NYC Enacts Severance Pay Requirements for Displaced Hotel Workers
Effective as of October 5, 2021, Int. 2397-2021 requires operators of “transient hotels” (as defined by Section 12-10 of the New York City zoning resolutions) to pay their employees severance pay if: (1) the hotel closed to the public and has not, by October 11, 2021, recalled at least 25% of the number of employees it employed as of March 1, 2020 and has not reopened to the public by November 1, 2021; or (2) the hotel underwent a mass layoff after March 1, 2020 that resulted in the loss of work by at least 75% of employees during any 30-day period. There is an exception for hotels that have closed permanently and are in the process of converting to an alternative use, provided that: (1) the hotel employees were offered severance of at least 20 days’ pay per year of service; and (2) the severance was specifically tied to the conversion.
To be eligible for severance payment, an employee working at a covered transient hotel must have: (a) been employed by the hotel on March 1, 2020 for at least one year; (b) been employed to perform “hotel service” (defined broadly to include any work performed in connection with the operation of a hotel); (c) not been a managerial, supervisory or confidential employee who had the power to exercise control over the management of the hotel; and (d) been laid off after March 1, 2020 due to a closure or mass layoff. Severance payments are owed to all such employees beginning on October 11, 2021, for up to 30 weeks in the amount of $500 per week, or up to a total of $15,000. The obligation to provide severance ends when an employee is recalled, or, for a closed hotel, when the hotel reopens to the public and recalls 25% of its employees. Notably, any severance pay provided to a hotel employee prior to October 11, 2021 does not qualify as a set-off towards the obligations to pay severance to hotel employees after October 11, 2021; however, any severance payments made after October 11 will function as a set-off toward the severance pay obligations under this law. The law will expire and be deemed repealed on June 1, 2022.