Hotel Shutdown May Not Be the End of Labor Disputes

Though collective bargaining agreement obligations are a common operational concern for hotels and heavily focused on purchase and sale transactions, it is just as important to assess potential obligations to unionized employees when the hotel is shutting down. As detailed in the linked article, owners of a New York hotel are involved in a Second Circuit dispute with the New York Hotel & Motel Trades Council over what bargaining obligations the parties had in connection with the decision to close the hotel in 2020. This case also highlights the importance of clearly defining the contractual ‘employer’ of hotel employees, whether it be the hotel owner, or more commonly, the hotel manager entity. Here, the Court’s determination of the ‘employer’ would decide which entity ends up facing a potential $24.5 million in pension fund liability claims. It will be interesting to see how this case continues to develop.