Successor Hotel Owners and Operators Beware: New Jersey Enacts Job Protections for Predecessor Hotel Employees and Notice Requirements and Restrictions for any Service Disruptions

The new year has brought with it new legislation in New Jersey that warrants close scrutiny by hotel owners and operators alike. Introduced as Bill A-6246, which was signed by Governor Phil Murphy on January 18, 2022, upon a “change in control, controlling interest or identity of a hotel,” a successor hotel employer must provide service disruption notices and certain job protections to the existing eligible hotel service employees, including offering employment to such employees with no reduction to wages or benefits for a retention period of not less than 90 working days.

When is this law triggered?

As noted above, the law is triggered when there is either a: (1) “change in control” of a hotel or (2) “change in controlling interest or identity” of a hotel. A “change in control” is broadly defined to include “any sale, assignment, transfer, contribution or other disposition of all or substantially all of the assets used in the operation of a hotel or a discrete portion of a hotel.” A “change in controlling interest or identity” also covers a broad scope of transactions to include “any sale, assignment, transfer, contribution or other disposition of a controlling interest, including by consolidation, merger or reorganization, of a hotel employer or any person who controls a hotel employer; or any other event or sequence of events, including a purchase, sale or lease termination of a management contract or lease, that causes the identity of the hotel employer at a hotel to change.”

Anything to do prior to the triggering event?

A full list of the identities, wage rates and classifications of the hotel’s service employees must be provided by the former hotel employer to the new hotel employer not less than 30 days prior to a change in control, controlling interest or identity of a hotel, while also providing notice to the employees of their rights provided under this law.

What job protections must be provided?

The successor hotel employer must offer employment to each eligible hotel service employee for no less than 90 working days from the date of the triggering event. The new hotel employer must offer these eligible hotel service employees the same (or more generous) wage and benefit rates provided by the former hotel employer. The offers must be made in writing and remain open for at least 10 business days from the date of the offer.

Employees cannot be discharged during this 90-day period, except in the following limited circumstances: (1) a termination for “cause” (which is not defined by the law) or (2) in connection with a reduction in force (“RIF”), which must be based on seniority and experience (i.e., the employees with the least seniority and experience must be laid off first). The law further requires that should any of the positions subject to the RIF be restored, the formerly laid off employees must be rehired in seniority order.

At the end of the 90-day period, the successor hotel employer must conduct written performance evaluations of all retained employees and offer continued employment if the employee’s performance is “satisfactory” (which is also not defined by the law).

The job protections in this law do not apply if there is a collective bargaining agreement in place on or before the triggering event that includes terms and conditions governing employee discharge or layoffs.

New recordkeeping obligations to accompany the job protections

Successor hotel employers must retain written verification of each job offer made during the 90-day period for no less than 3 years from the date the offer is made. The verification must contain the name, address, date of hire, phone number, wage rate and employment classification of each eligible hotel service employee.

Rules for service disruptions

Further, the law requires a hotel operator to provide notice to third-party vendors and guests of any ”service disruption” within 24 hours of becoming aware of a disruption, and for a substantial disruption, provide guests the right to cancel any agreement for occupancy without penalty. A “service disruption” is defined broadly to include various conditions that “substantially affects or is likely to substantially affect” any guest’s use of a room or hotel service. For example, “service disruptions” include: construction work that creates “excessive noise,” insect or rodent infestation, the unavailability of any advertised hotel amenity or room appliance/technology for at least 24 hours and the unavailability of any public utility for at least 24 hours.

Hotel operators are prohibited from charging any fee or retaining any deposit if a guest, prior to checking in, cancels a reservation with the hotel operator if the guest’s stay or room is, or could be, substantially affected by a service disruption during the guest’s stay or use of a hotel service.

Hotel owners and operators should also keep in mind the requirements of the federal Worker Adjustment Retraining Notification Act and the New Jersey Millville Dallas Airmotive Plant Job Loss Notification Act in connection with effectuating a “change in control” or a “change in controlling interest or identity” of a hotel.