NYC Safe Hotels Act Imposes New Challenges for Hotel Owners and Operators

Read the Act here.

This law will drastically affect operational costs and employment structure for many NYC hotels. Below are key aspects of the new law, which is set to take effect in 180 days on May 3, 2025.

Hotel License Requirements

To legally operate a hotel in New York City, hotel operators — defined as any person who owns, leases, or manages a hotel and is in control of day-to-day operations of such hotel — must obtain a license from the Department of Consumer and Worker Protection. License applications carry a $350 fee and require the applicant to submit the following information:

1. Name, address, contact phone number, and email address of the hotel operator.
2. Information that the commissioner will require to demonstrate that the hotel operator has adequate procedures and safeguards at the hotel in compliance with the Act, such as those related to staffing, safety, guest room cleanliness, direct employment, and panic buttons — all of which are explained below.
3. Any other information the commissioner may require (which has yet to be specified).

Hotels subject to a collective bargaining agreement (CBA) may satisfy the requirement related to providing the commissioner with evidence of adequate procedures and safeguards if they are expressly listed in a CBA.

Hotel operators who are awarded a license must conspicuously display a copy of the license in a publicly visible area of the hotel where other legally required notices are displayed.

Direct Employment

Hotel owners of hotels with 100 or more guest rooms must “directly employ” all “core employees,” with the exception that a hotel owner may retain a single hotel operator to manage all hotel operations involving “core employees” at a hotel. This requirement limits the classic utilization of a management company, contractor, subcontractor, or staffing agency with respect to “core employees.”

“Core employees” are defined as employees whose job classifications relate to housekeeping, front desk, or front service at a hotel. “Core employees” do not include laundry/valet, concierge, reservation agents, telephone operators, engineering/maintenance employees, specialty cleaning employees, parking, security, life guards, spa/gym/health club employees, minibar employees, audio/visual employees, or employees primarily working in food/beverage.

With the Act set to take effect on May 3, 2025, it is important to note that existing contractual relationships will have a limited effective life. The Act places limits on the duration of the effective time frame for such contractual relationships. For contracts executed prior to the Act’s effective date that do not terminate on a date certain, the effective period ends on December 1, 2026. For contracts executed prior to the Act’s effective date that terminate on a date certain, the effective period ends 30 days after the termination/expiration date of that particular agreement.

Hotel Staffing and Security

The Act will require rules and protocol that may require significant changes to hotel operations. These changes include:

• Front Desk: Hotels are required to provide continuous front desk staffing. During overnight shifts, the hotel may use a security guard who is able to assist guests. Staff must also be able to confirm the identity of guests checking into the hotel.
• Security Guards: Owners of large hotels, defined as those with 400 or more guest rooms, are required to employ at least one security guard to provide continuous coverage while any guest room is occupied.
• Cleanliness: Hotels will be required to maintain the cleanliness of guest rooms, common areas, and sanitary facilities. This includes mandatory daily cleaning and trash removal unless explicitly declined by the guest. Further, every guest room must have clean towels, sheets, and pillowcases prior to occupancy by a new guest and must be replaced upon request by guests. Hotels will not be allowed to offset these costs by charging fees for daily room cleaning or offer incentives to guests to forgo this service.
• Human Sex Trafficking Prevention: To combat human sex trafficking, most hotels will not be permitted to accept reservations for a duration of less than four hours. Further, hotel operators will be required to provide human trafficking recognition training to all “core employees” within 60 days of employment.
• Panic Buttons: Hotel operators must provide panic buttons to “core employees” whose duties involve entering occupied guess rooms (i.e., housekeeping) at no cost to the employee.

Enforcement

The Act outlines several enforcement mechanisms to ensure compliance with its requirements. These range from the imposition of civil penalties for violations to the revocation of a license, which would jeopardize a hotel’s ability to operate. The Act also protects employees who report violations from retaliation by providing the ability to pursue civil actions.

This New Law Coupled With Restrictions Relative to Terminating Employees Upon a Sale

Hotel Owners and Operators who are considering entering or exiting the marketplace should also understand that, under New York City law, hotel licenses are not assignable, with the exception of transfers made in compliance with NYC Code 22-510 (“Displaced Hotel Service Workers Act”). The Displaced Hotel Service Workers Act generally requires a successor hotel employer to hire the previous employer’s employees and maintain said employment for 90 days. The Act specifically applies to employees defined as “any person employed [ ] at an affected hotel during the 365-day period immediately preceding the change in control” or any person who was formally employed at the hotel who retains recall rights under an applicable collective bargaining agreement or under a comparable arrangement. Managerial, supervisory and “confidential employees” (e.g., individuals employed in human resources) are excluded from the definition.

Key Takeaways

• The Act will require Hotel Owners and Operators to consider how this new law impacts their business model.
• Whether the employees of a hotel property are unionized or not, it will be incumbent on Hotel Owners and Operators to fully ensure that they are managing their employees within the parameters established by this new law.
• Hotel Owners and Operators will need to closely review the terms of any applicable hotel management agreements to determine whether existing ownership structures, employment relationships, and contractor agreements will need to be modified and/or terminated to comply with the Act.
• Hotel Owners and Operators will need to consider the impact on the value of their properties in light of the requirements imposed by this new law, combined with the requirements set out in the Displaced Hotel Services Workers Act.