the approximately 5.5 percent that is a normal unemployment rate. And the tight labor market is particularly noticeable in Washington state, especially in the Puget Sound region. There was an increase of jobs in the Seattle-Bellevue-Everett area during the 12 months through April 2017, up by 2.8 percent — the third highest job growth rate in the nation. With the region’s unemployment rate at a nine-year low, and the statewide jobless rate at an all-time bottom, job seekers really are in the driver’s seat. In response, employers need to get creative in finding and retaining employees.
illnesses in their families. We’ve allowed some employees to donate their vacation days to other employees who needed time off for emergencies." Sometimes it's also a matter of keeping the job interesting. "If we find out an employee has an interest or hobby, we try to find an outlet for it," said Yearout. "For example, we have one employee who loves gardening. We find ways of incorporating interests like that." Yearout also finds those special, little perks that come from employment can go a long way. "Managers will often comp the meals of their employees when they are dining with their families at one of our restaurants," said Yearout. "We also partner with other local companies to provide discounted tickets for our employees to seasonal activities such as ski lift tickets and Wild Waves tickets."
This is especially true in the hospitality industry, and many restaurants and hotels are finding interesting ways of attracting and retaining employees to help them grow in their jobs.
Go the Extra Mile "It is a challenging environment," said Patrick Yearout, Ivar's director of training and recruitment. "It's a real challenge in recruiting when you find a good employee, especially if you find a manager you want to retain. And there are always extra costs if you lose employees, especially in Seattle." For its part, Ivar's is one of those employers that are making tremendous efforts to create a great working environment that will encourage employees to stay and make a career out of their jobs. "Sometimes it involves going the extra mile for special needs," said Yearout. "We have two employees in our corporate office who are allowed to work flexible hours and also work remotely because they are dealing with serious 18 │ wahospitality.org
And nothing helps build employee loyalty more than an employer that goes to bat for its employees when their jobs are threatened. "I’m sure you’ve heard about all the hubbub recently about Ivar’s losing its lease at Sea-Tac International Airport," said Yearout. "What you need to know is that we fought really hard to stay there so we could protect the jobs of the 33 Ivar's employees at the airport. We feel we owe them that much."
Treat Employees with Respect Marination, an unusual Hawaiian-Korean restaurant concept with four Seattle locations plus a food truck, goes the extra mile in providing a caring work environment. "We really believe in treating our employees with respect," said Roz Edison, one of Marination's co-owners. "We really try to understand their lives and personal goals. We're a pretty small business, so it's easier for us to operate this way than it might be for some of the large corporations. We're flexible with schedules and look for opportunities to help our employees whenever we can. We do the best we can, given the number of employees we have." One of Marination's most unique policies is its owners' willingness to help their employees with financial planning, a skill that many employees don't have and often need. "We let our employees know we're available to offer our time," said Edison. "We'll help them reach their financial goals. We'll work with them on developing a savings plan or help them put together a business plan if they have a venture in mind that they'd like to pursue. We have an open-door policy and it's all optional." And all these personal touches work to Marination's advantage. "Whenever you can connect with an employee on a personal level, there's a better chance of a retainer," said Edison. Photos courtesy of Marination.
August 2017 │ 19
Second Chances If you listen to the radio, there's a good chance that you may provide. This includes supporting him in getting his GED to help with his long-term goal of becoming an electrician. have heard advertisements for a campaign called Grads of Life, which encourages employers to consider hiring people "Our team his taken him under their wing," said Watkins. from non-traditional backgrounds that do not include "It is gratifying seeing him rebuild his life." college degrees. Hospitality employers are among those thinking outside traditional recruitment boxes, and nowhere Watkins is also very interested in the IF Project, a is this trend more evident than in the growing number collaboration of law enforcement, of restaurants and hotels that offer currently and previously incarcerated second chances to help people rebuild adults and community partners their lives. Our team his taken focused on intervention, prevention and reduction in incarceration and One such hospitality employer is him under their wing. recidivism. Among its goals is bringing Seattle’s Inn at the Market. It is gratifying seeing foodservice training into prisons. him rebuild his life. "We don’t have official program," said "I think people are beginning to explore David Watkins, Inn at the Market's those arenas," said Watkins. "This has general manager. ”We have one been a learning curve for us, but it's individual who's going through the drug been very worthwhile." court process. In a month or two, he should graduate." Graduation is no easy feat. It involves a demanding schedule of coaching and counseling classes, as well as attendance at three Alcoholics Anonymous meetings and three drug tests per week. Inn at the Market, nevertheless, has stood by their employee with all the support it can
20 │ wahospitality.org
Treat Adults Like Adults "We have a high retention rate at our hotel and we’re really proud," said Audrey McCombs, director of human resources at Seattle's Mayflower Park Hotel. "We've
mastered the art of treating adults like adults.”
respectfully."
The hotel has been around for 90 years, and more than a third of their employees have been with the company 10 years or longer. McComb herself has been with the hotel for more than 20 years, and she attributes the Mayflower Park’s success to a culture of respect and encouragement.
"A lot of Millennials like us because we don’t script them, and we honor their individuality," said McCombs. "We let them be themselves and give them a lot of freedom."
“We honor our employees' families, we honor their cultures and we honor their needs,” she said. “We honor every profession under our roof. And when folks want to move up, we will help them. We really treat everyone
As a Seattle employer, Mayflower Park is keenly aware that it is in major competition for employees with such giants as Amazon. "Everyone’s having a challenge finding employees in this tight labor market," said McCombs. “I can’t even imagine what those hotels that are just opening are going through. It's most challenging to find cooks and servers at our restaurants. Our greatest recruitment source is our employees. Good long-term folks recommend good longterm folks." To encourage potential employees to apply, Mayflower has developed a simplified, user-friendly application. "We don’t have a complicated online application process," said McCombs. "We put our ads on Craigslist. Once an applicant applies, they go straight to the manager. People who apply like that. Our philosophy is to keep it simple. Small employers, like our hotel, can do this. At larger hotels, it can be a very complicated process."
Photos courtesy of the Mayflower Park Hotel.
August 2017 │ 21
Help People Become All They Can Be Once you have those great employees you always wanted, a wise business will do all it can to hold on to them. One of those hospitality businesses that is going the extra mile when it comes to employee retention is Hop Jack's, the Seattlebased restaurant and bar chain serving pub grub, burgers and sandwiches plus signature cocktails. "Our founder Mark Eggen always stresses that Hop Jack’s is a company that creates opportunity, " said Jaime Fox, Hop Jack's director of training. "All of us want to find value in what we’re doing. Restaurants sometimes suffer under an image that much of our work is not a real job that leads somewhere. At Hop Jack's, however, we let our employees know that this is a real job and a real career where you can grow and be what you want to be." Hop Jack's has developed a unique training program that helps its employees fulfill their ambitions and build careers. "Every 90 days everyone at Hop Jack's selects their goals," said Fox. "These goals can be long-term or short-term. It's a onepage document. If you want to go to the next level, you have a roadmap. We have that for every position from the kitchen workers to the CEO. And we’ve created leaders this way. We encourage our employees to let us know their passions."
Fox's own history with Hop Jack's shows how jobs with the company can become careers. "I started as a bartender with Hop Jack's," said Fox. "I had 14 years of experience in that field before I ever came to Hop Jack's. One day our CEO asked me to create a manual for bartenders, and that ultimately led to my current position as director of training." One thing for which Hop Jack's seems to have a unique knack is finding ways to make the process of developing new skills enjoyable rather than a grueling struggle. "Coming into a restaurant as a manager or being promoted to management from within can be a difficult transition," said Fox. "With that in mind, we created a Hop Jack's passport with details on each skill you need to move up in management. It looks exactly like a real passport. You even get stamps on 23 skills. Once you’ve gone through whole thing, you can keep it as a souvenir, just like you would with a real passport that has a lot of stamps from different countries. Our passport makes the process fun and engaging. And in the end, you get tangible proof of achievement." Another way that Hop Jack's holds onto employees is by being concerned with the whole person inside and outside of the workplace. "Recently, we started wellness bonuses," said Fox. "We give 50 percent of our bonus on meeting personal professional goals, but the other 50 percent is a wellness goal. If you are over 30 BMI [body mass index], your goal is to go down by one BMI per year. If you're under 30 BMI, the choice is yours what you want to do, and people end up getting bonuses for doing things like running in triathlons. It's great watching people lose weight and feel fantastic.
Photos courtesy of Hop Jack’s. 22 │ wahospitality.org
"Our employees know the company is loyal to them, which creates a lot of loyalty to the company. We're trying to help people become all they can be."
How to Raise a Hospitality Leader By David Faro
What does it take to bring an entry-level employee up into the ranks of your best supervisors? How do you ultimately grow a manager from scratch and train people to move your organization forward? A well-trained, wellconditioned, ready-for-the-frontlines leader only EVER arrives because of good guidance on your part. That’s where it starts. It starts with you. The value of a mentor/apprentice relationship in the early days of a hospitality career cannot be overestimated. You know the employees in your organization who seem to be eyeing a supervisory position. You should also know they are observing you. Every day, they are looking at you as an example of how a manager should act. They may also be learning what behavior they want to avoid. Kathy Chaffee Groff, a consultant for Restaurant Solutions out of Tucson, Arizona, has grown a few managers in her time and had help turning into a leader herself. “I started out as a young woman trying to make it in Honolulu’s very aggressive hospitality environment in the 1980s. If it wasn’t for the mentorship of some seasoned veterans who took me under their wings, I might not have been focused on some of the skills I needed to thrive,” she says. “I had to learn, on the job, how to lead teams and create the results my leadership wanted. Like most people, I started from the bottom up, and those initial lessons from my first teachers helped me to open a long list of restaurants in many cities long after I left them and moved on and up the ladder.” What inventory of skills and abilities does a manager need to consistently succeed at running operations that produce results? It starts with a disposition, of course. All kinds of personality constructs can perform effectively as a manager, but leaders who focus on growing the talent of others stand out from the others. “I firmly believe that coaching, or mentoring is a very motivational way to get a better work result. Unfortunately, it can also bring on a poor work result if done in a patronizing manner,” warns Groff. “Make sure that mentors know what they are doing and have a plan for the managers they are trying to grow,” says Groff. She recommends a simple, three-part plan when
helping general managers grow their team’s abilities: 1. Set clear expectations. 2. Train the employee for expected results. 3. Hold employees accountable to the results they produce. The very best coaches are skilled in dealing with both the positive and negative consequences of an employee’s choices. The effective coach is a cheerleader when someone is a bit down. It’s your job as a coach to pick them up and get them on the right track again. Great coaches are also the ones who care enough about the staff member and the company to address inferior performance. Not everyone performs at their best all the time. The most effective coaches do all this correction of performance in a calm, respectful manner. The GM who shames, embarrasses or is condescending does not get results or grow effective managers. Groff puts it plainly, “As I look back at some of the great coaches who have mentored me in the past, they all have one thing in common. They have had my back! When I made a poor decision, my great coaches called it, gently, to my attention.” A great coach does not just let things go, but they also correct in a way that honors the process. A great coach also hands out positive feedback and spells out a clear and understandable pathway towards success. Once you have positioned yourself with the attitude that you are going to be a great coach, Groff says that focusing on your measurables is what seals the deal. “Successful restaurant processes are usually made up of a delicate balance of financial, staffing and operations. There are quantifiable indicators in each of these areas that allow you to measure the results of your efforts. Good coaches pin performance assessment to those measurables every time.” Measurement comes in all shapes and sizes, from dollar and cents results to customer reviews, secret shopper discoveries or more traditional performance reviews. (See page 25 for examples.) Your team already shows up to do a respectable job. You can help them focus on doing an excellent job by setting expectations and providing the training they need to meet or exceed those expectations.
August 2017 │ 23
SMART LEADERS MAKE IT MEASURABLE If you and your team members have goals and clear success measurements, you’ll all be much more likely to where get to where you want to go. Here are some areas and approaches to consider.
Financial
Staffing
Operations
Annual plans and budgets. These should be carefully built using past history and future projections, and can be clearly communicated to the restaurant team.
Post-training reviews. Managers and crewmembers alike should have post-training reviews after completing their initial training program. Ideally held within one month of the completion of training, these are an opportunity to assess whether the new staff member is a “fit” with the existing team and whether they may need additional training for their position.
Guest comment cards. Customer feedback can be a very effective way to gain input on how your guest is perceiving your efforts. These can be made available to all guests at all meal periods and collected and tallied daily or weekly. Or, you can opt to put out forms quarterly and gather the data. The goal here is to monitor trends, whether they are good or bad. The cards are designed to measure the front desk, service staff, food and beverage, etc. They are an effective way to measure a problem area, whether it’s timings, value perception or friendliness and competency of staff.
Quarterly reviews. Conduct to assess actual results to goals. If the goals are being met, great! If they are not, make revisions or hold problemsolving sessions to correct deficiencies. Monthly profit/loss statements. Review with key personnel (again, budget to actual) and discuss and correct areas of concern. Weekly management team meetings. These are an excellent way to keep the whole team focused on the larger set of financial results. Weekly one-on-one meetings. Use these as opportunities for personal coaching and problemsolving. Each team member should have their own set of goals and operating accounts.
Daily and weekly coaching sessions. Consider holding preshift or post-shift meetings for a work group or for an individual. If you regularly discuss good performance and areas needing improvement, the expectations for performance will be clear and in focus for your staff. Regular performance appraisals. Whether they are conducted once a year, two times a year or quarterly, regularly scheduled performance reviews are critical in measuring the performance of your team. Make sure they’re planned and effective. This measurement should coincide with their job descriptions and training pieces.
Secret shopper programs. These are also a very valid way to gather guest information. You can pay to have this type of service, or you can invite your own choice of diner outside of your business to come in and measure how you are doing. Their experience gives you another set of eyes to your operation. Food/beverage/service reviews. These reviews can easily be conducted in-house by your managers and chefs. Restaurant consultant Kathy Chaffee Groff recommends, at least once a quarter, to have a representative from the kitchen dine and give their feedback. There should also be a measurement from the front of house. It’s helpful to involve crewmembers here as well, to allow them to learn from the experience.
For a limited time, Kathy Chaffee Groff, restaurant and leadership consultant, is offering a special consulting rate that benefits the Washington Hospitality Association Education Foundation. Contact Kathy at 206.522.5574 or kathygroff@icloud.com. 24 │ wahospitality.org
Are you experienced? Remember when your liquor license was being called into question and you almost lost it? Experienced servers will tell you; get trained, know your stuff, and don’t put your job or employer at risk. Experienced bartenders know the rules. Do yours?
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SERVSAFE ALCOHOL HOSPITALITY TRAINING SOLUTIONS August 2017 │ 25
Legally Valid Unpaid Internships are Rare By Catharine Morisset, Attorney at Law The master-apprentice learning relationship is a timehonored tradition in the hospitality industry, but there are very clear legal requirements on compensation for apprentices. Unpaid chefs in training—traditionally called “stagiares” or “stages” after the French word for “trainee”— and unpaid hotel interns such as concierges in training are not legal under federal law. They also violate Washington’s wage and hour laws. The U.S. Department of Labor has particularly called out stage programs in the restaurant industry as a common practice that violates minimum wage requirements. Washington state regulators are similarly concerned about businesses that claim its interns are “volunteers” who have no expectation of pay. Under the Fair Labor Standards Act and Washington’s similar Minimum Wage Act, there is no such thing as an unpaid volunteer for a for-profit corporation. Individuals who perform work must be paid at least minimum wage and overtime—even if those individuals state that they do not expect to receive wages—and they must be counted as workers for the purposes of Washington’s workers’ compensation laws. There is a very narrow exception for educational interns. However, most restaurant stage programs or hotel internship programs will not meet these strict guidelines. To qualify as an unpaid educational internship, all of these criteria must be met: • •
•
The internship consists of work-related, hands-on training for a specific occupational field that is an extension of an educational experience. The training, even though it may include actual operations at the employer’s, is similar to what would be given in an educational environment or vocational school. The more the internship program is structured around classroom or academic experience, the more likely it will be viewed as an extension of education. The training primarily benefits the intern, not the business.
26 │ wahospitality.org
•
•
The intern does not displace or perform productive work of regular employees (e.g., a stage who performs dishwashing work or an intern who answers guest calls at the front desk would fail to meet this part of the test). The agency and courts will examine if the business would have needed to hire other workers to perform those tasks in the absence of the intern. The intern is closely supervised, i.e. works in tandem with a mentor. Job shadowing, rather than performing actual work, is more likely to be viewed as a bona fide educational experience.
Assuming that your unpaid intern or stage program is legally valid can be costly. If it is found to be unvalid, under Washington law, you could be assessed all back wages, plus prejudgment interest, attorney fees and likely a double wage penalty. In short, check with your employment law counsel before putting any unpaid internship program in place. This article is not intended as legal advice. Please consult your employment attorney for guidance on your specific situation. Catharine Morisset is a partner in Fisher Phillips’ Seattle office. Her practice focuses on representing local and national employers in litigation in state and federal courts, on appeal, and also before the EEOC and similar state agencies in all aspects of workplace law. You can reach her at cmorisset@fisherphillips.com or visit www.fisherphillips.com for more information.
The Cost of an Unpaid Intern You may think that having an unpaid apprentice or intern is great for everyone, but an unpaid internship or apprenticeship can be very costly. If the internship you offer is deemed illegal, you could be required to pay: • • • •
Back wages Prejudgment interest on back wages Attorney fees Possible double wage penalty
NAVIGATING
CLIMATES
WASHINGTON LODGING CONVENTION
TULALIP RESORT CASINO | OCTOBER 22-24, 2017
WAHOSPITALITY.ORG/CONVENTION ECONOMIC
CLIMATE
CONSUMER
CLIMATE
POLITICAL
CLIMATE
MARKET
CLIMATE
INDUSTRY CALENDAR August/September
NEW MEMBERS Apple Cup Café, Chelan
Mongolian BBQ
TRAINING
Benchmark Seattle
North Fork Pizza & Brewing, Deming
Sept. 12
ServSafe® Manager, Seattle
Glacier Peak Resort and Winery, Rockport
Paradise Lanes
Sept. 21
ServSafe® Manager, Tacoma
Sept. 25
ServSafe® Manager, Kent
goPoke’, Seattle
Paradise Lanes Entertainment Center Inc., Tacoma
Gray Goat Bar and Grill, Oakville Poolsaloon LLC, Kent Hampton Inn & Suites Seattle/Renton Saltwater Fish House and Oyster Bar, Langley Hotel Deca, Seattle
MEETINGS
Sorrento’s Ristorante, Chelan Ixtapa Restaurant, Lake Stevens South East Asia Inc., Spokane Valley
Aug. 9
Retro Invest Workgroup
Aug. 9
Retro Trustees Meeting
Aug. 10
Seattle Hotel Association Board
Aug. 15
H.I.H.I.T. Board Meeting
Aug. 15
Spokane Chapter Membership Meeting
Sept. 5
Executive Committee Monthly Meeting
Sept. 6
Seattle Chapter Monthly Meeting
Sept. 12
Board Development Conference Call
Sept. 14
Seattle Hotel Association Board
Sept. 19
Spokane Hotel/Motel Association Meeting
Sept. 19
Finance Committee Meeting
Sept. 19
Spokane Chanpter Board Meeting
UPCOMING EVENTS Sept. 19
Golf FORE Education
Oct. 22
Washington Lodging Convention
28 │ wahospitality.org
Jarman LLC The North Fork Brewery Legacy Hospitality The Sydney Bakery & Wine Bar, LLC Maple Counter Café, Walla Walla The Sydney Bakery & Wine Bar, Mukilteo Maple Counter LLC Toro Lounge, Bremerton
NEW ALLIED MEMBERS Vazquez & Company Sonya Vazquez 1700 7th Ave Ste 2100 Seattle, WA 98101-1360 888.268.1040 sonya@vazquezco.com www.vazquezco.com
Alliant Merchant Solutions Jim Rehorst 3350 W Americana Terrace Blvd Ste 340 Boise, ID 83706-2547 866.888.2872 jrehorst@alliantms.com www.alliantms.com
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Sept. 19, 2017 SIGN UP: golf.wahospitality.org
Invest Heavily in Training for Big Returns By Rick Braa, CHAE
Q:
With the difficulty in staffing that comes with such low unemployment, we clearly must do a better job of developing bench strength. I’m considering many options, but where would you start?
A:
The job market today is hot. Turnover is high and plenty of people are leaving the industry to pursue other trades or professions. One of the imperatives to success is to have an organization that provides growth opportunities to counterbalance talent loss. The best companies are those that think forward with their people. One can tell much about a company based on how much time and money it invests in teaching, training and developing talent. Many companies think they don’t have the financial resources to invest in talent development, but that mindset fails to take the full cost of turnover into account. If it’s true that it costs $10,000 or more to replace a manager and more than $2,000 to replace a crew member, there is plenty of money to pay for additional hours and systems that will increase retention and develop employees from within an organization. To stay competitive in the war for talent, consider the following: Create an environment of learning and growth. Employees stay longer with companies that provide a path on which to grow. Expect every person in the organization to grow and train regardless of their level. Each person should learn to teach, train and develop new staff and coworkers. Owners should constantly be developing general and kitchen managers. GMs and KMs should constantly be working with managers, and managers should always be developing crew. Never should a day pass without every person contributing knowledge and value to someone else. Those working in the business have ideas and talent that must be harvested and shared continually to drive growth. Nurture a culture of excellence to continually grow. Sweat the small stuff. A well-documented story published by Disney involved an incident between Walt Disney and one of his talented engineers. The story involves the Enchanted Tiki Room, a Disneyland® Park attraction. While the birds in the exhibit blinked, moved and sang, Walt wondered why they didn’t breathe. The engineer mentioned the breathing would likely go unnoticed and it required, “too much perfection." Walt listened, and then relayed a centerpiece of the Disney culture, "People can feel perfection." 30 │ wahospitality.org
From this legendary saying comes a culture focused on overmanaging guest touch points. The obvious question is what happens if something is undermanaged? The things that go undermanaged break down a culture of excellence. Insist that every touchpoint between the guest and employees has a definition and understanding of excellence, and pay fanatical attention to those details. Maintaining a culture of excellence requires a learning and growth organization to continually shift to higher standards of excellence. Invest in a learning management system to track growth. The best companies in the world have been using learning management systems (LMS) to track development of people for years. The result is better retention and better financial results. Thanks to modern technology, what used to be nearly impossible is now easy to setup, use and maintain. These types of systems often contain ready-made courses and curriculum and simulate real-life situations. While live training can be effective with a talented trainer, it often uses passive learning techniques that generally deliver less than 50 percent behavioral retention. A great LMS can use active learning techniques that increase behavioral retention to over 50 percent heading toward 90 percent with active involvement in the process. With an LMS, employees can be certified in development areas through a series of quizzes and exams, further increasing behavioral retention while continually supporting individual growth. These systems also promote a common language and consistency person to person, all while providing the opportunity to assess and track employee skill development. Both employee and guest experiences improve in a talent-rich culture focused on excellence. When there is continuous growth, there is an excitement and energy to the business that is infectious and makes people happy. When people are happy, they want to be part of something and make it their own, and this results in sustainable financial returns. For more information on improving profitability and driving sales, contact AMP Services at rbraa@ampservices.com. Rick Braa is the founder of AMP Services, an accounting and consulting firm specializing in helping companies grow profitability.
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