On December 17, 2020, the New York City Council voted to approve two bills that would prohibit employers from terminating fast food workers without “just cause,” and set up arbitration procedures and a private cause of action, through which employees could dispute their termination. The Council also voted to approve separate requirements on the method through which an employer can layoff fast food workers, now mandating that such layoffs occur in inverse order of seniority and only for “bona fide economic reasons.”
These bills continue the legislative push from employee-advocates, which have sought increased regulation over the fast-food industry over the past few years. Among other things, this has included increasing the minimum wage in New York City to $15.00 per hour, requiring advance notice prior to schedule changes, and providing covered employees with rights to temporary changes in their work schedules.
The “just cause” bill is unique, however, in that it sets forth protections against termination through legislation that would normally be covered through a collective bargaining process. Critics of the bill have noted that this process effectively strips employers from a seat at the bargaining table and makes it more difficult to manage staff, including the hiring and retention of quality employees.
Who is Covered?
The new bills cover “Fast Food Establishments” operating in New York City who have at least thirty (30) locations nationwide. The City Administrative Code defines “Fast Food Establishments” as entities which: (1) have the primary purpose of serving food or drink items; (2) where patrons order, select, and pay for items before eating, and which may be consumed on the premise, taken out, or delivered; (3) offers limited service; (4) is part of a chain, or set of establishments with a common brand; and (5) is one of thirty (30) or more establishments across the country. Fast food employees who are covered by a collectively bargained agreement, which provides greater or similar protections, or expressly waives these protections, are exempt from these requirements.
What Will the Law Do?
The “just cause” bill creates a system of job protections for covered fast food workers, and prohibits discharge from employment or a significant reduction in work hours (15% or more of an employee’s weekly schedule) except for “just cause.” This would apply to all employees who have passed a pre-determined probationary period at the Fast Food Establishment, which is limited to a maximum of 30-days. The bill also provides for arbitration proceedings, as well as a private cause of action, through which employees can dispute their termination as without “just cause.”
What is “Just Cause?”
The bill defines “just cause” as including a failure to satisfactorily perform job duties or other misconduct that is demonstrably and materially harmful to the company’s legitimate business interests. It also outlines certain important factors that a reviewing entity should take into account when evaluating whether a termination was for “just cause.” These include, but are not limited to:
- Whether the fast food employee knew or should have known of the employer’s policy, rule, or practice at issue;
- Whether the fast food employee was provided with relevant and adequate training on the subject matter that led to their termination;
- Whether the employer’s policy, rule, or practice, which led to the termination at issue, was reasonable and applied on a consistent basis; and
- Whether the employer undertook a fair and objective investigation into the subject matter that led to termination.
Notably, the bill affirmatively states that a termination shall not be for “just cause,” where an employer fails to utilize “progressive discipline.” This requires discipline with a graduated range of reasonable responses based on the severity of an employee’s misconduct. The bill also specifically notes that no discipline issued more than one-year prior to termination may be used to support a “just cause” determination.
Finally, the bill requires an employer to provide the fast food employee with a written explanation stating the exact reasons for their termination. A reviewing entity is explicitly instructed not to consider any reasons for termination that are omitted from this written notice.
How Can an Employee Dispute Their Termination?
The bill provides employees with both an option to dispute their termination through arbitration as well as a private cause of action in Court. In either case, the burden to establish that a termination was for “just cause” is placed solely on the employer.
Moreover, the bill provides that employees who are successful at arbitration may seek back-pay, reinstatement, restoration of hours, and other damages, including punitive damages from their former employer. Arbitrators are also directly instructed by the bill to provide prevailing employees with reasonable attorneys’ fees and costs.
The bill also provides for specified monetary penalties for non-compliance, which are in addition to the relief noted above.
What About Employees Who Are Laid Off for Economic Reasons?
In addition to the bill regulating “just cause” termination, the City Council simultaneously approved further legislation concerning the method through which Fast Food Employees can be laid off. Specifically, covered employees may only be discharged for “just cause” or for “bona fide economic reasons,” which include the full or partial closing of business operations or organizational changes to the business in response to a reduction in sales, profit, or production.
Where bona fide economic reasons necessitate discharge, fast food employees must be laid off in inverse order of seniority, meaning that in most cases employees who have the shortest length of service with an employer must be discharged before more senior employees.
As with a dispute over termination, a covered employee is permitted to dispute their discharge in court or at arbitration, and may seek a broad array of damages against their former employer.
When Do These Rules Take Effect?
The bills were approved by the City Council on December 17, 2020. Mayor De Blasio has already indicated that he plans on signing both bills as soon as possible, and they would take effect 180-days after they are signed into law.
What Steps Should Employers Take Now?
If not already in place, covered employers should develop and prepare written disciplinary policies that include clearly delineated standards of performance and provide for progressive discipline. Employers should also confirm that a uniform investigatory process is utilized in cases of suspected employee misconduct.
Furthermore, employers should review their training procedures to make sure employees are well-aware of what is expected of them, and the methods through which they may face discipline. Once these regulations take effect, covered employers should be ready to provide terminated employees with a written explanation of the basis for their termination, as only the items provided in this written notice may be relied upon to establish “just cause.”
If you have any questions about this or any other employment matter, please contact the New York Employment Law practice group at Gordon Rees Scully Mansukhani, LLP.