Beware of New York City Fast Food Employers: Just Cause Needed for Firing | Bond Schoeneck & King PLLC

[co-author: Paige Carey]

The following article appeared in the August 2021 edition of WestView News and is reprinted here with permission.

As of July 5, 2021, New York City fast food employers can only fire employees for cause. This new law effectively breaks the American tradition of unlimited employment.

What types of employers and employees are affected?

An employee involved in customer service, cooking, food or drink preparation, delivery, security, storage of supplies or equipment, cleaning or routine maintenance in a fast food establishment in exchange for an hourly rate of pay falls within the scope of this Ordinance.

To qualify as a fast food restaurant employer, an establishment must:

  1. serve primarily food or drink;
  2. use a model where customers order or select items and pay before eating and these items can be eaten on site, taken out or delivered to the customer’s location;
  3. provide limited service;
  4. exist as part of a chain, which requires that the establishment be a member of a set of establishments sharing a common brand or characterized by standardized options for decoration, marketing, packaging, products and services ; and
  5. qualify as either: (a) an integrated enterprise that owns or operates at least 30 of these establishments in total nationally; or (b) an establishment operated under a franchise where the franchisor and the franchisees together own or operate 30 or more such establishments in total nationally.

Prescription overview: Under the New York ordinance, an employer cannot terminate at will – or for any reason without explanation – until the First 30 days after hiring an employee. After this period, a discharge for just cause is required.

Dismissal for cause requires that an employee: (1) fails to perform satisfactorily the duties of his position; or (2) commit a fault manifestly and materially prejudicial to the legitimate commercial interests of the employer. It is only when either of these actions is accomplished and progressive discipline is applied that an employer can terminate an employee’s employment. The City ordinance defines dismissal as including termination of employment in the form of dismissal, constructive dismissal, indefinite suspension and / or reduction of hours. In any of these termination actions, an employer must provide the employee with a written explanation outlining the specific reason (s) for the termination for cause.

In order to properly engage in progressive discipline under the ordinance, an employer must provide a disciplinary system with a graduated level of responses to an employee’s unsatisfactory performance. The system should involve a range of disciplinary actions that match the severity, frequency and degree of an employee’s failure. Immediate termination can occur under this system if an employee demonstrates a sufficiently flagrant breach or misconduct to constitute just cause. When using progressive discipline, an employer cannot rely on disciplinary action taken more than a year before termination for cause.

The following five factors will help determine if a fast food restaurant employee has been terminated without cause:

  1. whether the employee knew or should have known the employer’s policy, rule or practice;
  2. whether the employer has provided relevant and adequate training to the employee;
  3. whether the employer’s policy, rule or practice was reasonable and applied consistently;
  4. the employer conducted a fair and objective investigation; and
  5. the employee has violated the policy, rule or practice or has committed the misconduct which is the basis of progressive discipline or dismissal.

The onus is on the employer to prove the termination for cause by a preponderance of non-hearsay evidence. Enforcement of these warrants begins on September 3, 2021. Violation of the Just Cause Order could result in the payment of compensatory damages and other measures necessary to restore the integrity of an injured employee.

Impact on New York Business Owners: The bottom line for New York City business owners is that this ordinance will thicken the barrier to employment in New York City’s fast food industry. Fast food employers can increasingly filter candidates from their hiring pools. As a result, service industry workers returning to New York City after the pandemic may have difficulty securing jobs in the fast food industry due to increased hiring standards.

For owners of fast food franchises, it is important to note that this ordinance will increase worker safety. Under this ordinance, employees hired in the fast food sector can acquire bargaining power for better pay and working conditions. Fast food establishments will also find themselves under a more careful microscope when it comes to discrimination and retaliation in the workplace. While this change will likely increase the number of lawsuits filed against fast food employers, it could also reduce the high turnover rate at fast food establishments.

Future forecasts: This municipal ordinance is a scaled-up version of larger reforms that the Service Employees International Union is pushing for. Given the recent increase in minimum wages and labor protections in New York City, it is possible that just cause employment measures will spill over into the entire New York City service sector. All employers should keep a pulse on the issue of just cause and seek experienced legal advice to familiarize themselves with the best practices in dismissal for cause.

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