Under New York City law, hotels with at least 100 rooms that either (1) experienced a mass layoff of 75% or more of their workforce, or (2) were closed to the public during the COVID-19 pandemic, were not reopened to the public in November Has to go public in 2021, laid-off employees must pay weekly severance pay.
Currently the law is (Int. 2397-2021-A) and their requirements will expire and will be deemed waived on June 1, 2022.
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:
- Was closed to the public on or after March 1, 2020;
- By October 11, 2021, you have not recalled at least 25% of the employees on March 1, 2020; and
- November 2021 will not be reopened to the public.
A “mass layoff,” which would also trigger the obligation, means a reduction in the number that was not due to a lockdown, lockout or strike and that resulted in a layoff by a hotel employer over a period of at least 30 days Employees were working in hotel services in the hotel 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:
- Employed at the hotel for at least one year on March 1, 2020;
- Employed to perform work in connection with the operation of the hotel; and
- 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 defined, “employees” are not defined. Accordingly, any references to percentages (i.e., collective layoffs of at least 75% of employees or the removal of at least 25% of employees) would likely include all employees, not just those defined as “covered hotel service employees”.
The law is unclear about the impact of employees failing to return after a recall. It is also not stated whether employees who provide fringe services on site are included in the count. Therefore, it is safest to proceed conservatively until additional guidance is issued.
Remedies
The consequences of not complying with the law are significant. 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.
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On October 8, 2021, the Hotel Association of New York City filed a lawsuit contesting the validity of the law and seeking a declaratory and injunction.
