Saturday 30th October 2021

According to a new New York law (Int. 2397-2021-A), hotels with at least 100 rooms are required to pay redundant employees a weekly severance payment of USD 500 per employee per week for up to 30 weeks if either (1) there is a mass layoff of 75% or more from January 1st. March 2020, for a period of 30 days or (2) closed to the public on or after March 1, 2020 and not yet (a) until October 11, 2021 25% or more of its than March 1, 2020 and ( b) made available to the public again by November 1, 2021.

The city has not issued guidelines on how to interpret and enforce the law.

Triggering events

According to the law, the severance payment obligation is triggered when the hotel has undergone a covered “closure” or “mass layoff”.

A closure that would trigger the severance payment means that the hotel:

  1. Was closed to the public on or after March 1, 2020;

  2. By October 11, 2021, you have not recalled at least 25% of the employees on March 1, 2020; and

  3. November 2021 will not be reopened to the public.

A “mass layoff”, which would also trigger the obligation, means a decrease in the number that was not due to a lockdown, lockout or strike that resulted in a hotel employer being laid off by a hotel employer over a period of at least 75 days of at least 75% of employees who worked in the hotel service as of March 1, 2020.

Insured employees

The law provides for severance payments of $ 500 per week for “insured hotel service employees” for a maximum of 30 weeks.

“Insured Hotel Service Employees” include people who:

  1. Employed at the hotel for at least one year on March 1, 2020;

  2. Employed to perform work in connection with the operation of the hotel; and

  3. Discharged March 2020 due to a closure or mass layoff.

“Insured Hotel Service Employees” expressly exclude managerial, regulatory or confidential employees and persons who exercise control over the management of the hotel.

The severance payment obligation expires with the dismissal of the employee or, in the case of the reopening of the hotel that has been closed, on the day on which the hotel is again open to the public and at least 25% of the employees have been dismissed from March 1, 2020 .

Calculation of the employee share

While “insured hotel service employees” are expressly defined, the term “employees” is not. Accordingly, any references to percentages (ie collective layoffs of at least 75% or the removal of at least 25% of workers) may need to include all workers, not just those defined as “covered hotel service workers”.

Other uncertainties

The new law also contains a number of vague terms that create legal uncertainty. For example:

  • It is unclear whether employees of providers or concessionaires who work in a hotel have to be paid severance pay.

  • It is unclear how to treat employees who leave voluntarily or who refuse to return when they are called back.

  • It is unclear under what circumstances an employee is excluded as a “manager, supervisor or confidant”. This is a common problem with positions like a “housekeeping manager” who usually inspects the work of others.

Remedies

The consequences of not complying with the law can be significant. As a result, many hotels comply with the law despite the legal uncertainty. Severance payments are required within five days of the end of the week for each week to which the employee is entitled to severance pay.

The law provides a private right of action and the employee would be entitled to double damages plus reasonable legal fees and costs.

Hotels permanently closed, remodeled

Hotels that are permanently closed or converted (or under renovation) are excluded from the severance payment regulation, provided they offer insured hotel service employees a severance payment of 20 days per year of service and the severance payment directly to the conversion. This severance payment must be paid at the same rate that is paid to the insured hotel service employee for paid days off.

On October 8, 2021, the Hotel Association of New York City filed a lawsuit contesting the validity of the law and seeking declaratory and injunctive relief. However, in the absence of measures to prohibit implementation of the law, the lawsuit itself did not prevent the law from coming into force.

© 2021National Law Review, Volume XI, Number 303

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