Owners of a hotel in New York on a hook for a severance pay of $ 500 million


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Hilton Times Square at 234 West 42nd Street and Roosevelt Hotel at 45 East 45th Street (Google Maps; Pixabay)

Hilton Times Square at 234 West 42nd Street and Roosevelt Hotel at 45 East 45th Street (Google Maps; Pixabay)

New York hotel owners are on the hook to pay more than $ 500 million to employees who lost their jobs due to the pandemic, the Wall Street Journal said.

It is the victory of tens of thousands of former hotel employees, but an obstacle for owners whose businesses have been ravaged by coronavirus.

About 200 hotels in the city are run by trade unionists, and according to the decision, the owners of about 75 of them are responsible for severance pay, according to the Journal, which quoted people familiar with the decision. The trade association of hotel owners and the hotel association agreed with the decision issued by the arbitrator.

According to this decision, workers are entitled to severance pay on the basis of the amount of years worked, together with seven months of health benefits. The severance pay would stop if the employee were re-employed by the hotel.

At least one hotelier challenges the decision: The owner of the Renwick Hotel in Midtown appeals the decision to the U.S. District Court in New York, arguing that the decision violates a collective bargaining agreement that makes severance pay only for permanent closures and not for pandemic outages. Paul Rosenberg, partner at BakerHostetler.

According to STR, a provider of hotel data, the level of hotel occupancy in the city in October was less than 40 percent.

However, according to hotel owner Richard Born, the occupancy rate would be even lower if hotels did not have a homeless location agreement with the city.

Some of the largest hotels have already been closed due to a pandemic: Hilton Times Square and Roosevelt Hotel closes permanently. And it could get worse: As much as 20 percent of the city’s total hotel rooms may not reopen. [WSJ] – Akiko Matsuda


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