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New York City's “Just Cause Law” For Restaurant Workers Is Being Challenged

Employment Laws

On January 5, 2021, New York City Mayor Bill de Blasio signed 2 new laws that provide significant protections of worker’s in the City’s fast food industry. Effective July 4, 2021, fast food employees who have completed an initial 30-day probation period may not be terminated or have their hours cut by more than 15 percent without just cause or a bona fide economic reason. Just cause includes a failure to substantially perform job duties or misconduct that is “demonstrably and materially harmful to the employer’s legitimate business interests.

With regard to “just cause,” the law lays out a strict set of factors to determine whether a fast food employee’s discharge or reduction in hours was actually based on “just cause.” These factors include:

  1. Whether the fast food employee knew or should have known of the fast food employer’s policy, rule, or practice that is the basis for progressive discipline or discharge;
  2. Whether the food fast employer provided relevant and adequate training to the fast food employee;
  3. Whether the fast food employer’s policy, rule, or practice, including the utilization of progressive discipline, was reasonable and applied consistently;
  4. Whether the fast food employer undertook a fair and objective investigation into the job performance or misconduct; and
  5. Whether the fast food employee violated the policy, rule, or practice or committed the misconduct that is the basis for progressive discipline or discharge.

“Progressive Discipline” is defined as a “disciplinary system that provides for a graduated range of reasonable responses to a fast food employee’s failure to satisfactorily perform such fast food employee’s job duties, with the disciplinary measures ranging from mild to severe, depending on the frequency and degree of the failure.” The bill expressly provides: “unless termination is for an egregious failure by the employee to perform their duties, or for egregious misconduct, a termination shall not be considered based on just cause unless (1) the fast food employer has utilized progressive discipline; provided, however, that the fast food employer may not rely on discipline issued more than one year before the purported just cause termination, and (2) the fast food employer had a written policy on progressive discipline in effect at the fast food establishment and that was provided to the fast food employee.”

Further, the new legislation requires that within five days of discharging a fast food employee, the employer must provide a written explanation of the “precise reasons” for the action and this explanation will be the employer’s sole basis to support its termination decision if challenged.

A bona fide economic reason is a full or partial closing of operations or technological or organizational changes to the business in response to the reduction in volume of production, sales, or profit.

The types of establishes that are covered under these new laws are any (1) with a primary purpose of serving food or drink items (ii) where patrons order select items and pay before eating and such items maybe be consumed on premises, taken our, or delivered, (iii) that offers limited service, (iv) that is part of a chain, and (v) that is one of 30 or more establishments nationally. The “30” requirement includes an integrated enterprise that owns or operates 30 or more facilities in total nationally or an establishment operated pursuant to a franchise where the franchisor and the franchisees of such franchisor own or operate 30 or more facilities in total nationally. Under this definition, a franchisee who owns only one location would be covered, so long as there exist at least 30 other locations of the chain.

If a covered employer terminates employees due to a bona fide economic reason, the terminations must be done in reverse order of seniority at that particular location.

Aggrieved fast food employees who believe they were subjected to adverse action under these new laws have the right to bring an action in court or or, after January 1, 2022, file an arbitration proceeding.

If a violation is found, the court or arbitrator may order the employer to: (i) reinstate or restore the hours of the fast food employee; (ii) pay the city for the costs of the arbitration proceeding; (iii) pay the reasonable attorneys’ fees and costs of the fast food employee; or (iv) pay back pay, compensatory damages, and any other equitable relief, including penalties for missed shifts under the Fair Workweek Law and civil fines.

This first-of-its-kind law is being challenged in federal court by advocacy groups that criticize the law as a way for unions to promote restaurant workers’ interests without being voted into that role. The two groups bringing the action—the Restaurant Law Center, an affiliate of the National Restaurant Association, and the New York State Restaurant Association—asked the U.S. District Court for the Southern District of New York to block the measures before they take effect July 5. If these laws are not blocked or overturned, it should signal a shift away from the concept of at-will employment, which has been the foundation of all employment relationships.