New York City Says Goodbye to At-Will Employment for the Fast Food Industry
On January 5, 2021, New York City Mayor Bill de Blasio signed legislation that effectively ends at-will employment for fast food employees in New York City. The new law takes effect on July 4, 2021, and would make New York City the nation’s first jurisdiction to create job protections for a particular industry. However, at least some portions of the new law may be ripe to challenge on federal preemption and other grounds. The new law was passed via two separate bills—one on wrongful discharge and one on layoffs.
Just Cause, Progressive Discipline, and Seniority Requirements
In a sweeping and dramatic change, the new law prohibits fast food employers from discharging employees or substantially reducing employees’ hours without “just cause” outside of a probation period. The law defines “just cause” as “the fast food employee’s failure to satisfactorily perform job duties or misconduct that is demonstrably and materially harmful to the fast food employer’s legitimate business interests.” A covered reduction in hours is any reduction “totaling at least 15 percent of the employee’s regular schedule or 15 percent of any weekly work schedule.” If an employee is working within a probation period (“not to exceed 30 days from the first date of work”), the employee is not subject to the just cause standard.
In addition, the law imposes progressive discipline requirements on fast food employers, subject to limited exceptions for egregious performance or misconduct. Importantly, a termination will “not be considered based on just cause unless … the fast food employer has utilized progressive discipline.” The term “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.” Fast food employers must establish and distribute a compliant progressive discipline policy to satisfy the just cause standard.
In addition to discharge for “just cause,” fast food employers may lay off employees based on a “bona fide economic reason,” which is defined 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.” Fast food employers must maintain business records sufficient to show that the closure or reorganization is “in response to a reduction in volume of production, sales, or profit.” Employee discharges based on a bona fide economic reason must “be done in reverse order of seniority … so that employees with the greatest seniority [are] retained the longest and reinstated or restored hours first” (i.e., last in, first out). Fast food employers are likewise required to “make reasonable efforts to offer reinstatement … to any fast food employee discharged based on a bona fide economic reason within the previous twelve months, if any, before the fast food employer may offer or distribute shifts to other employees or hire any new fast food employees.”