Small Businesses Oppose New York City’s Just Cause Law

Date: June 30, 2022

Restaurant Law Center v. City of New York challenges Just Cause provisions

New York City, New York (June 30, 2022)NFIB filed an amicus brief in the case Restaurant Law Center v. City of New York at the United States Court of Appeals for the Second Circuit. The case concerns the City of New York’s Just Cause Law, which was enacted in 2021 and impacts the relationship between employers and employees in the fast-food industry. NFIB’s brief argues the Just Cause Law fundamentally reshapes that relationship and imposes disproportionate burdens on employers in violation of the National Labor Relations Act and Commerce Clause.

“The Just Cause Law imposes significant and costly burdens on small business owners, particularly franchise owners that operate their business under narrow profit margins,” said Karen Harned, Executive Director of NFIB’s Small Business Legal Center. “Small businesses, especially restaurants, are managing an ongoing staffing shortage and the city law only exacerbates that problem. We urge the Court of Appeals to reverse the district court’s decision.”

“New York’s small business owners don’t need new laws and regulations to make it harder to run their businesses,” said Ashley Ranslow, NFIB New York State Director. “The Just Cause Law will make it substantially costlier for owners to make employment decisions at a time when staffing is a major concern for small businesses across the state. We are hopeful the lower court’s decision will be reversed.”

The Just Cause Law includes new substantive terms of employment including:

  • Targeted employers may not discharge or reduce an employee’s hours by more than 15% “except for just cause or for a bona fide economic reason;”
  • Targeted employers must establish “progressive discipline policies” providing a “graduated range of reasonable responses” to a fast-food employee’s failure to satisfactorily perform job duties;
  • And employees may challenge their discharge in a range of fora (including compelled private arbitration) and targeted employers “bear the burden of providing just cause or a bona fide economic reason.”

The brief argues the Just Cause Law violates the Constitution due to its discrimination on out-of-state businesses. If upheld, the district court’s decision creates a blueprint for state and local governments to bypass the critical limits imposed by the NLRA and the Commerce Clause, which will be at a great cost to small businesses nationwide.

NFIB filed the brief with the U.S. Chamber of Commerce, Retail Litigation Center, and Business Council of New York State.

The NFIB Small Business Legal Center protects the rights of small business owners in the nation’s courts. NFIB is currently active in more than 40 cases in federal and state courts across the country and in the U.S. Supreme Court.

Related Content: Small Business News | Legal | New York

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