Just Cause Protection Under Manager Discrimination

Just Cause Protection Under Manager Discrimination

Authors: Joseph Pickens, Aaron Sojourner

Abstract: Just cause employment policies have long been used to discourage the arbitrary firing of workers. Recent efforts at passing such laws in the U.S. have been motivated by deterring discrimination. This paper presents a framework to study the effects of just cause in an environment with taste-based discrimination. This framework generates predictions that we test for New York City’s 2021 passage of just cause protections for fast food workers. Using a synthetic difference-in-differences design on publicly available data, we find results consistent with taste-based discrimination against older workers. Further analysis suggests other mechanisms of discrimination may also be at play.

Objective

·         To understand the effect of employment protection legislation (EPL) on employment outcomes in the presence of employer taste-based discrimination

Importance

·         Theory predicts the stable share of job turnover will decrease, but the share of non-favored groups within stable employment will increase

Background

·         NYC passed a Just Cause law prohibiting employers in the fast food industry from firing or substantially reducing a workers hours without just cause in 2021. After a 30 day discretionary period, employees cannot be fired without just cause

·         Concern about discrimination is motivation for pushes from at will to just cause employment

Data & Key Variables

·         Quarterly Workforce Indicators Q1 2018 - Q2 2022

·         Restaurants - NAICS 7225

·         Stable employment=full quarter employee

·         Turnover rate=(hires+separations)/2

Methodology

·         Synthetic DnD comparing NYC restaurant workers to those in other counties (within-industry analysis) and NYC workers in other industries (within-county analysis).

·         Preferred specification pools within-industry and within-county results

Results

·         No change in overall employment in treated industry/county for most groups (race, gender) relative to trends in comparison industry/county

·         Older workers in NYC restaurants more likely to be in stable employment after law change, possible sign of employer preference in favor of younger workers

·         Screening discrimination - JC makes it harder for Black workers and young workers to achieve stable employment

Key Table/Figure