It seems it is, or at least was. Wikipedia has a summary of the practice with more references.
Searching on the net I found this article in the New Yorker claiming that this was a common thing in 2009. These rooms (there were 7 at the time according to the article) are officially called "Temporary Reassignment Centres", but informally known to teachers as "Rubber Rooms". It seems they are used for any teacher that the city wants to get rid of but can't fire. That includes sex abuse suspects, but also teachers accused of incompetence or other malpractice. There are also allegations that it is used as a punishment for whistleblowers.
The teachers have been in the Rubber Room for an average of about three years, doing the same thing every day—which is pretty much nothing at all. Watched over by two private security guards and two city Department of Education supervisors, they punch a time clock for the same hours that they would have kept at school—typically, eight-fifteen to three-fifteen. Like all teachers, they have the summer off. The city’s contract with their union, the United Federation of Teachers, requires that charges against them be heard by an arbitrator, and until the charges are resolved—the process is often endless—they will continue to draw their salaries and accrue pensions and other benefits.
Also this article in the New York Times describes the same system:
Some of the occupants faced criminal charges like assault, while others had been brought up by city education officials for termination due to incompetence or other causes. Still more, including Mr. Valtchev, had not yet received a formal letter specifying any allegation. Until their cases are resolved, which can take years, all are required to spend the 181 days of the school year in the rubber room.