Judge tosses biz groups' challenge to NYC law for fast food workers

McDonald's restaurants reopen with a dine-in service, in London
A worker delivers food inside a McDonald's in London, July 22, 2020. REUTERS/Hannah McKay
  • Groups said 'just cause' law was end run around collective bargaining
  • Unions have failed for years to organize fast food workers
  • Judge said law merely sets minimum standards

(Reuters) - A federal judge in Manhattan has ruled that a New York City law requiring fast food businesses to have just cause before firing workers is not blocked by federal laws governing collective bargaining and arbitration.

U.S. District Judge Denise Cote on Thursday said the city's law is a valid "minimum labor standard" designed to promote job stability for hourly fast food workers regardless of whether they are unionized, and does not interfere with collective bargaining.

The 2021 law says fast-food businesses may only fire employees or decrease their hours if they fail to perform their job duties or engage in misconduct that harms their employers' "legitimate business interests." The law only applies to businesses with 30 or more locations nationally.

Two trade groups, the Restaurant Law Center and the New York State Restaurant Association, had argued that the union-backed law was an attempt to impose requirements normally only seen in collective bargaining agreements after years of unsuccessful efforts to unionize fast-food workers.

But Cote said the law has no impact on the collective bargaining process.

"The law joins a plethora of valid state and local laws that form a backdrop of rights against which both employers and employees come to the bargaining table," the judge wrote.

The groups had also claimed that a provision of the city's law allowing workers to bring wrongful discharge claims in arbitration was invalid under the Federal Arbitration Act, because it does not require employers' consent to forego court proceedings.

Cote on Thursday said the FAA does not expressly preempt laws compelling arbitration, so the city's law was not preempted.

Cote declined to address the trade groups' separate claims that the just-cause requirement violates various New York state laws, saying they could be re-filed in state court.

The RLC, which is an affiliate of the National Restaurant Association, and NYSRA did not immediately respond to requests for comment. The groups are represented by Morgan Lewis & Bockius.

New York City Corporation Counsel Georgia Pestana in a statement said that as the city recovers from the COVID-19 pandemic, worker protections like the just-cause law "will bring much-needed stability — and the opportunity for economic mobility — to the lives of these workers.”

The case is Restaurant Law Center v. City of New York, U.S. District Court for the Southern District of New York, No. 1:21-cv-04801.

For the trade groups: Leni Battaglia of Morgan Lewis & Bockius

For the city: New York City Corporation Counsel Georgia Pestana

(Editor's Note: This article has been updated to include a statement from the New York City Law Department.)

Read more:

Trade groups challenge NYC ‘just cause’ law for fast-food staff

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

Dan Wiessner (@danwiessner) reports on labor and employment and immigration law, including litigation and policy making. He can be reached at daniel.wiessner@thomsonreuters.com.