New “Just Cause” Laws Protect NYC Fast-Food Workers from Arbitrary Terminations. Could This Be the Beginning of a Trend?

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Starting on July 5th, New York City’s large fast-food employers must have “just cause” or a bona fide economic reason to terminate workers as a result of two landmark laws. The new laws aim to protect the City’s nearly 70,000 fast-food workers from arbitrary discipline, reductions in hours, and terminations. Importantly, the laws provide a private right of action in state court and a new arbitral forum in which claims can be resolved, as well as enforcement by the City’s Department of Consumer and Worker Protection.

“Just cause” is defined as failure to satisfactorily perform job duties or engaging in misconduct harmful to the employer’s legitimate business interests. The just cause protections kick in after 30 days’ employment; they protect workers from having hours reduced by more than 15% and from unjust discipline and termination. Employers must adopt progressive discipline policies and apply them consistently prior to termination to avoid liability.

When laying off workers for “bona fide economic reasons,” such as a business downturn causing a reduction in force, the employer must do so in reverse order of seniority. To prevent retaliatory firings disguised as a reduction in force, employers must offer reinstatement to laid-off workers before hiring new workers.

Sponsors of the bills recognized that fast-food workers, who are mostly immigrants and/or women of color, perform essential work, and did so throughout the pandemic. COVID-19 exacerbated the precariousness of their jobs, with employees seeing reductions in hours and firings for complaining about poor health and safety measures.

Some employers worry that the laws could threaten profitability by forcing them to retain mediocre employees and “troublemakers.” Such employers have threatened or voiced fears over repercussions, including reduced hiring, robotization, and relocating out of New York. These drastic consequences were also forecasted when New York City raised the minimum wage to $15 per hour, though they have yet to materialize. Nonetheless, the New York State Restaurant Association filed a lawsuit in the Southern District of New York to prevent the laws from taking effect on May 28.

Progressives are campaigning to make “just cause” protections the national standard. President Biden has been encouraged to issue an executive order requiring just cause protections for federal workers and contractors, which would affect one-fifth of the nation’s workforce. In Illinois, the legislature is considering the Employee Security Act, which would broaden just-cause protections, restrict terminations based on electronic monitoring of employees, and provide a private right of action with remedies including statutory damages and attorney’s fees.

Regardless of legal requirements, all employers can benefit from having clear workplace rules and expectations, enforcing them consistently and fairly, and documenting infractions. Employers will have to use creativity, effort, and effective leadership to incentivize good employee behavior rather than relying on the easy threat of termination. Coincidentally, abiding by just-cause procedures should result in less stressed, more productive workers and fewer discrimination lawsuits, which is also good for the bottom line.