Just Cause Protection Under Manager Discrimination

Abstract

Just cause policies aim to discourage the arbitrary firing of employees. Recent efforts at passing such laws in the United States have been motivated by deterring discrimination. This article presents a framework to study the effects of just cause when managers engage in taste-based discrimination. If managers are motivated by bias, one would expect to see separations of disfavored workers concentrated in the initial probationary period, before workers are covered by the just cause protection. Since probationary periods are a typical feature of protections, the approach is generalizable. The authors test this prediction using New York City’s 2021 just cause law for fast-food employees and a synthetic difference-in-differences design on publicly available data. They do not find results consistent with taste-based discrimination against Black, Hispanic, female, nor older workers, though lack of enforcement or data issues could drive the nulls. Further analysis suggests another mechanism: screening discrimination against younger workers.