Beginning on July 4, 2021, fast food employees in New York City will be entitled to significant job security under local laws signed by Mayor DeBlasio in January of this year. Among other things, Law 2021/002 requires fast food employers to use progressive discipline before firing someone and prohibits them from terminating or substantially reducing the hours of fast food employees without just cause. Additionally, Law 2021/001 requires fast food employers conducting layoffs to have a “bona fide economic reason” and to lay off employees in reverse order of seniority (i.e., those hired most recently must be terminated first). Employees who believe they have been terminated in violation of either of these laws may now pursue arbitration and an employer who violates the laws may be directed to pay the employee’s attorneys’ fees.

Law 2021/002

This law permits employers to impose a probationary period of up to thirty days during which a fast food employee may be discharged without cause. However, after the expiration of the probationary period, a fast food employee may not, except for just cause, be discharged, indefinitely suspended or subject to a reduction in hours of 15% or more of the employee’s regular schedule or of any weekly work schedule. 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.”

Whether there is just cause for termination depends on whether:

  1. The fast food employee committed misconduct or violated a rule or policy of the employer and knew or should have known about that rule or policy.
  2. The rule or policy of the fast food employer was reasonable, and the employer applied it consistently.
  3. The fast food employer provided sufficient training to the fast food employee.
  4. The fast food employer conducted a fair and objective investigation into the fast food employee’s job performance and/or misconduct.

These are not the only requirements for termination, suspension or a reduction in hours based on just cause. Except in cases of an “egregious failure by the employee to perform their duties, or for egregious misconduct,” a fast food employer cannot undertake an employment action for just cause unless: (1) it first implemented “progressive discipline”; and (2) the employer had a written policy of progressive discipline in place and gave a copy of it to the employee.

The progressive discipline policy must provide for “a graduated range of reasonable responses” to an employee’s failure to fulfill his or her duties. Further, the employer cannot rely on progressive discipline imposed more than one year ago in terminating an employee for just cause. As a result, if an employee was subject to progressive discipline more than a year ago and then commits the same offense, the employer cannot terminate the employee for just cause and must instead begin implementing progressive discipline anew.

Within five days after a fast food employee is discharged, suspended or subject to reduced hours for just cause, the employer must provide a written notice explaining the employment action taken and the exact reasons for it. This step is critical because, in the event the employee challenges the employer’s decision in court or arbitration, the employer is not allowed to rely on any reasons for termination other than those contained in the notice.

In the event that a fast food employee challenges his termination and the employer fails to prove that it terminated the employee for just cause, the employer must reinstate the employee (unless the employee waives this requirement) and pay the employee’s reasonable attorneys’ fees and costs. The employee may also be entitled to back pay for loss of wages and benefits, $500 for each violation by the employer, rescission of the discipline issued, and “any other equitable relief as may be appropriate.”

Law 2021/001

This law limits a fast food employer’s rights in the event of a layoff. Specifically, the law allows for the termination, indefinite suspension or a reduction in hours of a fast food employee if the employer has a “bona fide economic reason.” To prove that it has a bona fide economic reason, the fast food employer must have business records demonstrating “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.”

Even assuming that a fast food employer has a bona fide economic reason for conducting a layoff, it is still not free to select any employees to layoff. The law requires the employer to layoff employees in reverse order of seniority at the establishment where the discharge will happen. This means that the employer must retain the most senior employees the longest. This structure is often referred to as “last in, first out.”

A fast food employer must also make “reasonable efforts” to reinstate any fast food employee who was laid off within the previous twelve months before offering to distribute shifts to other employees or hiring new employees. And, the employer must reinstate employees in order of seniority, offering restoration to the most senior employees first.

Arbitration

Fast food employees who believe they were wrongfully discharged, suspended or had their hours reduced may elect to challenge their employer in an arbitration. They must bring the arbitration within two years of the date the law was allegedly violated. If the employee chooses arbitration, it may not later sue the employer in court or file a complaint with an administrative agency.

In any arbitration, the parties will jointly select the arbitrator(s) from a panel. The members of the panel will be selected by a committee consisting of four fast food employees or advocates and four fast food employers or advocates. The government will choose the arbitrator if the parties cannot agree on one.

Conclusion

These new laws create substantial administrative burdens for fast food employers, who must now ensure that their policies and procedures are detailed, up-to-date and in writing. They must also create written systems of progressive discipline. They must also train human resources and management personnel to implement these progressive discipline systems and to conduct and document thorough investigations of policy violations and misconduct. Documenting downturns in business and revenue is also an essential prerequisite to undertaking a layoff. An employer’s failure to do what is required may result in substantial monetary exposure, including paying not only for its own attorneys but also the employee’s.

For these reasons, it is important for fast food employers to be diligent and proactive well in advance of July 4th. If you have any questions about the new law, contact Jessica Baquet at (516) 393-8292 or jbaquet@jaspanllp.com.