Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
On April 22, 2020, the New York City Council introduced a series of bills in response to the COVID-19 crisis that is ravaging the city. In addition to proposals in this legislative package affecting the real estate industry and small businesses, is a series of bills the Council has dubbed the “NYC Essential Workers Bill of Rights.” These bills would require premiums for non-salaried essential employees at large companies, prohibit firing essential workers without just cause, and mandate paid sick leave for gig workers. In particular, the “Just Cause Discharge from Employment” portion would immediately become one of the most radical and consequential pieces of employment legislation enacted in the 21st century, eliminating at-will employment for a large component of New York City’s workforce.
Just Cause Discharge from Employment
If passed, Introductory Bill No. 1923 (“Int. No. 1923”) would provide unprecedented protections for “essential employees” of “essential employers.” Specifically, this bill would prohibit essential employers from “discharging” an essential employee without just cause once that employee has completed the essential employer’s probationary period. The term “essential employee” is broadly defined as any employee who works for an essential employer as defined in New York Executive Order 202.6, issued by the governor of New York on March 18, 2020, and as extended thereafter.1 “Essential employers” cover a wide range of businesses including but not limited to those in the following industries: (i) health care, (ii) infrastructure, (iii) manufacturing, (iv) certain types of retail, (v) services including but not limited to, trash collection, mail and delivery, building cleaning and maintenance, auto repair, child care, warehouse and distribution centers, animal shelter, and funeral homes, (vi) news media, (vii) financial institutions, (viii) providers of basic necessities to economically disadvantaged populations, (ix) certain types of construction, (x) defense, (xi) providers of services necessary to maintain the safety, sanitation and essential operations of residences or other businesses, (xii) certain types of recreation. The proposed bill exempts employees covered by a collective bargaining agreement if such agreement expressly waives the provisions of the proposed law and provides comparable benefits.
“Just cause” is defined as “sufficient cause” for discharging an essential employee, such as the employee’s failure to “satisfactorily perform job duties” or employee misconduct that is “demonstrably and materially” harmful to the essential employer’s business interests. A termination cannot be considered to be based on “just cause” unless the essential employer has utilized progressive discipline with respect to that employee within the past year. The bill further defines “progressive discipline” as a disciplinary system that provides a graduated range of reasonable responses to an employee’s failure to satisfactorily perform such employee’s job duties with discipline ranging from mild to severe. Notably, however, the progressive discipline provision then contradicts itself by stating “Nothing herein shall preclude an essential employer from terminating an essential employee immediately for a failure or misconduct constituting just cause.” Furthermore, prior to discharging an essential employee, the essential employer must first conduct a fair and objective investigation into the employee’s conduct. The employer must provide a written explanation, including any non-hearsay evidence to support the decision, to the terminated employee of the precise reasons for the just cause termination within one week of termination. In determining whether an essential employer had just cause for termination, a fact finder may not consider any reasons not included in such written explanation.
An essential employee can challenge their discharge by filing a complaint with the Department of Consumer Affairs, through a private cause of action filed with a court of competent jurisdiction, or through arbitration2 administered through the New York City Department of Consumer Affairs. The employer bears the burden of proving just cause in any proceeding brought under the proposed bill. Regardless of the forum, the trier of fact, in determining whether an essential employee has been terminated for just cause, shall consider whether:
- The essential employee knew or should have known of the essential employer’s policy, rule or practice;
- The essential employer provided relevant and adequate training to the essential employee;
- The essential employer’s policy, rule or practice was reasonable and applied consistently; and
- The essential employer undertook a fair and objective investigation.
The bill also defines the term “discharge” extremely broadly to cover not only terminations but also constructive discharges, and reductions in hours totaling at least 15 percent of the employee’s weekly work schedule and an indefinite suspension. Thus, an employer who is laying off staff or reducing hours due to a decline in revenue could face a challenge that the termination was not supported by just cause.
Under the proposed bill, an essential employee can be terminated during an employer’s probationary period, which it defines as a period of time not to exceed 30 days, during which the essential employer and essential employee are free, at any time, with or without notice and with or without just cause, to end the employment relationship. Thus, an essential employee is only deemed “at-will” during the probationary period. After that period ends, the “just cause” provisions apply.
An employee can also bring a claim of retaliation for actions up to and including termination. The remedies available are those under New York City Administrative Code 20-1211, which includes compensatory, injunctive and declaratory relief, including lost wages, reasonable attorneys’ fees, and reinstatement to employment.
Notably, there is no “sunset” provision in the bill, meaning that if enacted into law, it is arguably not set to expire even when the pandemic ends.
Premium Pay Bill
The New York City Council proposed a second bill in the “NYC Essential Workers Bill of Rights” that would provide essential employees who are continuing to provide services during the COVID-19 crisis with premium pay. Introductory Bill No. 1918 (“Int. No. 1918”) also adopts the same definition of “essential employer” as defined in the Just Cause Discharge from Employment bill, and defines an “essential employee” as any person employed or permitted to work at or for an essential business but excludes (i) salaried employees, (ii) employees whose employment is covered by a collective bargaining agreement that expressly waives the provisions of this bill and provides comparable or superior benefits for essential employees, and (iii) employees covered by a program created pursuant to an emergency order issued by the governor that provides comparable or superior benefits for essential employees.
Primarily, this bill would require essential employers who employ 100 or more employees to pay essential employees $30 for any shift of less than four hours, $60 for any shift of between four and eight hours and $75 for any shift of greater than eight hours. Int. No. 1918 requires that these large essential employers pay these wage premiums at the same time that wages are ordinarily due and to separately itemize and provide to the employee the premium pay paid to essential employees on a wage stub or other form of written documentation per pay period. The bill would also require large essential employers to post a notice of rights under the bill in a conspicuous location at the worksite. This notice must be in English and any language spoken as a primary language by at least five percent of employees at that location.
In determining the number of people who perform work during a given week, an employer must count all people performing work for compensation on a full-time, part-time or temporary basis. Importantly, the bill provides that if the number of employees fluctuates (as it likely will because of the loss of business during the COVID-19 crisis), the essential employer must examine business size for the current calendar year based upon the average number of persons who worked for compensation per week during the preceding calendar year. In addition, if the essential employer operates a “chain business,” then the total number of employees in that group of establishments must be counted. The term “chain business” is defined as any business that is part of a group of establishments that shares a common owner or principal who owns at least 30 percent of each establishment where such establishments (i) engage in the same business or (ii) operate pursuant to franchise agreements with the same franchisor as defined in section 681 of the general business law.
Importantly, the law authorizes the New York City Office of Labor Standards to investigate claims and assess significant penalties (up to $2,000 to affected employees per violation, $1,000 civil money penalties to New York City for first violations, and additional penalties for subsequent violations). Also, essential employees are granted private rights of action to enforce potential claims under this bill in a court of competent jurisdiction. If enacted, this law will end when the state of emergency is lifted.
Expansion of Paid Sick Leave to Independent Contractors
Introductory Bill No. 1926 (“Int. No. 1926”) would expand coverage of the New York City Earned Safe and Sick Time Act (ESSTA) to include individuals who previously were not entitled to paid sick leave. If this bill is passed then any person providing labor or services for remuneration within the city of New York for more than 80 hours in a calendar year will be considered an employee, unless the hiring entity demonstrates that all of the following conditions are satisfied:
- The person is free from the control and direction of the hiring entity in connection with the performance of the labor or services, both under the contract for the performance of the work and in fact;
- The person performs labor or services that are outside the usual course of the hiring entity’s business; and
- The person is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the labor or services performed.
The bill is designed to grant paid sick leave rights to independent contractors and freelancers who were previously excluded from ESSTA’s coverage.
What Would an Employer Need to do?
If these bills become law as currently written, employers should institute a 30-day probationary period and be sure that they have policies, rules or practices that govern workplace conduct, the employer’s expectations of satisfactory job performance, and what would constitute misconduct that is “demonstrably and materially harmful to the employer’s business interest,” thus meeting the definition of just cause for termination. Employers would need to distribute such policies, rules or practices, preferably in writing, and retain an acknowledgment of receipt so that they can prove employees received the materials. Employers should also think about providing training to employees regarding workplace conduct, how to adequately perform the job functions and what would constitute misconduct that is demonstrably and materially harmful to the employer’s business interest. Employers would also need to consider implementing a progressive discipline policy and designating an employee to conduct investigations into just cause terminations.
Employers with collective bargaining agreements would need to consider adding provisions expressly waiving the provisions of the proposed bills, should they become law.
Will These Bills Become Law?
Several measures have to take place before the bills become law. The bills are only at Stage 1 right now, having been introduced during the April 22 Stated Meeting, and assigned to the Committee on Civil Service and Labor. The Committee on Civil Service and Labor must hold a public hearing on the bills to obtain feedback from the public and other government entities. This may result in amendments to one or more of the bills. Next, the Committee on Civil Service and Labor must vote on the bills, and each bill must pass by majority vote. Any bill that passes by majority vote is sent to the full Council to be considered and voted at a Stated Meeting. It must again pass by majority vote. If a bill passes the Council, it is presented to the mayor, who has 30 days to either sign the bill into law, veto the bill or send it back to the Council. If the mayor vetoes a bill, the Council can override the veto by 2/3 vote.
1 The definition of “Essential Businesses” can be found at https://esd.ny.gov/guidance-executive-order-2026.
2 The arbitration provision specifically provides that an employee can bring an arbitration proceeding on a class or collective basis, and the arbiter can, in addition to compensatory damages, award punitive damages.