A recently proposed legislation in New York State aims to change a long-standing rule of employment at will, requiring good cause before an employer can terminate an employee. New York City currently has such a law that applies to fast food workers, but these laws as drafted and currently proposed would apply to nearly all private employees. The Safeguarding Employees and Accountability for Termination (“SEAT”) Act was introduced in the New York State Senate on March 6, 2023. SEAT would provide employees with the right to sue their employers for “wrongful discharge,” which is defined as a discharge that:
a) is not made for “good cause” and the employee has completed a “probationary period of employment”; or
b) is in violation of an express provision of the employer’s written personnel policy and deprives the employee of a “fair and reasonable opportunity” to remain employed.
The proposed Act defines “good cause” as “any reasonable job-related grounds” based on: (a) the employee’s failure to satisfactorily perform job duties; (b) the employee’s disruption of the employer’s operations, unless such disruption is protected activity; (c) the employee’s material or repeated violation of the employer’s written policies; or (d) other legitimate business reasons determined by the employer while exercising reasonable business judgment. Presumably, these other legitimate business reasons will include economic reasons for reducing the workforce. The “probationary period” during which an employee may still be discharged at-will can vary according to employer policy but may not exceed six (6) months. The bill creates a private right of action with a statute of limitations of six (6) years from the date of termination. The State’s proposed legislation comes after a similar proposal was introduced in the New York City Council in December 2022, which would require employers seeking to terminate an employee following a probationary period to show “just cause” or a “bona fide economic reason” for the termination. This bill expands upon a just-cause termination requirement that has already been imposed upon fast food employers in New York City.
Should these bills become law, they will profoundly change the employer-employee relationships in New York State. As of today, most employers can terminate employees “for any reason or no reason at all” based on an at-will relationship. Under this new proposed law, clearly documenting employees’ performance and discipline, and distributing a written handbook establishing internal company policies will become mandatory, if an employer wants to show good cause for termination. This, most likely, will result in the drastic reduction of the work force in the private sector immediately prior to SEAT going into effect, and intensifying outsourcing of work to outside contractors not located in New York State. It is also likely that quite a few companies will re-incorporate in states other than New York and subject all new hires to mandatory choice of law clauses choosing other jurisdictions for conflict resolution as a risk-management move attempting to limit litigation exposure.