Chapter § 10.6

• Jurisdiction: New York

[10.6] What is "just cause"?

"Just cause" is a frequently used phrase which can, depending on who is using it and for what purpose, have varying connotations.

When found in union collective bargaining agreements, "just cause" has the meaning that has been ascribed to it over the years by labor arbitrators, and it is understood to mean a termination that is neither arbitrary nor capricious. Some arbitrators apply a seven-question test as described below (or some subset of those questions), which are intended to protect employees against arbitrary, capricious, or vindictive disciplinary actions on the part of their employers.

When used in an individual employment contract, "just cause" can be defined in the language of the contract. An example of such a contract provision might read as follows:

Employee's employment shall not be terminated prior to [date] except for 'just cause,' which shall be defined as (i) an act or acts of commission or omission of sufficient severity as to constitute a material failure of performance; (ii) the commission of a crime under applicable state or federal law which materially bears upon Employee's continued fitness to serve; (iii) material neglect of duty; (iv) a knowing and material departure from the norms of conduct or performance generally applicable to [type of position in the relevant industry]; or (v) physical or mental incapacity to perform the essential functions of Employee's duties, with or without reasonable accommodation, which shall persist for a period of [number] calendar days.

When a contract of employment is for a fixed term, New York law implies as a matter of law that termination prior to the expiration of the fixed term may only be for just cause. If there is a claim that this implied requirement has been breached, and where the parties have not defined what is meant by "just cause," a court will apply its own notions of what would be equitable. Most of the time, the analysis will use some or all the considerations in the seven-point arbitral standard described below.

The seven-point test was first articulated by Arbitrator Carroll R. Daugherty in an arbitration case called Greif Bros. Cooperage Corp.,³ and is as follows:

1. Did the employee have advance knowledge from the employer of the possible disciplinary consequences of the conduct?⁴

2. Was the prohibition of the conduct "reasonably related to the orderly, efficient and safe operation of the employer's business?"⁵

3. Did the employer, before taking disciplinary action, make an effort to find out whether the employee in fact committed...