- Restaurant advocacy groups are challenging New York City legislation passed in December that prevents a fast food chain's ability to fire employees or cut hours by more than 15% unless the employer can show "just cause" or a "bona fide economic reason."
- The Restaurant Law Center and the New York State Restaurant Association are seeking to block the measure before it takes effect on July 5 and then overturn it, stating that it bars layoffs until the employer suffers "actual economic harm." The groups claim that means layoffs may not be used to avoid economic harm or increase volumes, sales or profits.
- Among the other issues cited by the plaintiffs is that the law only covers fast food chains that have at least 30 locations nationwide, unfairly targeting a "small subset of a single industry." It's unclear why this segment is singled out, but that doesn't mean this law couldn't eventually translate to other segments, or even other industries.
New York City is one of the most restaurant-dense cities in the U.S., and the market often serves as an early mover on some legislation, accordingly. For example, New York first implemented no-smoking laws and menu labeling, according to Restaurant Business. Because of that, industry advocates and chains have expressed concerns that this "just cause" legislation could easily be duplicated elsewhere.
If these laws are not blocked or overturned, it could signal a shift away from at-will employment. After more than a year of the pandemic, which designated restaurant workers as "essential" and increased their risk of illness, these employees appear to have gained more leverage. Major chains like Starbucks and Chipotle have increased their starting wages, for example, and McDonald's is doing the same at its U.S. corporate stores.
This leverage could be contributing to the industrywide labor crisis that has restaurant chains scrambling to offer incentives for employment, like free iPhones and sign-on bonuses.
The Restaurant Law Center and the New York State Restaurant Association also allege the Service Employees International Union (SEIU) is seeking to "evade the [National Labor Relations Act], overturn [New York's] longstanding doctrine of at-will employment, and, instead, impose onerous procedural rules that go to the heart of collective bargaining agreements in unionized workforces." It's worth noting this fight isn't just legally complex, it is also one of several disagreements between union organizations and industry organizations.
Still, it will take more than increased employee power to move away from at-will employment, which in New York State was initially recognized in 1895. The plaintiffs claim employers' state and federal constitutional rights are violated under just cause laws, for example, and federal labor law preempts just cause laws by interfering with the collective bargaining process. This dynamic could potentially create conflict with the National Labor Relations Board's statutory authority, according to the lawsuit.
The plaintiffs claim if the actions of the employer are ever challenged, the law presumes that the employer's action was unlawful and forces them to prove just cause, which they argue violates federal arbitration law. The groups also allege the law includes language drafted by the SEIU, a labor group that supports wage increases, and claim the legislation is a union tactic that promotes employees' interests without following federal labor laws.