New York City Passes Law Enacting “Just Cause” Standard for Terminating Fast Food Employees

New York City Passes Law Enacting “Just Cause” Standard for Terminating Fast Food Employees

  • As of July 1, 2021, New York City fast food employees cannot terminate their employees without “just cause” or “bona fide economic reasons.”
  • These new laws have the impact of turning the New York City fast food industry into a de facto union environment.
  • A practical implication of the new laws will require employers to train their employees on progressive discipline, a difficult task in an industry with high turnover and a large number of part-time employees. 

Christmas came early for employees in New York City’s fast food industry, as the City Council passed two laws (New York City Int 1396-A and 1415-A) late on Christmas Eve that limit employers’ rights to terminate their employees except in instances of “just cause” or “bona fide economic reason.” The new laws place the burden of proof for proving termination was “with cause” or for a bona fide economic reason squarely on the employer, as well as assume employees have full knowledge of the circumstances leading to their termination. These new legal requirements also have the de facto impact of requiring New York City fast food employers to train on their discipline policies, and determine whether they were applied practically or correctly. The new laws are some of the farthest reaching in the country, and are set to take effect on July 1, 2021. 

According to the statutes, “just cause” requires employers to use progressive discipline before terminating a fast food employee, except in the very limited circumstances where the employee is “engaged in egregious failure by the employee to perform their duties” or for “egregious misconduct.” Further complicating matters (as is often the case when laws relate back to principles of labor–rather than employment–law), the law does not define “egregious” as it relates to its application. Instead, employers are left to evaluate a list of factors prior to making the determination whether they can prove that such cause exists. The factors enumerated in the statute include:

  • Whether the employee violated the rule, policy or practice or committed the misconduct that is the basis for the progressive discipline or discharge. 
  • Whether the employee knew or should have known of the employer’s policy, rule or practice that is the basis for progressive discipline or discharge;
  • Whether the employer provided adequate training to the employee;
  • The level of consistency with which the policy was applied to each and every fast food employee;
  • Whether the employer undertook a fair and objective investigation into the job performance or misconduct; and

The new law does define “bona fide economic reason” more succinctly as “the 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 law also has important seniority rules for laying off employees in response to bona fide economic circumstances. Employers should be aware that bona fide economic conditions are likely to be heavily scrutinized (along with just cause), as it is the employer who bears the burden of proof of existence, and neither will be easy to show. 

Moving forward, fast food employers have a lot of work to do before these laws take effect on July 1, 2021. In addition to reviewing and modifying their discipline policies and employment handbooks to include information about the progressive steps discussed above, all references to “employment at will” must be removed. Additionally, to create the best possible argument that just cause existed, all fast food employees should receive discipline training so that the employer can demonstrate that its employees were fully apprised of the progressive discipline policies in place that could lead to their termination. That way it will be no surprise to the employee that they are being terminated for cause. 

Many employers rightfully want to avoid a unionized environment due to the lack of flexibility in staffing their operation. Given the NYC City Council’s far-reaching action just prior to Christmas, that is now no longer an option. Layoffs will now be difficult in an industry that has been hard-hit by both the pandemic and steadily rising minimum wages. It is extremely important that fast food employers take time and care to review these laws and implement the newly required policies and procedures well in advance of July, so as not to be surprised. The clock is ticking, and Syntrio is happy to discuss ways we can offer our assistance. Contact us today for a review of products and services we offer that will help your business prepare for the coming changes to the fast food industry in New York City. 

Since 2007, Jonathan has practiced labor and employment law, with a focus on litigation, individual plaintiff and class action discrimination, harassment, and other employment-specific cases as well as focusing his practice toward advising employers on preventive practice. Jonathan has presented over 100 live employment discrimination and harassment prevention training courses across all 50 states.

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