Garcia v. Four Points Sheraton LAX, 188 Cal. App. 4th 364 (2010)

In 2006, the City of Los Angeles enacted the Hotel Service Charge Reform Ordinance, which required non-unionized hotels in the Century Boulevard Corridor near LAX to pass along mandatory service charges to the workers who rendered the services for which the charges were collected. (The service workers alleged their income had declined as a result of the hotels’ practice of imposing mandatory service charges because patrons assumed the charges would be distributed to the workers, and, as a result, the patrons left fewer and smaller gratuities.) The hotels challenged the Ordinance on the grounds that it was preempted by Labor Code sections 350 to 356 (regulating gratuities) and that it violated the equal protection clauses of the state and federal constitutions, among other grounds. The trial court sustained the hotels’ demurrers, but the Court of Appeal reversed, holding that the Ordinance is not preempted by the Labor Code because the latter does not conflict with the former. The Court of Appeal further held that the Ordinance is not unconstitutional under either the federal or state constitutions.