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End of At-Will Employment in NYC for Fast Food Workers

August 1, 2021 – Earlier this year, New York City Mayor Bill de Blasio signed legislation which expands the city’s 2017 Fair Work Week Law (the “Act”) as it relates to fast food employees.  De Blasio’s actions effectively put an end to at-will employment for fast food employees in New York City. The new law went into effect on the 4th of July and makes New York City the first jurisdiction in the country to create job protection for a specific segment of an industry (i.e., fast food workers) within the restaurant industry. Although the new law has now gone into effect in New York City, many legal scholars believe it will be subject to challenge based on federal preemption.  (Preemption is the concept that state laws cannot narrow rights granted under a federal law, including an employer’s right to fire an employee at will.)  If the law stands after preemptive challenge, the Act could be a flashpoint for similar legislation across the country, and not just in the fast food industry, but for other industries, too.

What this means for Employers?

The new law prohibits fast food employers from discharging employees without “just cause,” mandates a progressive discipline process, and implements seniority requirements.

Just Cause

Outside of a probationary period, which is not to exceed 30 days from the first day worked, the new law prohibits terminating or substantially reducing a fast food workers hours without “just cause.”

  • “Just cause” is defined as a “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 prohibited reduction in hours is any reduction which totals “at least 15 percent of the employee’s regular schedule or 15 percent of any weekly work schedule.”

Progressive Discipline

The Act requires employers to implement “progressive discipline” for poor performance and misconduct, subject to exceptions for gross misconduct and egregious acts.

  • 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.” Under the Act, a termination will “not be considered based on just cause unless … the fast food employer has utilized progressive discipline.”

In order to be in compliance, employers must establish and distribute a compliant progressive discipline policy.

Bona Fide Economic Reasons – A Justification for a Lay Off

Under the Act, employers may lay off employees based on a “bona fide economic reason.”

  • “A bona fide economic reason” 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.”

Any layoff based on economic reasons must be done in reverse order of seniority and the employer must make reasonable efforts to reinstate those impacted employees “before the fast food employer may offer or distribute shifts to other employees or hire any new fast food employees.”

Burden of Proof Falls to Employers

Employers beware!  The new law requires employers to bear the burden of proof and provide employees within five days of discharge “a written explanation to the fast food employee of the precise reasons for their discharge.” The employer must show that an employee’s discharge or reduction in hours was based on “just cause” or one of the other permitted reasons for termination under the new law.

An employer’s failure to satisfy the requirements of the new law could result in the impacted employee’s (i) reinstatement, (ii) restoration of hours, or (iii) rescission of discipline, as the case may be.  In addition, an impacted employee may obtain back pay, and the employer could face a penalty of $500 for each violation and be required to pay the employee’s attorney’s fees.

Employee Arbitration Rights

The new law permits employees alleging violations to forego the administrative charge process by bringing an arbitration proceeding on behalf of themselves and any applicable class of individuals. However, by doing so, employees must abide by American Arbitrations Association rules and waive any rights to bring an action in court.

Preemption and Other Potential Legal Challenges

As mentioned above, the new law could face legal challenges based on preemption and how it has targeted one specific industry- fast food restaurants.  By essentially abolishing the “at-will” employment status of fast food workers, the law takes direct aim at the National Labor Relations Act (NLRA) preemption principles.  The federal nature of the NLRA generally preempts state and local laws that look to control  employment practices protected by the NLRA.

Additionally, the new law’s targeting of the fast food industry could present equal protection challenges under the U.S. Constitution, as it appears to create a more onerous law for fast food employers compared to other employers, without a rational basis for doing so.

Employers inside and outside of New York City, whether covered  by the new law or not, should pay close attention to how things in New York City unfold.  This new legislation may provide a template for other similar acts in other jurisdictions or industries.

One final note, New York City fast food employers must consider reviewing their current practices.  Specific procedures for compliant disciplinary procedures should be considered.

Brody and Associates regularly advises management on complying with the latest state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.