Under a new New York law (Int. 2397-2021-A), hotels with at least 100 rooms must pay redundant employees a weekly severance payment of $ 500 per employee per week for up to 30 weeks if their hotel either (1) has a mass layoff experienced by 75% or more of their workforce on March 1, 2020 during any 30 day period or (2) closed to the public on or after March 1, 2020 and not yet (a) October 11, 2021 , has recalled 25% or more of its employees as of March 1, 2020 and (b) reopened to the public by November 1, 2021.
The city has not issued guidelines on how to interpret and enforce the law.
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 staff that is not due to a lockdown, lockout or strike and which results in a layoff by a hotel employer for a period of at least 75 days of at least 75. % of employees who worked in hotel services as of March 1, 2020.
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 after March 1, 2020 due to 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, all percentages are (ie, Mass layoffs of at least 75% or the removal of at least 25%) may need to involve all employees, not just those defined as “covered hotel service employees”.
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.
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 in conversion) 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 pay 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 some measures ordering implementation of the law, the lawsuit itself did not prevent the law from coming into force.
© 2021National Law Review, Volume XI, Number 303