Locking in Labor
The hospitality and restaurant labor shortage is real and sparking concern among planners counting on vendors for their meetings and events.
By Ronnie Wendt
The hospitality and restaurant labor shortage is real and sparking waves of concern among planners counting on vendors to deliver a full staff for their meetings and events. Fortunately, there are ways planners can protect themselves from short-staffed venues, restaurants, caterers and other vendors, according to Jordan Rohlfing, attorney for DeWitt LLP.
She recommends beginning every potential partnership with a series of questions, then incorporating the answers into the contract. For instance, ask vendors if they handled a similarly sized event recently. “If they tell you they have only done smaller events, then you need to ask if they have all the materials or staff needed to execute an event of this size, or if they’ll be relying on outside parties to help,” she says. “If they are contracting with another vendor, who is that vendor?”
Directly inquire about staffing levels. “How many staff does the venue or vendor expect to need? Does that number jive with your past experience?” asks Rohlfing.
Pay attention to red flags. Many venues, she says, are scaling back services because of the labor shortage. If a venue is not cleaning hotel rooms as often or notes some dining rooms are closed, it’s important to ask why. “They may be dealing with labor shortages,” she says, “and the answers to these questions give insight into how the vendor will execute your event.”
All vendors should be forthright in their answers, Rohlfing adds, noting, “If they seem cagey in their responses, trust your gut.”
Conversely, be reasonable about your expectations. The pandemic injects challenges into meetings and events. Worker shortages can increase labor costs. Planners may need to make do with less. “Come in with realistic expectations for what you can achieve,” Rohlfing says. “It goes a long way toward determining what a successful event looks like in today’s world.”
Even if staffing and capabilities seem sufficient, it’s crucial to include protections in contracts with venues and vendors. “Unless you put specifics into a contract, everything they told you may be meaningless,” explains Rohlfing.
The contents of the contract should depend on what’s important to you. “If you ask about something and the answer is really important to you, include it in the contract,” Rohlfing suggests. “Let’s say they tell you, ‘We know we can handle an event of your size because we have 30 people who can work it.’ Make sure your contract details how many people they will provide for your event.”
Later, if a labor shortage causes problems, the contract provides protection. “If the [venue or vendor] agreed to 30 workers and only supplied 20, they are in breach of contract,” she says.
Rohlfing recommends paying attention to the boilerplate contract terms that are included in every contract. These terms include limitation of liability, inability to perform, indemnification and hold harmless provisions. This fine print, she says, “is really meaningful when trying to protect yourself from things that may go awry at an event.”
Limitation of Liability: This clause limits vendors’ liability. It might limit their liability to your deposit or the amount you paid for the event, even when the losses you suffered are far greater.
Inability to Perform: This clause gives vendors an out if they cannot perform their duties. Most of the time, these clauses cover an act of God, a war or other major disaster. But sometimes, according to Rohlfing, “the contract includes things like ‘if it’s not commercially feasible,’ which means they may be excused for nonperformance. If it’s a vendor you’ve worked with before or a supplier you could replace at a moment’s notice, maybe you’re willing to take on that risk. But if it’s a main venue, that’s difficult to replace.”
Indemnification: These clauses shift liability between parties. Indemnity is a contractual obligation of one party to compensate for the harm or losses incurred by the other party. They indemnify, or do not hold accountable, a party for acts they might otherwise be held accountable for.
Hold Harmless: A hold harmless agreement states that one or both parties will not hold the other party responsible for any harm or losses incurred. A well- written indemnification or hold harmless clause includes a requirement that the party agreeing to indemnify holds liability insurance that will refund any damages for which it is liable.
“It’s important to understand these provisions and make sure you’re comfortable with the risk as allocated,” Rohlfing explains. “The bottom line is you want to have some contractual ability to hold the other party responsible if they cannot hold up their end of the bargain.”
Rohlfing also recommends considering an attorney’s fees provision. If you get involved in a lawsuit over a breach of contract, this provision, if written correctly, can shift attorney’s fees to the vendor. “Often these clauses are mutual, meaning that, if there is a lawsuit, the prevailing party gets its attorney’s fees paid,” according to Rohlfing. “That means if a planner sues a vendor because the vendor messed up, and the planner loses in court, the planner must pay the vendor’s attorney’s fees.”
As the Omicron COVID-19 variant sweeps the nation, Rohlfing also recommends asking about the venue’s contingency plan if personnel get ill before an event. “If providing labor is critical to the success of your event, you should make sure the contract says the vendor will provide a specific number of people and details the contingency plan if people get sick,” she says.
During an event, it’s too late to find extra labor, which makes it critical to check on event staffing periodically as the event gets closer. These check-ins help ensure vendors have the full amount of labor on hand. “On the day of your event, it’s going to be tricky to rectify the issue,” Rohlfing warns.
But that doesn’t mean you do nothing during the event. It’s important to document issues that arise over short staffing and the harm it causes. Later, send information in writing regarding any documented issues to the vendor. This documentation should be thorough and fact-based: You agreed to do X and didn’t do it. Here is the harm it cost us. You need to make good on the harm you caused.
“If it’s black and white that the vendor did not do what it promised, it may agree to resolve the issues in prelitigation negotiations,” Rohlfing says. However, consider filing a claim in a court if you cannot resolve things in prelitigation. “If you haven’t already, engage the services of a lawyer to help,” she says.
But be realistic about your demands. If a vendor promised 30 workers and one got COVID-19 on the day of the event, it would be difficult to prove harm. “You need to prove that the breach of contract caused some monetary harm,” she confirms.
Asking the right questions and putting specific information into a contract goes a long way toward protecting your interests when the show must go on despite third- party staffing levels.