At-Will No More? New York City Bill Would Restrict Discharge of Employees

Seyfarth Synopsis: A bill pending in the New York City Council would prohibit employers from discharging employees absent just cause or a bona fide economic reason.  The bill would also ban employers from relying on data collected through electronic monitoring when discharging or disciplining an employee unless certain conditions are met.

In 2021, employment at-will effectively ended in the fast-food industry in New York City with the enactment of a new law that required just cause or a bona fide economic reason for the discharge of certain employees (see here and here).  Ever since, employers in other industries have wondered if they would be targeted next.

On December 7, 2022, the New York City Council answered this question with the introduction of Int. No. 837.  If adopted, the legislation would amend the fast-food law, N.Y.C. Admin. Code § 20-1271 et seq., to apply to all employers, and would prohibit them from discharging New York City employees without just cause or a bona fide economic reason.  The legislation would also limit employers’ ability to rely on data collected through electronic monitoring when discharging or disciplining employees.

Under this new bill, in order for a termination to be based on just cause, the employer must (1) use progressive discipline and (2) have provided to the employee and posted at the workplace or job site its written policy on progressive discipline.  Additionally, the employer must provide 14 days’ notice of any qualifying discharge and, within five  days of such notice, give the employee a written explanation of the precise reasons for discharge.  If the employer fails to timely provide the written notice, according to the bill, “the discharge shall not be deemed to be based on just cause.”  

None of these requirements would be applicable when the termination is based on an employee’s egregious misconduct or egregious failure to perform their duties.  The bill does not provide any detail or further explanation of these exceptions.

A fact-finder evaluating whether the employee has been discharged for just cause would be tasked with considering the following seven (7) factors:

1. whether 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. whether the employer provided relevant and adequate training to the employee;
3. whether the employer’s policy, rule, practice or performance standard, including the utilization of progressive discipline, was reasonable and applied consistently;
4. whether the employer impermissibly relied on electronic monitoring;
5. whether the employer disciplined or discharged the employee based on that employee’s individual performance, irrespective of the performance of other employees;
6. whether the employer undertook a fair and objective investigation into the job performance or misconduct; and
7. whether 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.

For a discharge to be based on a bona fide economic reason, the decision must be supported by the employer’s business records showing that the termination was the result of technological or organizational changes, or a permanent shutdown of the business, in response to reduced production or sales volume.  

If enacted, the bill would also prohibit employers from relying on data collected through electronic monitoring when discharging or disciplining an employee, unless the employer can show, prior to using the data gathered through electronic monitoring, that (1) there is no other practical method of tracking or assessing employee performance, (2) it is using the least invasive available form of electronic monitoring, and (3) it previously provided the employee with the required notice of the monitoring.  Even when these conditions are met, the employer may not rely solely on the data from electronic monitoring in making such employment decisions, except in cases of egregious misconduct or involving threats to others’ health or safety.  And, employers would need to file in advance with the Department of Consumer and Workforce Protection “an impartial evaluation from an independent auditor that said electronic monitoring is effective in undertaking its designed task.”

Under the proposed legislation, anyone alleging a violation of the law may bring an administrative proceeding to challenge their discharge.  The employer would bear the burden of proving just cause or a bona fide economic reason by a preponderance of the evidence.  An employer found to have violated the law would have to pay the employee’s attorneys’ fees and costs, pay the City for the costs of the administrative proceeding, and reinstate the employee, among other potential remedies.  The proposed bill also provides for a  private right of action, such that affected employees may alternatively bring a civil action within two years of the date the employee knew or should have known of the alleged violation.

Excepted from the bill are employees within a probation period or short-term position (as defined by the legislation), construction employees, government employees, and employees covered by a collective bargaining agreement, if the agreement meets certain criteria. 

The bill is under consideration by the City Council’s Committee on Consumer and Worker Protection.  If the bill passes the Council and is signed by the Mayor, it would take effect 180 days after signature.

Seyfarth will continue to monitor developments in this space and provide updates when available.