It’s time to end arbitrary firings in fast-food chains and elsewhere

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You’re fired! Nearly half of American workers say they have lost a job for a bad reason or no reason at all: they may have complained about parental leave policies, volunteered at an unpopular charity or simply worn the wrong hairstyle.

All of these firings are basically legal. Unlike most developed economies, the majority of US employment is “at will”. Bosses do not have to give a warning before dismissal. Companies take full advantage of this flexibility: in the first 10 weeks of the Covid-19 pandemic, more than 40m people, nearly one-quarter of the US workforce, were let go.

Now New York City is trying to change this precarious situation. Starting this week, fast-food companies with at least 30 outlets nationwide must show they have “just cause”, defined as objective operational or conduct-related reasons, for shedding staff.

“It’s basic fairness,” says Brad Lander, the city councillor behind the New York law. “Wouldn’t you want your kid to know what their responsibilities are and have a chance for some feedback rather than getting fired for no reason at all?”

That cuts no mustard with fast-food groups. The industry-funded Restaurant Law Center has sued to block the law. Executive director Angelo Amador argues the rules conflict with federal standards in the 1935 National Labor Relations Act. “Why have a federal law if you are going to pre-empt it?” he asks. “It would set up a patchwork of laws.”

Business groups argue that the flexibility of the US system gives companies the confidence to add staff more quickly. In the long run, they say, it drives faster economic growth than in Europe or Japan, where it is harder to downsize or fire poor workers.

Business groups contend that workers who want more protection can unionise. Staffers at the New Yorker did so last year. However, anti-union efforts by many companies have helped drive down union membership from more than 20 per cent of workers in the 1980s to 10.8 per cent last year. Amazon recently fought off a high-profile campaign to unionise staff at an Alabama warehouse.

Meanwhile, the conservative US Supreme Court has not been falling over itself to help workers. A 2018 ruling made it harder for employees to band together to sue over workplace issues, and the court last month struck down a California rule that required employers to allow union organisers access to farm workers on the job.

But the fast-food chains are wrong to fight the New York law. More stable working conditions would attract and retain employees, and a 2012 study found limits on at-will employment can boost innovation and new firm creation.

Shifting to just cause firing would also reduce workplace tensions in an industry rife with harassment and discrimination claims. McDonalds alone is fending off multiple class action lawsuits alleging sexual harassment and a hostile environment.

Workers less vulnerable to summary dismissal would feel more empowered to call out bad managers. And employers would have better evidence when they did fire people, reducing the likelihood of discrimination lawsuits.

Progressives aren’t waiting for businesses to see the light. Though President Joe Biden’s federal employment legislation is stuck in the Senate, Democratic-controlled states and cities have been pushing through local minimum wage increases and worker protections.

Illinois is considering a just cause law, and nearly 2m workers around the country are covered by “fair work week” laws that require employers to notify workers of their schedules well in advance. In April, New York City sued the fast-food chain Chipotle alleging violation of its version of that law.

Activists hope these statutes will both help local workers and strengthen the case for national action. “It provides the opportunity for proof of concept: when there are ‘the sky is falling’ claims from the business community, it helps if these laws have been in operation,” says Terri Gerstein, a Harvard senior fellow.

New York will start enforcing the just cause law in September unless it is struck down. In 2000, an appeals court held that a US Virgin Islands’ just cause law did not conflict with federal law. But that ruling did not apply nationally, so New York’s case could have a different outcome.

At a time when employers are struggling to fill open jobs, a smart company would make stable working conditions a point of differentiation. Amazon started offering a $15 minimum wage even though the federal standard is just half that. Now its competitors are having to match it to attract staff. Fairer firing rules are a lot cheaper to implement. There’s a lesson there.

brooke.masters@ft.com

Follow Brooke Masters with myFT and on Twitter

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