Hunton Employment & Labor Perspectives

On December 7, 2022, New York City Council Member Tiffany Cabán along with three other co-sponsors introduced a proposed bill that would prohibit all employers from terminating employees without (1) “just cause” or (2) a bona fide economic reason.  The bill would amend current law which protects “fast food” employees from being terminated without just cause.

Just Cause

Under the proposed bill, “just cause” means the “employee’s failure to satisfactorily perform job duties or… misconduct that is demonstrably and materially harmful to the employer’s legitimate business interests.”  The bill then sets forth a number of factors to consider when determining whether “just cause” exists: (1) the employee knew or should have known of the employer’s policy, rule, practice or performance standard that is the basis for progressive discipline or discharge; (2) the employer provided relevant and adequate training to the employee; (3) the employer’s policy, rule, practice performance standard, including the utilization of progressive discipline, was reasonable and applied consistently; (4) the employer impermissibly relied on electronic monitoring; (5) the employer disciplined or discharged the employee based on that employee’s individual performance, irrespective of the performance of other employees; (6) the employer undertook a fair and objective investigation into the job performance or misconduct; and (7) the employee violated the policy, rule or practice, failed to meet the performance standard or committed the misconduct that is the basis for progressive discipline or discharge.

The employer must give the employee 14 days’ notice of any discharge for just cause or a bona fide economic reason. And within five days of that notice, the employer must provide the employee with a  “written explanation…of the precise reasons for their discharge…”  When determining whether the employer wrongfully discharged the employee, the fact finder (whether an arbitrator or court) may only rely on the reasons stated in the written explanation.  If the employer does not provide written notice stating the reasons for the discharge, no just cause exists.

Significantly, no just cause will exist if the employer does not implement progressive discipline before terminating an employee.  The only exception to this rule is if the employee’s conduct is an “egregious” failure to perform job duties or is otherwise “egregious” conduct.  Thus, the employer has many hurdles to meet before a termination will be considered for “just cause.”

Bona Fide Economic Reason

The other basis to discharge an employee under the bill is for a “bona fide economic reason.”  Under the bill, a “bona fide economic reason” means “the full or partial closing of operations…in response to a reduction in volume of production or sales of 15 percent or more over a period of two quarters either at the establishment where the discharge is to occur or across all establishments owned by the employer…  within  the city, but shall not include elimination of staff redundancy created by merger or acquisition.”  But a discharge will not be considered for a “…bona fide economic reason unless supported by an employer’s business records showing that the closing, or technological or reorganizational changes are in response to a reduction in volume of production or sales.”  If this standard is met, the employer must first discharge those employees with the least amount of  seniority.

Other Notable Provisions

The Bill does not apply to probationary employees (probationary period limited to 30 days), those in a “short term position” so long as the individual isn’t hired within 180 days after expiration of the position, those in the construction industry, and those covered by a CBA specifically waiving the Act’s provisions and providing comparable protections.  The amendment also makes staffing agencies and third-party clients of those agencies joint employers over an employee when the employee performs functions in the ordinary course of the client’s business.  

Employers based in New York City will want to keep a watchful eye on this legislation.  And if the Bill passes, employers will want to secure experienced employment counsel to help navigate all the potential pitfalls.