NEW YORK (Legal Newsline) – A closed New York City hotel tired of paying severance to workers laid off during the COVID-19 pandemic has lost its challenge of the law requiring it to do so.
Judge J. Paul Oetken, of the U.S. District Court for the Southern District of New York, ruled against RHC Operating on March 30. The company, which owns the Roosevelt Hotel, sought an injunction against the Severance Law.
The Roosevelt closed to the public in December 2020 and has not reopened, but owner RHC Operating still has to pay $500 a week to laid-off workers for 30 weeks. RHC argued this law, which was enacted Oct. 5, was preempted by the Employee Retirement Income Act and the National Labor Relations Act while also violating several clauses of the U.S. Constitution.
A hotel doesn’t need to pay the severance once it recalls the employee, and on a wider scale, it doesn’t have to pay any severance if it reopens to the public and recalls 25% of the employees it had on March 1, 2020.
Permanently closed hotels don’t have to pay the severance as long as offers severance of at least pay for 20 days per year of service.
“(N)othing in the record here suggests that an employer would have to modify any provision of the relevant collective bargaining agreement to comply with the Severance Law,” Judge Oetken wrote.
“The statutory obligations merely supplement the contractual ones. For example, under the operative collective bargaining agreement, an employer is generally obligated by contract to pay union employees ‘an amount equal to four (4) days of regular wages for each year of service’ in ‘the event of termination resulting from the closing of a hotel.’
“The Severance Law does not nullify that obligation. It just provides that if the contractual severance does not amount to $500 a week, an employer has to make up the difference.”
The Severance Law sets a floor below which an employer can’t fall, Oetken said, and does not prevent “full-throated” bargaining between workers and employers.
“The Severance Law has all the markers of a minimum labor standard,” Oetken wrote.