250 Employees of Doral Arrowwood Were Unlawfully Fired Right Before Start of Pandemic; Impacted Workers Have Started Receiving Payments
New York Attorney General Letitia James and State Senator Shelley Mayer today delivered $2.7 million to workers who were unlawfully terminated without sufficient legal notice and denied their rights and wages from the Doral Arrowwood Hotel and Conference Center when it abruptly shut down. Attorney General James joined a lawsuit and successfully argued that the hotel’s lenders — U.S. Bank National Association and Anderson Hill Road Capital, LLC — violated the New York Worker Adjustment and Retraining Notification (WARN) Act by failing to give workers 90-days termination notices and failing to pay up to 60 days of lost wages for failure to provide such notice. As a result of this lawsuit, Attorney General James recovered the lost wages for the 250 affected workers, who have started receiving payments.
“Protecting hardworking New Yorkers will always be a top priority for my office,” said Attorney General James. “More than 250 workers at the Doral Arrowwood Hotel were left to fend for themselves when the hotel shut down without sufficient notice, leaving them jobless right before the start of the pandemic. Today, we deliver big for these impacted workers — finally providing the wages they were unfairly denied and holding these greedy companies accountable for violating their rights. Thank you to State Senator Mayer for her tireless advocacy on this issue and for her partnership in putting our workers first.”
“This is wonderful news for the Doral Arrowwood workers who have finally gotten the money they deserve and are entitled to after being terminated without warning on Christmas Eve nearly two years ago,” said State Senator Shelley B. Mayer. “Upon hearing that they were let go, I immediately reached out to ensure their rights would be protected under the WARN Act. We continued to advocate for the workers with the New York state Department of Labor and the Office of the Attorney General. For the past year and a half, we remained in contact with the workers to ensure they were informed and their voices were heard throughout the case, including attending court appearances with them. Thank you to Jane Lauer Barker, Esq., Attorney General Letitia James, and Department of Labor Commissioner Roberta Reardon, who worked tirelessly on behalf of the employees.”
Doral Arrowood is a hotel conference center in Rye Brook, New York that employed hundreds of workers. In December 2019, Doral Arrowwood management informed its workers that the hotel would be shutting down in about three weeks and employees would be terminated at the beginning of January 2020. Under the New York WARN Act, businesses with 50 or more employees are required to give workers a 90-day notice of termination if the business is closing. If an employer fails to give workers the adequate 90-day legal notice, employers are required by the WARN Act to pay workers up to 60 days of lost wages. The hotel failed to comply with the WARN Act, leaving workers to fend for themselves without pay just weeks before the start of the coronavirus disease 2019 (COVID-19) pandemic.
The Office of the Attorney General (OAG) immediately took action to enforce the WARN Act and recover lost wages, joining a lawsuit on behalf of the state Department of Labor and the People of the State of New York in an existing foreclosure proceeding in Westchester County State Supreme Court brought by U.S. Bank against Doral Arrowwood. The OAG argued that U.S. Bank — which held a mortgage secured by the hotel’s property — and Anderson Hill Road Capital — which acquired the mortgage note from U.S. Bank — were responsible for payment of WARN Act damages to the affected employees because they caused the hotel’s abrupt shut down when they refused to fund the hotel’s operations deficiency which would have allowed it to continue to operate and provide proper WARN Act notice to its employees. Justice Gretchen Walsh agreed with the OAG’s argument and ordered U.S. Bank and Anderson Hill to pay $2.7 million in lost wages to the workers — a major relief for the 250 hospitality workers whose job prospects were further ravaged by the pandemic.
Anderson Hill entered into a Stipulation of Settlement with the OAG and the affected employees, and agreed to pay the full amount set forth in the court order. The WARN Act stipulation asserts that the former employees are owed $2,482,884.88 with an estimated employment tax amount of $223,459.64, for a total of $2,706,344.51.
This is a case of first impression in New York in which a non-employer third party — in this case U.S. Bank and Anderson Hill — were found liable of WARN Act damages. In connection with the foreclosure proceeding, a receiver had been appointed by the court to operate Doral Arrowwood. A receivership is a court-appointed tool that can assist creditors to recover funds in default and can help troubled companies avoid bankruptcy. The court agreed with the OAG that under receivership law, “special circumstances” allowed for the lenders — who would ultimately take over the hotel and who had cut off funding unexpectedly — to be held liable.
“I am pleased that these impacted workers are receiving their wages, a just outcome that sends a strong message that New York has zero tolerance for businesses that treat workers unfairly and knowingly break the law,” said New York state Department of Labor Commissioner Roberta Reardon. “I thank Attorney General James and State Senator Mayer for working with us to enforce laws designed to safeguard all workers in New York state.”