NYC City Council Passes "Just Cause" and Other Restrictions Covering Employers in Fast Food Industry

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On Friday, December 17, 2020, the NYC Council passed two bills that will end “at-will” employment for fast-food workers in New York City.  The bills will take effect 180 days following Mayor de Blasio’s expected signing of bills.  The bills may prove to be the proverbial “camel’s nose under the tent,” portending greater incursions into the traditional at-will principles that have defined New York’s public policy with respect to the employment relationship for well over a century. 

“Just Cause” Provisions

The first of the two bills prohibits fast-food employers from terminating or substantially reducing the hours of a worker without “just cause,” defined as the worker’s “demonstrated misconduct or poor performance,” which is “demonstrably and materially harmful to the fast food employer’s legitimate business interests.”  A covered “reduction in hours” is defined as “a reduction in a fast food employee’s hours of work totaling at least 15 percent of the employee’s regular schedule or 15 percent of any weekly work schedule.”

In addition, the new law imposes “progressive discipline” policy requirements that must be met before terminating an employee or reducing his or her hours.  Such policies must be in writing and “provide 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.”  

Employers are required to provide in writing to the employee the “precise reasons” for the termination or hours reduction within five days of the adverse action.  Per the bill, reasons other than those specified in writing to the employee may not be considered by any factfinder (i.e., agency, court, jury, etc.) when reviewing the lawfulness of the termination or reduction in hours.  The employer cannot reduce the employee’s schedule by 15 percent from the highest total hours contained in such employee’s regular schedule at any time within the previous 12 months unless either: (1) the employee consents to or requests the reduction in writing; or (2) the reduction is otherwise consistent with the just cause restrictions under the law.

Finally, an employer cannot rely on discipline that was issued more than one year before the currently contemplated adverse action.  

The penalties for violating these restrictions are substantial.  A violation will result in (1) reinstatement or restoration of hours of the fast food employee, unless waived by the fast food employee; and (2) payment of the employee’s reasonable attorneys’ fees and costs.  Additionally, a court or administrative agency may award: (1) a $500 penalty for each violation; (2) an order directing compliance with this law; (3) rescission of any discipline issued; (4) back pay for any loss of pay or benefits resulting from the wrongful discharge; (5) punitive damages; and (6) any other equitable relief as may be appropriate.

Notably, the bill excludes those employees in the first 30 days of employment (i.e., probationary employees) from the just-cause and progressive discipline requirements.

Finally, the bill also modifies New York City’s recently enacted “predictive scheduling” law covering fast food workers, which requires fast-food employers to provide employees in writing a “good-faith estimate” of their work hours.  The requirement is now more exacting, requiring employers to adopt “scheduling practices that provide each fast food employee with a regular schedule that is a predictable, regular set of recurring weekly shifts the employee will work each week.” Employees must be provided a “written copy of their regular schedule” before the employee’s first work shift and any time before the employee’s schedule is changed on an indefinite basis.

Layoffs Due to Economic Conditions

The second bill provides that, in addition to a “just cause” termination or reduction of hours, a fast-food establishment is permitted to lay off employees based on a “bona fide economic reason,” which is narrowly 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.”  Moreover, the adverse action shall not be considered bona fide unless “supported by a fast food employer’s business records.” If the discharge or reduction in hours is based on such a bona fide economic showing, the adverse action must be accomplished “in reverse order of seniority” (i.e., those hired last will be discharged first).

Moreover, where an employer has discharged or reduced employee hours on economic grounds, it may not hire any new employees or assign additional shifts to current employees unless and until it “make[s] reasonable efforts to offer reinstatement or restoration of hours” to any employees who were discharged or had their hours reduced for economic reasons within the previous 12 months.

Finally, this bill provides that, on or after January 1, 2022, an employee may file an arbitration demand, including on behalf of a class of employees, in lieu of a lawsuit to address an alleged wrongful discharge or reduction in hours under the new bills.  It provides specific requirements for the selection of an arbitrator and requires the parties to abide by the employment rules of the American Arbitration Association, as well as rules to be adopted by the City’s Department of Consumer Affairs (“DCA”).  Once an employee elects to file an arbitration demand, s/he will have waived her right to sue in court or file an administrative charge with the DCA.  

Again, the penalties for violating these provisions are substantial if the arbitrator finds that the fast food employer violated the bills’ provisions, the arbitrator “shall” (1) require the fast food employer to pay the reasonable  attorneys’ fees and costs of the fast food employee, (2) require the fast food employer to reinstate or restore the hours  of the fast food employee,  unless the employee waives reinstatement, (3) require the fast food employer to pay the city for the costs of the arbitration proceeding,  and (4) award all other appropriate equitable relief,  which may include back pay,  rescission of discipline, in addition to other relief, and such other compensatory damages or injunctive relief as may be appropriate.
 

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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