NYC hotels ordered to pay $500 million to employees who lost work during COVID-19

Tens of thousands of workers in the hotel industry will benefit from an arbitrator's September ruling. Sources told the Wall Street Journal this ruling forces 75 hotel owners to provide health care benefits and severance pay to their workers.

The payout is the largest between hotels and workers in New York City's history. The report said the payout will likely be the largest of its kind in the United States of America once severance numbers are finalized. It could be more depending on how many owners decide they want to pay in a lump sum right away versus paying installments, where it might be greater.

Hotel workers will receive seven months of health care benefits. Severance pay will be calculated based on seniority and the number of days per year employees have worked.

Rich Maroko, the union president at the Hotel Trades Council, said this payout will be useful to workers.

"Continuing health care in the context of a pandemic is a critical thing," said Maroko. "These severance payments are a necessity for our hotel workers after the federal supplements ended last summer."

Hotel owners have warned the payout could have long-term consequences for the industry, leading to more permanent hotel closures and job losses.

The ruling comes as the hospitality industry in New York City has been devastated by COVID-19 because tourism and business travel have plummeted, Broadway shows have been suspended, and restaurants and museums are bound by limited capacity restrictions.

At least one hotel owner is fighting the ruling. Other hotel owners have begun issuing payments.

Many hotels survived with help from federal assistance loans early on in the COVID-19 pandemic. A second round of assistance has been halted, which has caused city hotel giants like Hilton Times Square and the Roosevelt Hotel to announce they are permanently closing.