Thanks to a series of last-minute carve-outs, New York City’s controversial new employment rules for hotels will have a far more limited impact than critics originally feared, according to a new analysis.
Approved by the City Council in October and signed into law by Mayor Eric Adams weeks later, the Safe Hotels Act will require city hotels to obtain licenses to operate, contingent on meeting a number of new requirements — including directly employing public-facing workers rather than subcontracting them. Following outcry by the owners of small, nonunion hotels who said it would increase costs, the hotel workers’ union backing the bill agreed to soften it, days before it passed, by exempting hotels with under 100 rooms from the direct-employment policy.
That change had a big impact, according to an analysis released Monday by the Independent Budget Office. Of the roughly 300 hotels outside Manhattan, about 95% would have originally needed to make changes to comply with the direct-employment rule, but just 27% — or 80 total hotels — will now be affected following the exemption for small facilities.
The new employment rules were a victory for the Hotel and Gaming Trades Council labor union, a powerful force in city politics which is expected to use the policy as leverage during contract negotiations with hotel owners. The union endorsed and campaigned for many members of the current council, who passed the bill in a 45-4 vote in October. It is also a key supporter of Mayor Adams.
But last year’s push to pass the bill was bumpy, forcing HTC and the bill’s sponsor, Manhattan Councilwoman Julie Menin, to make numerous amendments to pacify the hospitality and hotel industries. The subcontracting ban was narrowed multiple times — first to clarify that hotel-based restaurants and bars would not be affected, then to exempt technical jobs like engineers, and finally to exempt all small hotels.
Those latter changes effectively carved out low-cost budget hotels, which tend to be nonunion, located in the outer boroughs and immigrant-owned. Those owners railed against the legislation for months and continued to oppose it after the carve-outs, sharply criticizing the Hotel Association of New York City — a trade group that mainly represents large, union hotels — for striking a deal with HTC that assured the bill’s passage.
“The entire bill favors powerful special interests at the expense [of] the small, independent entrepreneurs — many of whom are immigrants and people of color — who power New York City’s economy,” said Mukesh Patel, the owner of six hotels concentrated in Brooklyn, following the bill’s passage in October.
Midtown Manhattan, home to more than half of the city’s hotel rooms, will see some impacts from the new employment rules. Some 105 Midtown hotels will need to change their hiring policies under the enacted law, a drop from 158 under the original, pre-carveout bill, according to IBO. The analysis was based on data from CoStar, city and state agencies, and both HTC and the Hotel Association.
The IBO report does not take any position on the stated goal of the bill: to improve hotel safety. To obtain a license, hotel owners must now provide “panic buttons” to employees who enter guest rooms, maintain a continuous front-desk or security presence, and meet certain cleanliness standards for guest rooms, among other rules. Hotels are also barred from accepting bookings of less than four hours — shortened from eight hours in the original proposal.
