In the past 19 months, restaurants and bars have taken drastic measures to survive (and in some cases, thrive) under pandemic conditions. Traditional restaurant service is increasingly replaced by third-party delivery apps and QR code menus when guests opt to dine in. These and other technological adaptations have allowed restaurants and bars to run more efficiently (that is, with fewer staff) but have associated qualitative costs in terms of the guest experience and quantitative costs in terms of fees for various third-party service providers.
Those costs, along with an ordinary desire to return to normal, have left restaurateurs continuing to look to hire staff without success. Despite efforts to raise wages, increase benefits, and an otherwise generally positive hiring trend in the hospitality and leisure sector, restaurants still cannot fill all positions. By July 2021, the restaurant industry was still a million jobs short of the pre-pandemic level of 12.3 million jobs—with the COVID-19 Delta variant expected to cool the labor market and make hiring or retaining staff an even greater challenge.
Explaining the Shortage
With 26 governors having opted out of enhanced unemployment benefits prior to their expiration, unemployment benefits have not offered a good explanation for the staffing challenges. In one recent study, economists and researchers concluded that ending the benefits resulted in a very modest 4.4 percent increase in employment as compared with states that retained benefits. That is while being associated with a 35 percent reduction in jobless workers receiving benefits and an associated $2 billion decease in consumer spending that may have caused layoffs and other undesirable externalities that may offset that 4.4 percent increase in employed workers. The benefits also do not explain the increase in wages in hospitality, as equivalent wage increases are not being seen in other traditionally low-wage sectors.
The labor shortage seems to come, instead, from the unique nature of foodservice work. Those features (the close quarters, the intimate interactions with guests, the grueling hours and physically demanding tasks) so romanticized by authors ranging by former chefs like the late Anthony Bourdain to journalists like Bill Buford have presented a particular challenge for businesses and staff alike to survive the pandemic.
Restaurants, particularly full-service restaurants, stand at that nexus between recreational activity and necessity of life. As shutdowns led to layoffs, the pandemic created conditions of uncertainty in the restaurant labor market through both the dining public on the demand side and staff on the supply side. Studies have indicated that nearly two-thirds of unemployed hospitality workers “seriously considered” changing their field of work after being laid off in the pandemic. Optimism about possible economic recovery has not seemed enough to reverse the destabilizing effects of mass layoffs—and the Delta variant’s effects are unlikely to temper staff skepticism about returning. Meanwhile, staff have also continued to face the childcare issues that still prevent many others from returning to in-person work.
Restaurants also lack the adaptability that allowed other sectors to justify a full return to work: with serious exposure-risk mitigation strategies, such as permitting employees to work from home, ensuring social distancing at work, adding ventilation systems, and even providing full PPE and procedures for handling the known or likely infected. But front-of-house staff must come face-to-face with unmasked guests with unknown vaccination statuses and varying beliefs on the seriousness of COVID-19, a dynamic that prevents staff from prioritizing hosting and hospitality and forcing staff to choose between creating conflict and reducing risk. And back-of-house staff must try to maintain social distancing in quarters that were already intimate under pre-pandemic standards. The inflexibility of these basic aspects of restaurant work prevent even the most conscientious restaurateurs from implementing comparable risk-reduction methods to those used in other sectors. The uncertainty of the associated risk here further discourages workers from returning to their old positions without sufficient incentives.
Each of these factors contribute to the staffing shortages and inhibits a return to normal function in the restaurant industry labor market.
Potential Legal Risks in Talent Management
With these unique challenges and the competitive market for staff, restaurants need to carefully consider each decision to hire, fire or retain staff to avoid potential claims under various federal, state and local anti-discrimination laws. These laws protect employees and applicants from discrimination on the basis of a protected characteristic, such as the individual’s sex, race, color, national original, disability or religious belief at minimum. While restaurants need not make every decision for a good or even a sensible reason, employment decisions cannot be made for a discriminatory reason.
Sex, race, color and national origin discrimination can occur through either disparate treatment of an individual based on a protected characteristic (i.e., treating them differently because of that characteristic) or disparate impacts on individuals with a certain protected characteristic (i.e., policy decisions that improperly effect groups of individuals who share that characteristic). Disability and religious discrimination involve slightly different requirements, including requirements that employer and employee engage in interactive dialogue and that employers attempt to reasonably accommodate disabilities and religious beliefs.
These claims are often levied by applicants who do not get the job and ascribe a discriminatory motive to the decision not to hire (or, for example, to choose to hire someone else) or when employees are laid off or treated differently from others outside of the protected class. As a result, discrimination claims can often come out of passion (e.g., feeling wronged or a desire to make an employer pay for a perceived or actual slight) and so can require more training and other forms of active management by decision makers.
One particularly new area where discrimination claims may arise is from employment-related, pandemic-specific risk management strategies like vaccine mandates or masking and distancing policies. The politicization of vaccines and mask mandates may make these policies a new target for disgruntled applicants or employees who object to or refuse to comply with workplace policies. And employers who require new, existing or returning employees to prove their vaccination status may face a discrimination claim alleging that the request constituted an unnecessary medical inquiry (although this would be unlikely to succeed considering the close quarters of a typical restaurant), or that the employer failed to reasonably accommodate a medical disability preventing vaccination or a sincerely held religious belief. In some states, employers may be entirely prohibited by (new, ad-hoc) state laws from making an employment-related decision based on vaccination status.
In terms of more traditional strategies for talent management, employers must remain aware that poorly implemented programs can have a negative impact on morale. That, in turn, may increase the likelihood of an employee viewing a particular decision as discriminatorily based on a protected characteristic. For instance, employees may point to retention bonuses paid to certain employees over others, or efforts to promote certain classes of employees over others, as evidence of discriminatory intent. Instead, employers need to apply neutral (nondiscriminatory) criteria for providing bonuses and keep opportunities for advancement open to all employees.
Colin Barnacle is a Partner at Nelson Mullins and was formerly division general counsel for WhiteWave Food Company, a packaged food and beverage producer (now Danone North America). He has extensive experience advising and litigating both traditional labor and employment issues and unique regulatory issues specific to the food, beverage and hospitality sectors. Colin is based in Denver, Col. and regularly practices across the country.
Nick Ladin-Sienne is an associate at Nelson Mullins and a former professional chef. He has advised on and litigated employment, regulatory and general civil issues for clients across the food, beverage, and hospitality industries. Nick is based in Boston, Mass.