Business

Arbitrator Orders NYC Hotels To Pay $500 Million To Employees Affected By Pandemic

New York City hotel owners were ordered to pay employees affected by the coronavirus pandemic more than $500 million in an arbitration ruling, The Wall Street Journal reported.

The ruling represented a victory for tens of thousands of currently unemployed hotel workers and the largest payout of its kind in New York City, according to The Wall Street Journal. Union representatives told the WSJ that the ruling was likely the largest in U.S. history for any hotel workers union.

More than 75 property owners and 200 union-operated hotels were affected by the decision, the WSJ reported. The arbitrator ruled that individual payout amount would be based on the worker’s seniority and would include seven months of health benefits.

“Continuing health care in the context of a pandemic is a critical thing,” Hotel Trades Council President Rich Maroko told the WSJ. “These severance payments are a necessity for our hotel workers after the federal supplements ended last summer.”

However, Paul Rosenberg, a partner at law firm BakerHostetler, said the arbitration decision will hurt hotel owners and potentially lead to more lost jobs and permanent closures, according to the WSJ. He added that one hotel, the Renwick Hotel, is appealing the decision arguing that the collective-bargaining agreement makes such severance payments applicable for permanent closings, not temporary shutdowns.

“This is a really dangerous slope the union is going down,” Rosenberg said, the WSJ reported.

Maroko disagreed and said severance payments will incentivize hotels to reopen, according to the WSJ.

“Hotels are closed because there are no guests, not because of severance,” Maroko told the WSJ. “If anything, paying severance over time gives hotels an incentive to reopen so they can cease making [installment] payments.”

Since hotels in New York City were forced to close in March amidst the rapidly spreading coronavirus pandemic, they have been crushed by overdue mortgage payments and property taxes, according to The New York Times. Several have been forced to permanently close in recent months.

Two Courtyard by Marriott hotels, the Hilton hotel in Times Square and the Omni Berkshire Place are among the hotels to have permanently shuttered, The Times reported.

“The year’s a washout,” Vijay Dandapani, the president of the Hotel Association of New York City, told The Times. “It’s a complete washout.”

The Roosevelt Hotel, a New York City staple near Grand Central train station that has been featured in Hollywood films, announced in October that it would permanently close after almost 100 years, CNN reported.

The Bureau of Labor Statistics (BLS) reported that 7.5 million U.S. hospitality and leisure jobs had been lost in April due to the pandemic. The industry has added back 4.8 million jobs as of October, but remains 3.5 million short of its February peak, according to the BLS.