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What employers need to know about New York City’s new hotel severance pay law


New York City hotels with 100 or more rooms are required to pay each terminated employee severance pay of $ 500 per week for up to thirty weeks if the hotel has suffered a mass layoff for a period of 30 days involving 75% or more of their workers who were employed on March 1 or the hotel was closed on March 1, 2020 or later and failed to recall 25% or more of its employees who were employed on March 1, 2020 or reopened on November 1, 2020, to the public.

Unfortunately, the city has yet to issue guidelines on how this law should be interpreted or applied. However, some events require a hotel to pay severance pay, such as a mass layoff or closure that:

  • Closure of the hotel from March 1, 2020
  • Where 25% or more of workers employed on March 1, 2020 had not been recalled by October 11, 2021
  • The hotel did not reopen until November 1, 2021.

If any of these events occur, the hotel is required to pay $ 500 per week for up to thirty weeks to covered hotel service employees who:

  • Do work that contributes to the operation of the hotel
  • Work for the hotel for a year or more before March 1, 2020
  • Were dismissed after March 1, 2020, following a collective dismissal or a closure

Certain hotel employees are specifically excluded from this new law on severance pay, in particular confidential, managerial or supervisory employees, as well as any employee who has participated in the management of the hotel.

Employees who are covered by severance pay no longer need to receive this severance pay once the hotel reopens and recalled 25% or more of the workers who were employed as of March 1, 2020.

It is not as clear who is included in hotel services employees as who is not. Therefore, it may be necessary to include all employees to determine whether or not you have recalled at least 25% of the employees.

There are some requirements in this law that are unclear, such as when supervisory, confidential or managerial employees are excluded. It is also not clear whether or not dealer or vendor employees will need to receive severance pay. Plus, it never explains what to do if an employee quits or chooses not to return to work when called back.

Hotels must pay qualifying employees their severance pay within five days of the end of each week for which they are qualified. There is a considerable penalty for not following this law. There is a private right of action, and the employee can receive double damages as well as attorney fees and costs.

If a hotel is closed or has been converted or is in the process of being converted to another type of establishment, it is exempt from this law if the hotel provides employees with covered hotel services 20 days of severance pay for each year they have worked for the hotel, and the severance pay is a direct result of the conversion. Severance pay must be paid at the same rate the hotel service employee receives for paid days off.

The Hotel Association of New York City has filed a complaint challenging the validity of this law, but that does not inherently prevent the law from coming into force. This means that unless the court decides to take action against it, such as an injunction, the law will still come into force and require severance pay as of November 1, 2021.

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