Typically, in the private sector (public employment is another matter!), if an employer becomes disenchanted with an employee, it is free to summarily terminate said employee. This can be for a good reason, a bad reason, or no reason whatsoever! This is what “employment-at-will” entails. Generally speaking, a private sector employer has the unfettered right to hire – and fire – “at will.” There are exceptions of course; an employer cannot terminate an employee if doing so would violate any of a number of federal, state or local laws. For example, an employer may not take negative action (e.g., terminate) against an employee based on the employee’s race, sex, age, national origin, etc. In addition, for those employees represented by a union, there typically are protections in the relevant collective bargaining agreement prohibiting the employer from disciplining employees unless it can prove “cause,” “just cause,” “proper cause” or similar protective language. And, of course, employees covered by their own employment agreement often have similar protections. But for the vast majority of workers in the private sector, they serve at the whim and caprice of their employers, i.e., they are “employees-at-will.” Well, maybe not!
Earlier this year, the New York City Council enacted a law amending the administrative code to address this issue in the fast food industry. The changes to the existing law are momentous, to put it mildly. Henceforth, employees working in the industry can be terminated only for “just cause or for a bona fide economic reason.” And, not surprisingly, the burden of proof is on the employer, i.e., to defeat a claim of unjust dismissal, the employer must prove “by a preponderance of the evidence” that it satisfied the new legal standard. Thus, the employer must establish that the weight of the evidence favors its argument that it was justified in taking the questioned action against the employee; or, to put it in lay terms, the employer has a better than fifty percent chance of prevailing.
In addition to terminations, the fast food employer must follow a system typical in union settings when laying off employees. Employees must be laid off in order of their respective seniority, and the same goes for recall back to work. And, those employees enjoy re-employment rights before the employer may hire new personnel.
The new law provides for final and binding arbitration to resolve disputes between an aggrieved employee and the employer. Moreover, the law allows for a class action where appropriate, i.e., if a number of employees were similarly affected by the employer’s decision, they may join together to litigate their grievances before an impartial arbitrator. Not surprisingly, if the arbitrator rules against the employer, the award will include reinstatement and back pay. However, the arbitrator may, in addition, award attorneys’ fees and costs, which can include the City’s costs of the arbitration proceedings. Moreover, the arbitrator may also award “all other appropriate equitable relief,” which may include compensatory damages as well as possible injunctive relief. Note that these amendments providing for binding arbitration are not necessarily exclusive. Employees may also bring suit in state court as an alternative course of action.
Covered by the new municipal law are roughly 70,000 fast food workers in the five boroughs. While the enactment and implementation of the new law is subject to court challenge, similar laws have been upheld in the past.
So, what possibly can the new law mean to employers outside the fast food industry? Obviously, this particular municipal code provision has limited application. But it is very possible that this is a precursor of things to come with a much broader stroke. For example, Vermont Senator Bernie Sanders is pushing for just cause as the national standard, one that would apply to all employees who would otherwise be considered “employees-at-will.” Furthermore, progressive groups are pushing the Biden administration to force companies contracting with the federal government, through executive fiat, to provide equivalent worker protections—a proposition not terribly farfetched considering the recent executive order mandating vaccines for millions of employees nationwide.
One should also consider the possible impact on union organizing. While employees in the private sector have long been protected against employer retribution for exercising their statutory right to organize, many nevertheless have declined to do so from fear of retaliation. A Sanders-type law would provide new protections and very possibly empower workers to further exercise their rights.
If you have questions about how the new municipal ordinance or the possible expansion of similar laws might impact your business, please contact Phil Mortensen.