As previously discussed here, the New York City Council passed a law at the end of last year requiring certain hotels in the City to pay eligible employees weekly severance payments for up to 30 weeks.
There were swift legal challenges to the law, claiming that it was preempted by the NLRA and ERISA and unconstitutional. Late last week, in the first opinion to address the legal merits of such claims, the U.S. District Court for the Southern District of New York denied a motion for a preliminary injunction filed by one of New York City’s many hotels rocked by the COVID-19 pandemic in an attempt to delay enforcement of this new “Severance Law”. Despite the existence of a collective bargaining agreement that provides for bargained-for severance benefits, the court determined that the plaintiff hotel did not show a likelihood of success on the merits of its claim that the Severance Law is preempted and unconstitutional.
The key provisions of the law are as follows:
Enacted in October 2021, the Severance Law (2397-2021) requires operators of hotels that had at least 100 rooms on March 1, 2020 to pay their employees severance if: (1) the hotel closed to the public and has not recalled at least 25% of the employees it employed on March 1, 2020; 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.
Employer hotels must provide severance payments to...
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