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NYC Just-Cause Law Threatens Rideshare Market Dynamics
New York City's just-cause law for rideshare drivers makes it harder to fire workers, but economists warn it will reduce hiring and hurt market flexibility. Turnover rates above 90% amplify the risk.
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New York City this month began enforcing a law that forbids app-based rideshare and delivery platforms from removing drivers without showing “just cause” or a “bona fide economic reason.” The measure extends a 2021 policy that applied the same standard to fast-food workers.
The United States has long relied on employment-at-will, where either side can end the relationship for any reason. That default has kept labor markets flexible. Workers move easily between jobs, and labor flows to the sectors where it is most productive.
Job-protection laws push in the opposite direction. By making it harder to fire, they discourage hiring. An employer that knows it will face arbitration and potential back-wage liability if it lets someone go becomes pickier about who it brings on. Over time, total employment tends to fall.
The pattern shows up in European data. France adopted a series of discharge restrictions starting in 1956, including advance-notice requirements and mandatory severance. Over the next three decades, its unemployment rate climbed from 1% to 10%. Economists have attributed most of that increase to the legal limits on firing.