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New York City’s Proposed Secure Jobs Act May Drive Businesses Out of The City

New York is a long-established “at-will” state, where employment can be terminated at any time without notice, for any reason or no reason at all, as long as the action is not discriminatory or illegal. To prevent employers from terminating employees without a fair reason, the New York City Council’s newly proposed Secure Jobs Act would prohibit employers from terminating employees without just cause or a bona fide economic reason*.

If enacted, with certain exceptions, the following are some of the changes that will be in effect:

  • Employers are prohibited from the use of electronic monitoring in discharging or disciplining employees

  • Employers are required to provide 14 days notice of termination

  • Employers are required to provide a written explanation within five days of the 14 days notice, which addresses the reasons for termination

  • Employers must implement a progressive discipline system to give employees the opportunity to receive feedback and improve work performance before being terminated

    How Would This Affect Businesses in New York City?

Generally, at-will employment provides more freedom and flexibility for businesses to hire or terminate employees. Under the proposal, the burden of proof is shifted to the employers when an employee is terminated. If employees are terminated under just cause, the business must prove the employee was terminated due to legal reasons such as work performance, misconduct, or company policy violations.

If employees are terminated due to a bona fide economic reason, the business must prove there was a reduction in volume of production or sales of 15 percent or more over a period of two quarters before laying off employees. The termination process may be deemed time-consuming and not cost-effective for businesses. The elimination of at-will employment may be the driving factor for businesses to move out of New York City and ironically put jobs at risk.

At the time of writing, the Secure Jobs Act has been proposed by the New York City Council and has not been enacted.

*A local law to amend the administrative code of the city of New York.

Article by Zaid Butt, Director 

Zaid Butt
Author: Zaid Butt
Zaid is a certified public accountant with significant tax compliance and consulting experience in diverse industries, including private equity, software, construction, manufacturing, retail, and financial services.