Under a 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, but have not reopened to the public by November 1, 2021, must pay a weekly severance to laid-off employees.
Currently, the law (Int. 2397-2021-A) and its requirements expire and are deemed repealed on June 1, 2022.
The City has not issued guidance on the interpretation and enforcement of the law.
Triggering Events
Under the law, the severance pay obligation is triggered where the hotel experienced a covered “closure” or “mass layoff.”
A closure that would trigger the severance pay obligation means that the hotel:
- Was closed to the public on or after March 1, 2020;
- Did not, by October 11, 2021, recall at least 25% of the employees employed as of March 1, 2020; and
- Did not reopen to the public by November 1, 2021.
A “mass layoff,” which also would trigger the obligation, means a reduction in force that is not the result of a closure, lockout, or strike and that resulted in a layoff by a hotel employer during any 30-day period of at least 75% of the employees engaged in hotel service at the hotel as of March 1, 2020.
Covered Employees
The law provides for severance payments of $500 per week to “covered hotel service employees,” up to a maximum of 30 weeks.
“Covered hotel service employees” include individuals who were:
- Employed for at least one year by the hotel on March 1, 2020;
- Employed to provide work in connection with the operation of the hotel; and
- Laid off after March 1, 2020 due to a closure or a mass layoff.
“Covered hotel service employees” expressly excludes managerial, supervisory, or confidential employees and those who exercise control over the management of the hotel.
The obligation to pay severance ceases at the later of when either the employee is recalled, or, if the hotel that experienced a closure reopens, on the date when the hotel is reopened to the public and has recalled at least 25% of its employees employed as of March 1, 2020.
Calculating Percentage of Employees
While “covered hotel service employees” is defined, “employees” is not. Accordingly, all references to percentages (i.e., mass layoffs of at least 75% employees or the recall of at least 25% employees) would likely include all employees, not just those defined as “covered hotel service employees.”
The law is unclear on the implications of employees who do not return upon recall. It also does not specify whether employees who provide ancillary on-site services are included in the count. Therefore, it is safest to proceed conservatively until additional guidance is issued.
Remedies
The consequences of failing to comply with the law are significant. Severance payments are required within five days of the end of the week for each week the employee is entitled to severance.
The law provides for a private right of action and the employee would be entitled to double damages plus reasonable attorney’s fees and costs.
Hotels Permanently Closed, Converted
Hotels that are permanently closed or converted (or in the process of converting) to alternative use are exempted from the severance pay provision, so long as they offer covered hotel service employees severance of 20 days per year of service and the severance is tied directly to the conversion. This severance must be paid at the same rate the covered hotel service employee is paid for paid days off.
***
A lawsuit was filed by the Hotel Association of New York City on October 8, 2021, challenging the validity of the law and seeking declaratory and injunctive relief.
