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Hotel Association sues city over severance pay mandate

The legislation, intended to support laid-off staff and encourage reopening, was signed by Mayor de Blasio Tuesday

Vijay Dandapani, President and CEO of the Hotel Association of New York City (Getty Images, iStock)
Vijay Dandapani, President and CEO of the Hotel Association of New York City (Getty Images, iStock)

Just days after Mayor Bill de Blasio signed a bill forcing the city’s hotels to either reopen or pay severance to their out-of-work staff, the Hotel Association of New York City has sued the city in an attempt to strike down the legislation.

The lawsuit, filed Friday, alleges that the measure violates state and federal laws and asks the court to void it while seeking an injunction to prevent its enforcement.

The legislation requires hotels that either closed or laid off 75 percent of their staff during the pandemic to provide $500 per week in severance pay to service employees for up to 30 weeks. Hotels can exempt themselves from the mandate by recalling at least 25 percent of employees by Oct. 11 and reopening by Nov. 1.

The HANYC has been vocal in its opposition to the measure. Vijay Dandapani, the trade association’s president and CEO, testified Tuesday that the mandate would be an additional burden on an industry already battered by the pandemic.

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“We’re disappointed that the city chose to risk future tourism and our local economy by passing this legislation which forces hotels to pay money they do not have,” Dandapani said in a statement. “Ultimately, this bill may force owners to close and leave New York altogether.”

More than 200 New York hotels have closed during the pandemic. Before, the hotel industry employed more than 50,000 people, generated $3.2 billion per year in city tax revenue and added $22 billion annually to the economy.

The city’s hotel rooms were 61 percent occupied in August, the latest month for which data is available, compared to 90 percent in August 2019. Revenue per available room stood at a little more than half its pre-pandemic level.

“Attacking hotels and their employees in the midst of the worst crisis the industry has ever faced is senseless in every way. It is as if the Council has purposely set forth on a course to destroy the New York City hotel industry and the jobs it supports,” Chip Rogers, president and CEO of the American Hotel & Lodging Association, said in a statement. “We cannot find a more destructive policy anywhere else in the United States.”

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