UPDATE: Mayor de Blasio signed these two bills on January 5, 2021. The new laws are scheduled to take effect in 180 days, on July 4, 2021.

On Tuesday, December 15, 2020, the New York City Council’s Committee on Civil Service and Labor voted to approve two bills, Proposed Int. No. 1415-A and Proposed Int. No. 1396-A, that would fundamentally alter the employer-employee relationship for fast food employers in New York City.  These two bills will now move to the full City Council for a vote scheduled for Thursday, December 17, 2020.  If passed and signed into law by the mayor, these two bills would effectively end the concept of at-will employment in New York City’s fast food industry.

What would these bills do generally?

An employer would be prohibited from terminating fast food employees’ employment, reducing their hours by 15% of their regular schedule or by 15% of any weekly work schedule, or indefinitely suspending employees, unless the fast food employer has “just cause” to do so, or is compelled to do so by bona fide economic concerns. The bills would require all fast food employers to adopt clear policies relating to all standards of conduct; institute a progressive discipline policy for less-egregious infractions; perform “adequate training” on the employer’s standards; conduct a “fair and objective investigation into the job performance or misconduct”; and, within five days of discharging a fast food employee, provide a written explanation of the “precise reasons” for the action.  For employees whose jobs are terminated due to economic reasons, the bills would require the selection of laid-off employees to be in reverse seniority order and create functional recall rights for a period of up to 12 months.  Employees would have the right to file for arbitration to challenge whether or not an employer had “just cause” for its actions or otherwise complied with the law. 

Who is covered by the bills?

The bills would amend Section 20 of New York City’s Administrative Code, and add to New York City’s Fair Workweek Law (FWWL), which have applied predictable scheduling rules to New York City’s fast food and retail employers. These new bills, as currently proposed, would apply to all “fast food employers,” as that term is broadly defined by the FWWL. 

According to the FWWL, a fast food employer is an employer that operates any establishment: (i) that has as its primary purpose serving food or drink items; (ii) where patrons order or select items and pay before eating and such items may be consumed on the premises, taken out or delivered to the customer's location; (iii) offers limited service; (iv) is part of a chain; and (v) is one of 30 or more establishments nationally, including (A) an integrated enterprise that owns or operates 30 or more such establishments in the aggregate nationally or (B) an establishment operated pursuant to a franchise where the franchisor and the franchisees of such franchisor own or operate 30 or more such establishments in the aggregate nationally. 

Not only is the definition of what type of food service is considered “fast food" broad, but a franchisee that has only two total locations within its network in New York City can still be considered a “fast food employer” if the franchise brand has more than 30 locations across the country.

What do the bills prohibit or mandate?

In essence, the bills would prohibit fast food employers from terminating the employment of fast food workers, or reducing the regularly scheduled hours by 15% or more, unless “just cause” exists or for bona fide economic concerns.  The bills set the standard for determining whether just cause exists and those factors include the following:

1. The fast food employee knew or should have known of the fast food employer’s policy, rule or practice that is the basis for progressive discipline or discharge;

2. The fast food employer provided relevant and adequate training to the fast food employee;

3. The fast food employer’s policy, rule or practice, including the utilization of progressive discipline, was reasonable and applied consistently;

4. The fast food employer undertook a fair and objective investigation into the job performance or misconduct; and

5. The fast food employee violated the policy, rule or practice or committed the misconduct that is the basis for progressive discipline or discharge.

In addition, the bills mandate that fast food employers provide a written explanation to the fast food employee of the precise reasons for the job termination within five days of discharging a fast food employee.  In the event that a fast food employee challenges the termination decision, the fast food employer would be bound by the reasoning in the termination letter, and if the fast food employee challenges the termination decision, the fact-finder may not consider any explanation for the termination other than the reasons proffered in the written explanation provided to the fast food employee.

What is meant by progressive discipline?

As noted above, the bills mandate that fast food employers adopt a written progressive discipline policy, which must be distributed to each fast food employee. The bills further prohibit the termination of a fast food employee’s employment, unless the fast food employer can demonstrate that it has applied “progressive discipline” in a reasonable and consistent manner.  The bills define “progressive discipline” as “a disciplinary system that provides 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.”  In other words, a fast food employer would not be permitted to fire a fast food employee unless it is able to demonstrate that it tried to correct the fast food employee’s behavior prior to job termination. 

Although the bills do not clearly define what method progressive discipline must take, potential methods could include verbal or written disciplinary warnings, coaching, additional training, job relocation, and/or suspension/loss of shifts depending on the severity of the fast food employees’ infraction.  But what is clear is that unless a fast food employee commits an egregious failure to perform their duties, or commits egregious misconduct, the fast food employer cannot terminate the employment of a fast food employee unless the fast food employer can demonstrate that it has documented progressive discipline with the employee.  Unsurprisingly, the bills do not identify what type of conduct constitutes “egregious” misconduct.  The bills also contains a sunset clause that prohibits the fast food employer from relying on progressive discipline issued more than one year before the date of termination. 

What is meant by bona fide economic reasons?

A fast food employer can discharge fast food employees, or reduce their hours if, in response to a reduction in volume of production, sales, or profit, it is forced to completely or partially close its operations or make technological or organizational changes to the business.  The bill provides that if a layoff is required because of bona fide economic reasons, then the layoffs must be made in reverse order of seniority in the fast food establishment where the discharge is to occur, so that employees with the greatest seniority shall be retained the longest or called back to work first.

The bills further provide that if the economic conditions improve, and the fast food employer is able to rehire staff within 12 months following the layoff caused by the bona fide economic reasons, then before hiring new fast food workers, the fast food employer must offer reinstatement or restoration of hours to the laid off fast food workers in order of seniority.

Can fast food employees challenge termination decisions?

Yes.  Fast food employees could challenge any termination decision by either filing a claim in court or by filing an arbitration even if there is no arbitration agreement between the fast food employer and fast food employee. The New York City Department of Consumer Affairs and Workplace Protection (DCAWP) is tasked with appointing an eight-person committee to select an undetermined number of arbitrators to form a panel from which fast food employees and fast food employers could select arbitrators as needed.  If the parties to the dispute cannot agree on an arbitrator from this panel, then the DCAWP would appoint one.  The arbitration would be governed by the American Arbitration Association’s labor arbitration rules. 

If the arbitrator finds that the fast food employer did not have a proper basis for the job action, the bills instruct the arbitrator to order (i) the reinstatement or restoration of the hours of the fast food employee (unless the employee waives reinstatement), (ii) the fast food employer to pay the city for the costs of the arbitration proceeding, (iii) the fast food employer to pay the reasonable attorneys’ fees and costs of the fast food employee, and (iv) order all other appropriate equitable relief, which may include back pay, rescission of discipline, compensatory damages or injunctive relief.

Anything else?

Yes. Presently, fast food employers are required to provide new fast food employees with a schedule and a good-faith estimate on or before their first day of work.  A modification to the Fair Workweek Law contained in the bill now specifies that fast food employers must develop and implement, “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.”  In other words, the new amendment would prohibit employers from making significant adjustments to schedules to reflect seasonal changes in demand unless disclosed and scheduled in a compliant manner at the time of hiring.

In addition, the amendment to the law provides that a “fast food employer may not reduce the total hours in a fast food employee’s regular schedule by more than 15% from the highest total hours contained in such employee’s regular schedule at any time within the previous 12 months, unless the employee has previously consented to or requested such reduction in writing, or the reduction was consistent with the restrictions on discharges.”

Takeaways

These bills are expected to pass the full City Council and may likely become law.  If this occurs, New York City will have redefined the very basic concepts of the employer-employee relationship for fast food employers.  Concepts that have traditionally existed only in a unionized workforce, such as strict seniority for layoff and recall, just cause termination, discipline expiring after 12 months, and arbitral review of employment decisions, will apply across the industry.  Furthermore, the speed at which disciplinary decisions would need to be made is significant and binding.  The bills also extend the same themes that started with the Fair Workweek Law by compelling employers to maximize the hours of current employees and placing significant hurdles to changing employee schedules. 

Fast food employers would be required to adopt comprehensive policies covering all aspects of employee conduct, including progressive discipline for less-egregious infractions.  Employers would hold the burden of training all employees on these standards, and ensuring that supervisors and managers act in response to policy violations in a timely and consistent manner.  Furthermore, prior to terminating the employment of any employee, a fast food employer would need to conduct a comprehensive review of any such decision for risk of waiving any basis not asserted at the time the job action is taken.