What happened?

On January 17, 2018, a federal judge stayed enforcement of New York City’s (“City”) recently-enacted Fast Food Deductions Law (the “Deductions Law”). The order, entered by consent, was entered in a lawsuit challenging the law filed against the City by two leading foodservice advocacy organizations (Restaurant Law Center, et al. v. City of New York, et al., 1:17cv9128).  The stay is currently in place until the earlier of the determination of the parties’ dispositive motions or March 30, 2018.

What is the Fast Food Deductions Law?

The Deductions Law, which took effect November 26, 2017, was enacted as part of New York City’s Fair Work Week Laws to facilitate fast food employees’ ability to contribute to not-for-profit organizations that advocate on their behalf. Under the Deductions Law, “fast food employers” (defined in the law) must honor employee requests to deduct voluntary payments from their paychecks and must send the funds to the designated not-for-profit organization, provided it has a registration letter from New York City’s Department of Consumer Affairs (“DCA”).  The law does not permit contributions to “labor organizations,” as defined in the law.

Who is challenging the Deductions Law and why?

On November 21, 2017, the Restaurant Law Center and the National Restaurant Association, together, filed a lawsuit against the City challenging the law alleging that it:

1. Violates the First Amendment because it requires fast food employers to “calculate, deduct, collect, administer, and remit employee deductions to political and ideological groups that employers may choose to oppose, and should not be forced to support.”
2. Is preempted by the National Labor Relations Act because it “purports to grant [New York City] the authority to decide what is and is not a “labor organization”; and
3. Is preempted by the Labor Management Relations Act (“LMRA”) because it “requires covered employers to pay funds without regard to the restrictions of the [LMRA], exposing employers to federal criminal liability and an impossible choice between compliance with federal or local law.”

What should employers do now?

Continue to monitor developments in this area.