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A woman claimed that she reached for the hand rail, but a planter blocked her access, causing her to fall. Did the planter block access to the hand rail? (Figure 1 Inset) 

Surveillance video captured the incident.  A still image showed the woman’s heel on the top step of the landing before she fell.  (Figure 1)

Figure 1

Fig. 1


The landing had a unique stone pattern.  The beginning of the video segment showed the landing where the stone pattern was unblocked.  The pattern was outlined and then overlaid on the video. (Figure 2) The expert measured the landing giving the stone layout and dimensions.  Graphics then created a detailed illustration.  (Figure 2 inset)

Figure 2

Fig. 2


By utilizing the diagram of the landing’s stone pattern, the expert was able to track the woman’s heel as she traversed the landing.  The red circle indicates where the woman’s heel was located on the landing and the detailed diagram.

The woman was approximately 49 inches from the hand railing before she fell.   She had not been reaching for the hand rail.  In fact, the video evidence indicated that the woman began falling forward before she reached the edge of the landing. (Figure 3)

Figure 3

Fig. 3

The judge granted a summary judgment based on James Koester’s affidavit founded on the video analysis.


 Experts on the Case:

James F. Koester, District Manager, New Jersey, Senior Civil/Structural Engineer

Chris A. Cuellar, Animator, Houston, Graphics and Video Enhancement 




Given recent events, there is an increased interest in political risk insurance in Russia and Ukraine. However, it also appears that insurers have stopped underwriting political risk insurance, at least for exposures in Ukraine for the time being, and many insurers are declining to quote on Russian exposures, or are subjecting new inquiries to greater, and slower, underwriting scrutiny. The situation is exacerbated by threats and implementation of economic sanctions, which could lead to responsive economic measures, changes in the laws, or even steps by the governments resulting in payment delays or seizure or reprisals against foreign assets in those countries.

Political risk insurance takes many forms and can protect direct investors or those who do business with foreign governments or businesses. Common forms of political risk insurance include:

  • • Contract Frustration Insurance: Contract Frustration Insurance protects an insured’s trade or sales contract with a foreign          company from the action (or inaction) of the foreign government. The risks insured may include the risks of                      confiscation,    nationalization, expropriation, or changes in the foreign country’s law. The policies typically require          that the government’s action or inaction result in the termination of the contract, prevent the performance of the            contract, or result in the foreign company having a valid discharge of its duties under the contract. Contract                      Frustration insurance also may protect against losses from an embargo or license cancellation, from war, political                violence, insurrection, actions by armed forces, strikes, riots, and other specified events that prevent the                        performance of the contract.
  • • Currency Inconvertibility Insurance: Currency Inconvertibility Insurance protects an insured doing business in a foreign              country from losses if it cannot convert the foreign currency into U.S. dollars. It typically applies when a foreign                government enacts new currency restrictions or prevents the conversion or transfer of the insured’s funds generated          in connection with its investment in the foreign country from local currency into U.S. dollars.
  • •  Expropriation Insurance: Expropriation Insurance protects an insured’s investment or assets in a foreign country from a            foreign government’s unlawful confiscation, nationalization, or expropriation.
  • •  Political Violence Insurance: Political Violence Insurance protects an insured against property and income losses incurred          as a result of war, civil unrest, revolution, riots, and politically motivated terrorism.
  • •  Terrorism Insurance: Terrorism Insurance protects an insured against losses from violent acts, including acts involving              chemical, biological, or other weapons of mass destruction, by individuals or groups. Terrorism coverage typically is          significantly narrower than political violence coverage.


Coverage also can be tailored to meet specific needs through the private insurance marketplace (e.g., underwriters at Lloyd’s of London or AIG).

The situation we see with Russia and Ukraine is not unusual in terms of triggering interest in political risk insurance—it highlights why businesses should consider it. However, as the current situation demonstrates, when there is a “hot spot” of activity in a particular region, it makes procurement of political insurance in the aftermath difficult and, if available, expensive. Therefore, political risk insurance should be considered before there is an issue. Once the issue arises, it may be too late. And, while the likelihood of events happening that might trigger political risk insurance may not be predicted with certainty, several major insurance brokers post political risk “maps” or assessments that indicate possible risk levels. While not perfect, these maps and assessments could provide guidance to those considering a possible need for political risk insurance.





There is a distinct difference between a hotel customer who has enrolled in a loyalty program and a customer who makes regular, truly loyal use of the brand because of it. For most customers, only one brand “wins” — and the prize is a dedicated relationship that enhances revenue in the long term. The journey past that behavioral tipping point is part science, part emotion.

To turn your customers into enthusiastic, even passionate brand devotees, you need to understand the patterns in how different travelers view and use rewards. And you have to use that insight to craft a program that stands above the ordinary and the expected.

In 2013, A Restoration in Hotel Loyalty: Developing a Blueprint for Reinventing Loyalty Programs gave us deep insights into hotel guests’ travel behaviors, attitudes, and engagement preferences.

In 2014, we take an even deeper look at how high-frequency business and leisure travelers feel about loyalty programs and how their behaviors and attitudes towards brands, hotel groups and loyalty programs affect their hotel spend and selection process.

Explore Winning the race for guest loyalty and view the infographic to learn more.



Recently, the hotel industry has been wrestling with a growing trend.  A guest whom the hotel suspects violated smoking policies by smoking in his room or inside the hotel itself has his credit card charged for the violation fee after leaving the hotel. The guest either promptly or eventually disputes this charge, denying the alleged violation, which often garners agreement from the credit card company and results in a chargeback to the hotel. These four best practices will help hotels win disputes over smoking policy violations with credit card companies and avoid chargebacks: 

            1.    Post a clearly-visible sign in each guest room that advises readers of the smoking policy and associated fine,                            including the method(s) by which the hotel will collect the fine.

        2.    Maintain a log of custody for each guest room that notes the precise times that your housekeeping staff interacted                  with the room.

        3.    Before collecting a smoking policy violation fee, ensure you have acquired reliable evidence of a policy violation.                  This can include witnesses (preferably several), used cigarettes in guest room waste receptacles, and/or tobacco                    residue in the room (accompanied by a cleaning record that dates the residue).

        4.    Require all guests to sign a document (or include text on existing registration/check-in documents your guests sign)                  that specifically prohibits (a) smoking in any guest room or anywhere inside the hotel and (b) disposing of used                        cigarettes in guest room waste receptacles. We recommend using the following text in this document:  

                    This hotel is a completely non-smoking facility. By my initials below, I confirm that I fully understand and agree                        that if hotel staff find any evidence that I or someone visiting me at the hotel was smoking or utilizing a                                "smokeless" cigarette device anywhere in the building, including the sleeping room, I will be subject to a $250                        higher nightly room rate, which I agree to have charged to my credit card that was used to secure the                                    reservation or pay the higher room rate in cash at the time of checkout.


Co authored by Allison McCarthy and David P. Sofge

Condominium hotels are a subject of renewed interest, buoyed by the rising tide for real estate generally. These projects are also encouraged by favorable trends for financing under the SEC's new Rule 506(c) that allows "general solicitation," including use of protected websites, for exempt offerings by developers under specified conditions. Brand operators who are thinking of putting their flags on projects offered and sold under Rule 506(c) may wish to consider both the advantages and potential hazards associated with the new financing options.

Before Rule 506(c) became effective in September 2013, developers typically attempted to structure sales of condo hotel units in a way that would prevent the transactions from being deemed offers or sales of "securities." Developers relied on standards for avoiding "investment contract" status derived from the U.S. Supreme Court's Howey test and the SEC's 1973 Condominium Release and 2002 Intrawest no-action letter the requirements generally consist of avoiding:

  • » emphasis on the economic benefits to the purchaser from the managerial efforts of the promoter
  • » mandatory participation in a unit rental program
  • » pooling of rental revenues and expenses

Unfortunately, there are no bright line tests for meeting these standards, and in practice there is pervasive uncertainty. An August 2013 decision – favorable for developers – by the U.S. Court of Appeals for the Ninth Circuit in Salameh v. Tarsadia Hotel, involving the Hard Rock Hotel in San Diego, turned on an unusually large gap in time (two years) between transfer of the units and execution of rent-pooling agreements and provided little in the way of useful guidance for other developers. A transaction which falls short must be registered as a security unless an exemption is available. However, before Rule 506(c) there was no exemption for a transaction using "general solicitation" – which includes newspapers, the Internet and most other forms of advertising. As a result, relatively few successful condo hotel deals were done.

SEC Rule 506(c) now allows "general solicitation," including via the Web, for certain exempt offers and sales in which all purchasers are "accredited investors." This has created a surge of new "crowdfunding" websites for commercial real estate. It has also caught the attention of condo hotel developers since it may provide a way to make offers and sales of units as "securities" that are entitled to an exemption from registration with the mandatory rental programs and pooling arrangements generally thought to be necessary for economic feasibility – provided that the offers and sales are made in compliance with all requirements of Rule 506(c).

Risks Associated with Condo Hotel Units Sold as Securities

Before leaping in, however, brand operators who are thinking about lending their names to condo hotel projects offered and sold under the new rule may wish to consider some additional risks arising from the circumstance that these offers and sales will be securities under federal and state law. The brand operator will, in most cases, want to take all appropriate steps to minimize the chance that it might be considered a "controlling person" of the issuer, with potentially increased liability to investors (unit purchasers). Proper structuring of the brand management contract can usually minimize this risk, but operators should be aware of the possibility that in the course of future investor claims there could be attempts by purchaser plaintiffs to bring brand operators within the scope of the parties alleged to be liable for securities law violations, which would bring into play a multitude of potential remedies and penalties. In addition, the security fraud provisions under Rule 10b-5, with its traditionally broad construction, will apply to all exempt offerings under Rule 506(c).

In addition, brand operators will want to consider the risk that the developer or others involved in offers and sales of the units may fail to comply with all of the requirements for the exemption under Rule 506(c). There are a number circumstances under which there may be failure to comply, including:

  • » inadequate or improper disclosure in the offering literature
  • » failure to comply with restrictions on the proper means for "general solicitation" (for instance, failure to provide proper » controls to ensure that a website used as a platform does not result in sales to non-accredited investors)
  • » failure to take proper steps to verify the accredited status of unit purchasers
  • » deficiencies with respect to the licensing and compensation of sales personnel under federal and state law

As a part of its evaluation of a proposed brand management arrangement, the operator will therefore need to take into account the potential consequences for the project, and for the expected benefits under the brand management contract, if the developer/owner runs afoul of the securities laws.

Even with Rule 506(c) Compliance Disputes Can Be Costly and Injurious to the Brand

An analysis of potential scenarios would also factor in the anticipation that even if there has been compliance with Rule 506(c) and the developer does ultimately prevail in litigation, the scope of potential purchaser claims is greatly expanded, disputes are likely to be more onerous and costly, and claims alleging securities fraud may embroil the brand name in undesirable public attention.

While there may be attractive new options for financing condo hotel projects under Rule 506(c), before brand operators take the plunge and lend their names to a project it is important that they consider both the expanded potential and the new hazards where the units to be offered and sold are not only real property interests, but also securities under federal and state law.


To ensure compliance with Treasury Regulations (31 CFR Part 10, §10.35), we inform you that any tax advice contained in this correspondence was not intended or written by us to be used, and cannot be used by you or anyone else, for the purpose of avoiding penalties imposed by the Internal Revenue Code.

Section 1198 of the Labor Code of California states that the “employment of any employee for longer hours than those fixed by the order or under conditions of labor prohibited by the order is unlawful.

References to the “order” refer to California Wage Orders, which are issued from time to time by the California Industrial Welfare Commission and establish wages and working conditions for a number of industries within California. Section 14 of the majority of the California Wage Orders say that an employer must provide “all working employees” with “suitable seats when the nature of the work reasonably permits the use of seats.” What each Wage Order does not say is what this means.

Even though these Wage Orders have been around for decades, they are only now the focus of many lawsuits.  So why now?  Well, that is also hard to answer.  These laws were originally focused on allowing employees who worked on certain equipment or in other jobs that were essentially stationary to sit down as they performed their work.  There used to be many more “suitable seating” laws across the nation.  They appear to have originated in the 1950s and were focused on the increasing number of females in the workplace.  They have either remained on the books (though neutralized to be gender neutral) or taken off the books altogether.  The California laws came to life with the passage of the Private Attorney General Act (PAGA).  Under PAGA (which was deemed to apply to the suitable seating laws) an employee can seek up to a year of civil penalties and attorney fees, including a civil penalty of $100 for each aggrieved employee per pay period for the initial violation and $200 for each aggrieved employee per pay period for each subsequent violation.  So, now there is real money tied to the law.  Where there is real money – lawyers will follow.

Two of the more notable suits involving suitable seating are class actions that are currently on appeal with the Ninth Circuit Court of Appeals.  As the Ninth Circuit was trying to interpret the law and make a ruling in these cases, the Court discovered that there was not clear interpretation of the law in California state court.  There was not sufficient guidance from state courts to inform the Ninth Circuit what was intended under the law.  Thus, the Ninth Circuit said that rather than substitute its own judgment in the interpretation of California law, it asked the Supreme Court of California to clarify three specific questions.

They first asked the California Supreme Court to clarify whether the term “nature of the work” refers to individual tasks that an employee performs during the day, or whether it should be read “holistically” to cover a full range of duties.  As a sub-part to this question, if the courts should construe the “nature of the work” requirement holistically, should they then consider the entire range of an employee’s duties if more than half of the employee’s time is spent performing tasks that reasonably allow the use of a seat?

The second question the California Supreme Court was been asked to clarify is whether an employer’s business judgment should be considered in determining whether the nature of the work “reasonably permits” the use of a seat, as well as the physical layout of the workplace and the employee’s physical characteristics.

The third and final question posed to the California Supreme Court was to clarify whether the employee must prove what would constitute a “suitable seat” in order to prevail.

So, what does this mean to the California hospitality industry?  It could change the way in which operations are designed and how job expectations are defined.  What if a sous chef wants a stool as he does prep work?  Can the kitchen design handle the arrangement?  How does that reconcile with the hazards of the kitchen workplace?  Can it be set up in the often narrow passage ways of the kitchen?

How does the hostess position effectively use a seat and still present a welcoming atmosphere to the clientele?  What about the wait staff?  If they are given a seated area for use when the floor is not busy – what happens if someone is sitting down when they really should be tending to tables or cleaning the stations?

What about the reception desks at hotels and the spas?  Do they give the same image if they are sitting down – even if on a high stool?  More importantly, do you now have to change the lay-out of the reception area?  Is there enough room for the employees to be seated or use a stool?  Is a stool even considered “suitable seating”?

If a job or worksite has been modified as an accommodation to an individual in a wheelchair, does that mean that it is now considered to be a job that automatically can be performed when seated – even when it historically has not been?

It is not known when the California Supreme Court will provide answers to the questions posed by the Ninth Circuit.  Any guidance offered by the Court will still be open to interpretation and lead to more suits.  The answers will not be specific to any given industry.  The Court is unlikely to provide guidance on the interplay with other laws (e.g. workplace safety, OSHA, etc.) as well as define who has the burden to prove the violations exist and that the solutions are or are not reasonable.

Some of the early California cases regarding suitable seating suggest that there may be some considerations available to employers.  If a company can demonstrate that there is a genuine customer-service rationale for requiring the employees to stand, the company may have an argument.  Depending on the nature of the service provided by the employee, it is acceptable for a Company right to be concerned with efficiency – and the appearance of efficiency – of the delivered service.  These early cases have expressed concern not only about safety, but also about the employee’s ability to project a “ready-to-assist attitude” to the clientele.  It is not clear that these arguments will survive the California Supreme Court’s analysis.  It is anticipated that the answers will only create more questions, so it is well advised to start looking at your facilities as well as your job descriptions now so you can be prepared to take steps to not become the next lawsuit target.


 Major online hospitality outlets like Hotel Industry Magazine and Travel Daily UK are announcing the results of a NETGEAR study in which two-thirds of business travelers reported they would not return to a hotel that offers inadequate wireless service. Now, we can’t find a direct link to that survey, and the findings do encourage the purchase of the technology that NETGEAR sells; that being said, these numbers don’t stray far from the well-regarded Hotels.com Global Hotel Amenities Survey, which last year found that fifty-six percent of business travelers listed free Wi-Fi as the most crucial factor in choosing a hotel.

The bottom line: If you own and/or operate a hotel and you cut corners on wireless internet service for guests, you’re probably losing a significant amount of business. This article will help you understand both the basics and the finer points of providing your guests with excellent Wi-Fi.

Components: Avoid Modem/Router Combos

Whether you have DSL or cable—and, with today’s technology, either will work for your purposes—you will need both a modem and a router to operate your wireless network. The modem will connect to the outside cable/DSL line via a wall outlet, and the router will connect to your modem via an Ethernet cable. The modem reformats incoming electrical data on the cable/DSL line into digital data that a computer can process, and the router broadcasts that data to the wireless receiver inside your computer or mobile device.

Some brands offer devices that include the functionality of a modem and a router. You should avoid such devices for two reasons: (a) Dedicated routers typically broadcast a more powerful signal and (b) if a component fails, you will probably have to replace just the modemor the router (either of which will be more cost-effective than replacing a modem/router combo).

Speed: How Much Is Enough?

Your service provider likely offers a number of internet packages; pay more each month, and the provider will allocate more network resources to your line, which translates to faster Internet browsing speed on your end. The typical yardstick for the performance of an Internet connection is download speed; that is, the amount of data a given connection can push to your device in the span of one second.

For home use, most providers start with a package that features 10 Mbps (megabits per second), which provides a generally decent browsing experience for one or two casual users. People who work at home or play heavy-duty computer games often select a package with a more robust speed, somewhere between 25 Mbps and 50 Mbps.

As a hotel owner and/or operator, you face a challenge that home users do not: Your network may be used by dozens (if not hundreds) of users at once. This is important because end users share the data speed coming down the line with each other. In other words, while the cable company may be delivering the 50 Mbps connection speed it promised to your doorstep, the dozens of hotel guests simultaneously mobbing your network to watch Hulu videos at 9:00 PM are each crawling along at less than 5 Mbps (to say nothing of the dedicated few who are tearing their hair out because they can’t send a work email with an attachment). Your situation also differs from that of a small business owner because your number of users will vary inside a much greater range; as such, if you select a service package with an insufficient connection speed, you may not see the consequences until sometime after the fact (especially during the off-season in your particular region).

In summary, the speed your cable provider promised you, and the speed you’re enjoying on your (wired) computers in the office, is probably not the speed your guests are experiencing. Mitigate this obstacle by realistically tailoring your connection speed to the amount of guests your hotel typically sleeps, and considering how many guests will attempt to get online during peak usage hours; while a 25 Mbps package will likely prove insufficient for a hotel with one hundred rooms, a 100 Mbps package should keep your Internet-surfing guests happy (even during prime time).

Routers: Don’t Cut Corners Here, Either

Your cable/DSL line might be sizzling with 100 Mbps of speed, but if that data funnels into a subpar router (or series of subpar routers) to be broadcasted out to your users, you may find your Internet crawling along at a fist-clenching 5 Mbps or less well outside of peak usage hours. Simply put, many low-end routers do not contain the requisite technology to broadcast faster connections over a sufficient area. Investing in high-end routers will (a) ensure you get the most out of a lightning-fast data connection and (b) mitigate the signal interference that results from certain building materials and other electronic devices.

Signal Strength: Location, Location, Location

Okay, you’ve bought a blazing fast connection speed from your service provider and spent plenty of money installing high-end routers in every hallway of your hotel. Have you covered all of your bases? It’s possible, but chances are you still have some work to do.

Depending on the location(s) of the router(s), the construction materials and layout of your hotel, and other devices that may be interfering with the signal in certain areas, you might still have guest rooms with a weak Wi-Fi signal. Unfortunately, the best way to find out is to have your staff test the signal in each and every room. This involves moving around the room and testing devices from various locations (e.g. the window, the bed, even the bathroom). Testing the signal in one room and extrapolating the results to the entire hallway will be much quicker, but also prove far less thorough and accurate.

You can mitigate a weak Wi-Fi signal in certain guest rooms by shifting the location of your current router(s) and/or installing additional routers. You can also install range extenders, which boost the signal of an existing router and typically cost less.

Why Go Through All This Trouble?

If fifty percent of business travelers—let alone two-thirds—choose their hotel based on the strength and reliability of the hotel’s wireless internet, you can’t afford to offer anything less than stellar Wi-Fi. That involves (a) arranging for a fast connection speed to be dropped off at your outlet, (b) getting that signal into high-end routers that won’t degrade the speed, and (c) making sure every guest can sit on his/her bed and use the Internet without screaming or throwing anything across the room.

Not worried about a few rooms with weak signals? Those will be the one-star Yelp reviews attached to your hotel that everyone online reads for the next two years. Invest in the technology, take your wireless internet service seriously, and reap the benefits.

Wi-Fi Resources

        • SpeedTest.net

        • Best Practices for High Density Wireless Network Design




 At the recent 26th Annual Hunter Hotel Conference in Atlanta, Russ Rivard served alongside other hotel buyers, lenders, appraisers, and advisors on a panel discussion of “Hotel Values in a Rising Market.” While we shared insights from our various perspectives on the U.S. hotel industry as of early 2014, it became very apparent that there is a surge of urgency among hoteliers, and with good reason. The conference’s theme — “The Time is Now” — couldn’t have proven more apt, and other panel discussions, featured speakers, and informal conversations with fellow delegates made the strong impression that now is indeed the time to move ahead with hotel ambitions. 


 What makes the present so opportune for hoteliers? Read more


Is hotel rebranding trending, and is that a further sign of the recovering lodging industry? There have been a number of announced changes in hotel names and brands in the last few months, and while this may or may not signify an economic uptick, you can be assured that there has been a lot of work behind the scenes to get to this point for all of these venues.

A recent article noted there are many intellectual property issues involved in hotel rebranding, as well as the considerations of public opinion, current trends, and bottom line financials.

All of these factors are compounded given the general nature of hotels: large scale, significant reputation considerations, the considerable costs of the accompanying renovation (and usually updating) and replacing old inventory items that have the old brand, as well as the economic consequences of the time it takes (sometimes up to a year) for the unbranding and rebranding phases as well as reincorporating into the referral, booking, and online channels with the new name.

With all these issues already demanding time and resources, it makes sense to be very sure that the new brand to be adopted is available and that it will be a strong brand. Every company relies on trademark laws to communicate to consumers and to protect the reputation of its business. Making sure your new brand is not too similar to any other existing brand or trademark (including trade dress or other protectable elements), and then registering and managing your rights and responsibilities worldwide and online prevents your marketing and advertising resources and goals from being wasted. Examples of learning these lessons the hard way include instances when Hard Rock Café sued Hard Rock Hotel for trademark infringement; Hershey Entertainment & Resorts Company sued Radisson for calling its hotel Radisson Harrisburg HersheyBarley Swine restaurant in Austin sued Barley & Swine restaurant in Florida; and Seacrets hotel in Maryland stopped use of SECRET SPOT as a name for restaurant services.

The benefit of a strong brand, if adopting a new one, is that you will be able to use the brand to refer to your business and reputation in a broad, confident manner, prevent others from using similar marks, and build up value and credibility with much more ease than with a mark that already has other similar users out there, and clearing the mark first can help prevent those schedule-interrupting cease and desist letters from third parties.

If you are instead switching to an existing brand, being aware of the strength of the brand’s intellectual property portfolio (worldwide trademark registrations, domain names, franchise or service agreements, web use, trade dress protections, etc.) as part of the initial due diligence can inform you of issues or hurdles or ongoing problems that will need to be considered or managed as the brand is adopted. For example, if the brand has had to send numerous cease and desist letters to others because the name is fairly descriptive, it would be important to include that aspect into future budgets. On the other hand, determining that the brand to be adopted has a strong portfolio of established rights and registrations would be an indication that the change would indeed bring value and stability to your endeavor.

Takeaway: For any of the many reasons to shift, update, adopt, or change a brand, evaluating the strength of the trademarks, trade dress, domain names, and other intellectual property elements should be included in the list of to-do items before proceeding. If you’re going to go with this trend, if it is one, you might as well go with confidence!

Our national hospitality practice frequently advises restaurant owners and operators on whether it is legal for employers to pass credit card swipe fees onto employees or even to guests, and the short answer is, yes, in most states. But whether an employer wants to actually pass along this charge and risk alienating their staff or their customers is another question.

With respect to consumers, in the majority of states, passing credit card swipe fees along in a customer surcharge became lawful in 2013. Only ten states prohibit it: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, Oklahoma, Texas and Utah. If a restaurant decides to add a surcharge to the bill to recoup the credit card swipe fee, it is important that the fee not exceed the percentage charged by the credit card company, the fee is posted clearly on the guest check prior to paying the bill, and it cannot be used for debit card purchases.

With respect to employees, the credit card swipe fee may only be passed along to servers and applied to the tipped portion of the bill. For example, if a bill is $100 plus a $20 tip, the swipe fee on the $100 (e.g., 3 percent or $3) must be paid by the restaurant. However, when paying out the server, you can allocate $19.40 since you can charge the server 3 percent or 60 cents to recover the swipe fee on the gratuity. As with guests, an employer may not charge the server more than credit card swipe fee, and the reduced amount in tips cannot cause the employee to earn less than the minimum wage. And again, you must always check state and local law as some states prohibit deductions from credit card tips for processing fees, such as California, Colorado, Nevada, New Mexico, Oregon, and Washington, among others.

But even if legal, is it practical or good business sense to pass along processing fees to employees and customers? Is it industry practice in your market to pass along these fees, or do you risk angering an important stakeholder in your profit margin – your employees and customers? Surcharges could be perceived as owners taking more money out of the pockets of employees and customers and companies could risk losing the business to another restaurant down the street. Unless the practice becomes an industry standard, it is likely that adding a surcharge or deducting the swipe fee from tips could do more harm than good.

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