The Los Angeles International Airport (LAX) is among the world's busiest airports, hosting millions of travelers every year. The City of Los Angeles (City) operates and maintains LAX, and as a result of this support the businesses in the area adjacent to LAX reap significant economic benefits. In particular, the hotels in the LAX area enjoy the highest occupancy rate of all Los Angeles hotels due to their proximity to LAX.
Despite the high occupancy rates of hotels in the LAX area, many of these hotels fail to pay their service workers a living wage which in the City is currently $10.64 per hour without health benefits or $9.39 per hour with health benefits. Because of the low hourly wages paid by these hotels, service employees naturally rely on gratuities paid by hotel customers.
In recent years, hotels in the LAX area have instituted the practice of adding a "service charge" of 15% to 20% of the bill for banquets and other large group events. The service charge is typically listed as a line item on the bill. Some hotels pass a portion of the service charge to the workers who actually performed the services, while other hotels retain the entire service charge. Currently, there is nothing illegal about this practice. Since hotels have instituted the practice of adding service charges to bills, many hotel workers have reported a significant reduction in the gratuities they receive from hotel guests. Thus, many hotel customers reduce or eliminate gratuities (tips) they would otherwise pay to service workers because they assume that the workers receive the "service charges," which are added to their bills.
By way of this ordinance, the City seeks to improve the welfare of service workers at the LAX-area hotels by ensuring that they receive decent compensation for the work they perform. Accordingly, to the extent that LAX-area hotels institute or continue the practice of charging their customers "service charges," they will be required by this ordinance to pass the entire service charge on to the workers who actually performed the services for which the service charges are billed. Whereas the LAX-area hotels derive a distinct benefit from their location near LAX, they have both the ability and responsibility to support the local workforce by engaging in fair employment practices.