New York City Enacts Protections for Fast Food Industry Workers Against Termination and Scheduling Changes

Nelson Mullins Riley & Scarborough LLP

Nelson Mullins Riley & Scarborough LLP

Mayor Bill De Blasio signed into law two bills on January 5, 2021, 1396-A and 1415-A as introduced in 2019, regulating employment in the fast food industry. The bills create limitations that affect hiring, firing, disciplining and scheduling for fast food employers operating in New York City. In effect, the bills eliminate at-will employment for fast food hourly employees in New York City. These bills will take effect, in part, on July 4, 2021, just as post-vaccination pandemic reopening will be ramping up.

Overview and Definitions

The bills create a new set of “Fair Work Practices” laws specific to the fast food industry. These are the first New York City laws directed at employment practices in a specific industry and may be subject to legal challenge. New York City law defines “fast food” as limited-service, food and beverage chains with thirty or more establishments nationally (including other franchises) and, therefore, will not impact most sit-down dining, bars, or small businesses. The laws will only apply to non-salaried employees whose primary job duties involve service work such customer service, cooking, food preparation, delivery, security, stocking and cleaning.

Limits on Discharge: Just Cause or Economic Reason

The new law will prohibit a “discharge” of a fast food employee (after the first 30 days of employment) for any reason except “just cause” or “bona fide economic reason.” The law will place the burden on the employer to support any discharge with specific documentation. To prove “just cause,” employers need to maintain a written policy providing for a progressive discipline system and record showing that the employee was informed of the policy. To prove “bona fide economic reason,” employers need to keep business records tracking economic metrics (sales, profits, etc.) in relation to strategic decisions (store closing, schedule changes, use of technology). “Discharge” is broadly defined – to include layoffs and terminations as well as reducing scheduled hours more than 15% – thereby affecting a broad range of employment action. Finally, the law will create a “last in, first out” rule for the use of seniority where discharges are supported by a “bona fide economic reason” to protect employees who have more seniority and experience with the establishment.

Notice, Consequences and Arbitration

Employers that “discharge” an employee are required to provide written explanation of the reason for the discharge within five days – which will bind and limit the employer in the future to the identified reason in litigation or arbitration. Violations of the law may be asserted in a private cause of action or a complaint with the Consumer and Worker Protection Department. Employers could face consequences, including, rescinding the discharge, back pay, $500 penalty per violation, and paying the former employee’s reasonable attorney’s fees. The law also will create a structure – envisioned to start in January 2022 – for proceedings before an arbitrator jointly selected by the parties from a panel of Department arbitrators specific to the fast food industry.

Other Changes – Focus on Scheduling and Rehiring

The two bills also introduce changes – specific to fast food employment – to other New York City laws. In one change, fast food employers will be required to maintain scheduling practices geared to provide predictable and regular weekly shifts. Employers also will be required to provide work schedules, including both regular and on-call shifts, before the employee’s first day of work and at least 14 days in advance of any new schedule. In another change, fast food employers will be required to make efforts to offer reinstatement of hours to employees discharged in the last year, as well as offering shifts to employees at other establishments owned by or associated with the employer, before hiring new employees.

Broader Trends and Guidance

These new laws and changes are in line with other recent progressive policies in New York – such as prohibitions on drug testing job applicants for marijuana use in many service industries, which became law on May 10, 2020 – and respond to concerns, seen in many urban areas, about employment practices toward service industry workers. If the law survives legal challenge, expansion to other service industry chains, such as hotels, department stores, and grocery stores, could be the next step.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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