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New York Severance Pay Act for Hotel Services Employees

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Under a new New York City law (Int. 2397-2021-A), hotels with at least 100 rooms must pay a weekly allowance of $ 500 per employee per week to laid-off employees up to 30 weeks if their hotel either (1) suffered a mass layoff of 75% or more of their workforce employed as of March 1, 2020, within a 30-day period or (2) closed to the public on or after on March 1, 2020, and have not yet (a) at October 11, 2021, recalled 25% or more of its employees employed on March 1, 2020, and (b) reopened to the public by November 1, 2021 .

The City has not issued guidelines on the interpretation and application of the law.

Triggering events

By law, the obligation to pay severance is triggered when the hotel has suffered a covered “closure” or “collective dismissal”.

A closure that would trigger the obligation of severance pay means that the hotel:

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

  2. has not, as of October 11, 2021, recalled at least 25% of the employees employed on March 1, 2020; and

  3. Did not reopen to the public until November 1, 2021.

A “collective dismissal”, which would also trigger the obligation, means a reduction in force which is not the result of a closure, lockout or strike and which has resulted in a layoff by an employer hotelier for any 30-day period of at least 75 days. % of employees engaged in the hotel service of the hotel as of March 1, 2020.

Employees covered

The law provides severance pay of $ 500 per week to “covered hotel service employees”, up to a maximum of 30 weeks.

“Covered hotel service employees” include people who:

  1. Employed for at least one year by the hotel as of March 1, 2020;

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

  3. Layoff after March 1, 2020, due to a closure or mass layoff.

“Covered hotel services employees” expressly excludes management, supervisory or confidentiality employees and those who exercise control over hotel management.

The obligation to pay severance pay ceases at the latest when the employee is recalled or, if the hotel which has experienced a closure reopens, on the date on which the hotel is reopened to the public and recalled at least 25% of its employees employed on March 1, 2020.

Calculation of the percentage of employees

While “covered hotel service employees” is expressly defined, the term “employees” is not. Accordingly, all references to percentages (that is to say, mass layoffs of at least 75% of employees or recall of at least 25% of employees) may need to include all employees, not just those defined as “covered hotel service employees”.

Other uncertainties

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

  • It is not clear whether severance pay should be paid to employees of vendors or dealerships operating in a hotel.

  • It is not clear how employees who leave voluntarily or refuse to return when recalled should be treated.

  • It is not known under what circumstances an employee is excluded as an “executive, supervisory or confidential employee”. This is a common problem for positions like a “housekeeping supervisor” who typically inspects the work of others.

Remedies

The consequences of breaking the law can be significant. As a result, many hotels are complying with the law despite its legal insecurity. Severance pay is required within five days of the end of the week for each week in which the employee is entitled to the severance.

The law provides for a private right of action and the employee would be entitled to double damages as well as reasonable attorney fees and costs.

Hotels permanently closed, converted

Hotels that are permanently closed or converted (or in the process of being converted) to another use are exempt from the severance provision, provided that they provide employees of covered hotel services with an allowance of 20 days per year of service and that the indemnity is directly linked to the conversion. This allowance shall be paid at the same rate as the covered hotel service employee is paid for the 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 relief and an injunction. However, in the absence of any action to direct enforcement, the lawsuit itself did not prevent the law from coming into force.

Jackson Lewis PC © 2021Revue nationale de droit, volume XI, number 303


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