New York City Enacts Protections for Displaced Hotel Service Employees

Seyfarth Synopsis: Nearly eighteen years after the Displaced Building Service Workers Protection Act was signed into law, on September 28, 2020, Mayor de Blasio signed Int. No. 2049-A into law, which establishes protections for displaced hotel service workers in the event of a sale or transfer of a hotel.  Although the law is substantially similar to the Displaced Building Service Workers Protection Act, there are nuances that hotel employers should be aware of.

Background

After the 9/11 terrorist attacks in New York City, in November 2002, then-Mayor Bloomberg signed the Displaced Building Service Workers Protection Act (DBSWPA) into law.  Among other things, the DBSWPA required certain successor employers upon termination of a building service contract to retain pre-existing building service employees for a 90-day transition period.  Now, after nearly eighteen years, in the midst of the COVID-19 pandemic, the NYC Council passed a law that applied many portions of the DBSWPA to displaced hotel service employees following any sale, assignment, transfer, contribution or other disposition of a controlling interest of an affected hotel.  On September 28, 2020, Mayor de Blasio signed the law into effect.

Affected Hotels

Significantly, this new law not only applies to hotels that have been the subject of a change in control or a change in controlling interest or identity, but also to a “discrete portion of a hotel.”  Although the law does not define “discrete portion,” it likely applies to any concessionaire businesses of a hotel, such as restaurants and bars.  Thus, even if a hotel is only considering a change of its restaurant-operator, it needs to be aware of the below requirements.

Covered Employees

The law defines “hotel service” broadly as any “work performed in connection with the operation of a hotel.”  Furthermore, the law defines “hotel service employee” as:

(i) any person employed to perform a hotel service at an affected hotel during the 365-day period immediately preceding the change in control or change in controlling interest or identity of such hotel, or

(ii) any person formerly employed to perform a hotel service at an affected hotel who retains recall rights under the former hotel employer’s collective bargaining agreement, if any, or under any comparable arrangement established by the former hotel employer, on the date of the change in control or change in controlling interest or identity of such hotel.

However, it does not include persons who are managerial, supervisory or confidential employees or who otherwise exercise control over the management of the hotel.

Hotel Service Employee Retention

No less than 15 days before a change in control or a change in controlling interest or identity, a former hotel employer shall provide a full and accurate list to a successor hotel employer containing the name, address, date of hire and employment classification of each hotel service employee employed at an affected hotel.  Simultaneously, the former hotel employer shall post such list in a notice to the hotel service employees that also sets forth the rights provided by the law in the same location and manner that other required notices to such employees are posted at the affected hotel.

Moreover, a successor hotel employer shall, during the hotel service employee retention period, offer each eligible hotel service employee employment for no less than 90 days under the terms and conditions established by the successor hotel employer, except that the wage rate shall be the same as or higher than the wage rate last paid to such employee by the former hotel employer.  This wage protection provision has never been included in the DBSWPA.

The offers of employment shall be made in writing and shall remain open for at least 10 business days from the date of such offer.  During the 90-day period, the retained employee shall not be discharged without cause; however, if the successor hotel employer determines that fewer hotel service employees are required than were employed by the former hotel employer, the successor hotel employer shall retain eligible hotel service employees by seniority and experience within each job classification.  Unlike the DBSWPA, the 90-day period shall begin on the first day that such hotel is open to the public after such change in control.

At the end of the retention period, the successor hotel employer shall perform a written performance evaluation for each hotel service employee retained. If the employee's performance during such retention period is satisfactory, the successor hotel employer shall offer continued employment under the terms and conditions established by the successor hotel employer.

Remedies

Similar to the DBSWPA, a hotel service employee who has been discharged or not retained in violation of the law has a private right of action in New York State Supreme Court.  In addition to equitable relief, a court shall award: (1) back pay and an equal amount of liquidated damages; (2) costs of benefits the successor hotel service employer would have incurred for the employee under such employee's benefit plan; and (3) the employee's reasonable attorney's fees and costs.

Exemptions

Again, this new law contains similar CBA exemptions as set forth in the DBSWPA.  The law will not apply to:

1. any successor hotel employer who, on or before the change of control or change in controlling interest or identity, agrees to assume, or to be bound by, the collective bargaining agreement of the former hotel employer, provided that such collective bargaining agreement provides terms and conditions for the discharge or laying off of employees;
2. if there was no existing collective bargaining agreement as described in paragraph 1 of this subdivision, any successor hotel employer who agrees, on or before the change of control or change in controlling interest or identity, to enter into a new collective bargaining agreement covering its hotel service employees, provided that such collective bargaining agreement provides terms and conditions for the discharge or laying off of employees; or
3. a former hotel employer who obtains a written commitment from a successor hotel employer that such successor hotel employer’s hotel service employees will be covered by a collective bargaining agreement that provides terms and conditions for the discharge or laying off of employees.

Record-Keeping

Unlike the DBSWPA, this law contains new record-keeping requirements.  For a minimum of three years, each hotel employer shall maintain (1) a record showing the employee’s regular hourly rate of pay for each week of the employee’s employment; (2) the written verification of each offer of employment during the hotel service employee retention period showing the name, address, date of hire and job classification of the eligible hotel service employee to whom the offer was made; and (3) the written performance evaluation at the end of the retention period.

For more information on this or any related topic please contact the authors or your Seyfarth attorney.