The Real Estate Board of New York to The New York City Council Committee on Consumer Affairs and Business Licensing

Zachary Steinberg

Senior Vice President of Policy

September 14, 2021

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As REBNY has stated to the Council previously, it is essential that all employment opportunities in construction are safe and fair. This is particularly the case for vulnerable workers who have been formerly incarcerated or otherwise have been historically disenfranchised. 

Troublingly, as with many industries, wage theft, unsafe conditions, and other issues have been documented in the construction industry. Among other instances of these practices, this includes allegations that so-called ‘body shops’ prey on socioeconomically-vulnerable workers, including people of color and particularly formerly incarcerated individuals who are required to maintain employment as a requirement of their parole and therefore may be less able to come forward with allegations of labor abuses.

Int 2318 would address this issue by regulating labor service providers who act as third-party providers of laborers on construction projects. The regulation includes a requirement to be licensed by the City, establishes an obligation to provide certain information to workers and the City, imposes record keeping obligations, requires clients of the service provider to verify the provider has been licensed, and creates an enforcement regime that includes a private right of action.

REBNY generally believes it is appropriate to license third party labor service providers. However, it is important that such a scheme be appropriately tailored in such a way as to not constrain the supply of labor for construction projects or impose burdensome obligations on workforce intermediaries who help connect workers to legitimate employment opportunities. In addition, we encourage the Council to require the disclosure of information about whether workers are residents of New York City as part of the required reporting. We look forward to working with the Council and other stakeholders to accomplish these goals should the legislation move forward.

At the same time, we encourage the Council to consider legislation that would impose an elevated minimum wage with benefits on construction projects that receive certain amounts of public funding. This type of policy would serve to raise the wage floor for construction workers most likely to be impacted by the use of labor service providers in the industry and help address a fundamental need in the City – to raise the wages of lower income New Yorkers so they can better afford to live here.

BILL: Int 2397-2021

SUBJECT: This bill would require the provision of severance pay to certain hotel service workers

SPONSORS: Council Members Moya and Kallos

Int 2397 would require that hotels that closed to the public on or after May 1, 2020 and have not reopened and recalled 25 percent of the workforce by October 1, 2021 make certain severance payments to hotel service workers. Payments required under the legislation would range between $500 and $1,000 per week in the case of a closure or mass layoff, last for up to 30 weeks, and be additive to any previously provided severance compensation.

As with many industries, the hotel sector has been severely harmed by the pandemic. The lack of foreign and domestic travelers visiting New York City for work and/or leisure has dealt a significant blow to the city’s economy, hotel owners, and hotel workers. Indeed, hotel occupancy and rates plummeted during the pandemic. According to data from NYC & Company, in December 2020 hotel occupancy was 36% with the average daily rate at $130 compared to December 2019 when the figures were 91% and $351, respectively.[1] In May 2021, the Mayor noted that revenue from the hotel room occupancy tax dropped 89% compared with Fiscal Year 2020 as part of an announcement waiving the hotel room occupancy tax for June, July, and August 2021.[2]

While the hotel industry has seen greater occupancy in recent weeks, the recovery is going to be protracted. This is in no small part due to the fact that hotel occupancy in New York City is reliant on business travel, which has been very slow to recover from the pandemic. Consequently, a report from CBRE estimates that New York City hotels will not return to pre-pandemic levels of occupancy until 2025.[3]

In this difficult and uncertain environment for the hotel industry, the City Council has proposed legislation that would mandate hotels, some of which may not have a viable economic future, make severance payments to workers. These businesses, which may have not earned meaningful revenue for well over a year, may simply not be equipped to do so. Unfortunately, the legislation does not provide any City funds to support such payments.

Further, the precedential nature of this legislation is deeply concerning. The Council is acting on legislation that impacts one particular segment of the economy, which raises the question of why this particular industry, at a time when the entire city economy continues to be impacted by the pandemic. Indeed, if the Council is willing to pass this bill now, it would not be surprising if 30 weeks from now the Council is being asked to extend these payments for this industry or mandate new severance payments for workers in other industries who have unfortunately been impacted by the unprecedented global health pandemic.

If the City Council wishes to provide additional financial support to hotel service workers impacted by the pandemic, it should do so out of City funds. To this end, it is worth noting that when the federal government sought to provide assistance to workers impacted by the pandemic – including hotel workers – it did so through numerous successful interventions including the Paycheck Protection Program, unemployment insurance, and direct payments. Unfortunately, this legislation fails to build on any of those successful models.

To best help the hotel industry and its employees recover, the Council and City partners must focus on controlling the spread of the Coronavirus and sending a message to businesses and domestic and global travelers that New York City is safe, welcoming, and open for business. This means making concerted efforts to increase vaccination rates across the city including through the widespread use of mandates, encourage employers to safely bring workers back to the office, invest in reducing crime and cleaning the city, and sell New York City to the world. REBNY looks forward to working with the Council on these important priorities.