- New York City just passed a law saying employment in the fast food industry will no longer be “at will,” but must require “just cause” for firing workers.
- The law will provide workers needed protections by making it harder to fire them.
- If the effects of the law are positive, this could be a model for protecting essential workers across the country.
- Vincent White is a partner at White, Hilferty & Albanese, a national employment law firm.
- This is an opinion column. The thoughts expressed are those of the author.
- Visit the Business section of Insider for more stories.
At a moment of unprecedented insecurity for millions of American workers, New York City is once again functioning as a vital laboratory for the future of protecting American workers.
In 2019, after the city increased its minimum wage to $15 an hour, states from New Jersey to California followed with plans of their own to boost wages. Now a new law, passed in January and taking effect in July, will strengthen the job security of fast food workers in New York City and could be a model for more localities across the US. That’s because after July, employment in the industry will no longer be “at will.” Instead, employers will have to show “just cause” for firing workers.
This is a bold and important experiment, one that could bring more stability to workers in a notoriously difficult and high-turnover employment sector. The new law may also hasten a shift toward automation and impose costs on the operators of franchises at a time when New York City is struggling with massive revenue losses. Whatever the results of the new law, it’s encouraging to see a major American city move beyond stale talking points in policy debates and actually introduce a forceful, targeted intervention in labor law.
Many experts predicted that raising New York City’s minimum wage in 2019 would harm both revenue and employment. But contrary to these doom and gloom predictions, both increased. People were willing to pay a bit more to eat in restaurants, and everyone was able to benefit. This new law could also easily surprise us in a variety of ways.
What are “just cause” protections?
The “just cause” standard, while vague around the edges, can provide powerful protections for workers.
Under the old law, those who did not agree to cover last-minute shifts or work overtime might be fired with relative ease, perhaps on the pretext that they were not a “team player.” The language in the new law requires application of “progressive discipline,” which means that termination can occur only after a series of graduated interventions proportionate to any infractions of policy.
What’s more, this discipline cannot be arbitrarily dispensed according to the fluctuating whims, grudges, or agendas of a particular boss. It must be “reasonable and applied consistently,” a substantive legal phrase that provides genuine protection to workers.
In cases of obvious misconduct, fast food restaurants will still be able to fire employees. Assaulting the boss, spitting in the food – any reasonable judge or arbitrators would regard these as just causes for termination. In borderline cases, however, things will become more interesting. Is lagging productivity a legitimate reason for dismissal? A bad attitude that undermines morale without violating any policy? These cases are murkier.
The potential benefits of “just cause”
Absent this new law, employers probably would not think twice before dismissing workers in such scenarios, figuring that in an industry with annual turnover rates that often exceed 100%, they could always find another worker. Many more employers are now likely to be deterred from quick dismissals by the prospect of a longer and legally mandated process, which could trigger back pay for unlawfully terminated employees and statutory penalties of $500 for each violation.
This could result in more careful selection, training, and treatment of workers. It makes sense to invest more in choosing workers carefully and keeping them happy if you know that they are harder to dismiss. This could even cause upward pressure on wages as franchises compete to attract and retain good workers.
On the other hand, there might be fewer fast food jobs if the new law increases operational costs and decreases turnover. Critics also worry that employers might be permanently stuck with chronically underperforming employers they are unable to dismiss.
There’s some legitimacy to this fear, but it needs to be weighed against the benefit of decreasing unjust and arbitrary terminations. It’s also important to remember that the new law is currently limited to the fast food industry; businesses with profit flowing in from locations around the country and world can afford to treat workers a bit better in New York City. And if the local owners of New York City franchises are affected by the expense of these new laws, the wealthy national companies that grant these franchises could help their local operators with extra costs.
Rather than such a generous course of action, however, corporate fast food mammoths may simply accelerate the shift to automation that has already begun. McDonald’s spent nearly $1 billion in 2019 adding ordering kiosks and other automation technology to stores.
As current mayoral candidate Andrew Yang has stressed, this transition is likely inevitable in a range of industries over the coming years. Rather than postponing it, a more intelligent strategy may be to increase the security and wages of those jobs that can still only be done by humans. There’s even an argument for hastening the arrival of automation: if it’s going to happen anyway, the sooner we begin to experience its full disruptive effects, the sooner our economies and political systems will be forced to develop sustainable responses.
A final virtue of this new labor law is its granting of genuine workplace protections to those we celebrate as essential workers during the pandemic. Many of these workers already rely on public assistance programs because of low wages, and they now face additional risk from a deadly virus on a daily basis.
If we care about helping such people, a disproportionate number of whom are from immigrant and minority communities, it’s long overdue to provide them with more than a hollow bit of celebratory rhetoric about how they are “essential.” New York City’s bold new law could be a crucial step in the right direction. The rest of the country will be waiting to see the results.