In employment contracts, a fundamental employee protection is the right to continued employment absent termination for “cause.” Employment contracts often specify procedures that must be followed to effect a cause termination. If a contract has no termination procedure, it may still incorporate handbooks or policies that provide procedures for employee discipline. The prevalence of employment termination procedures is reflected in the Restatement of Employment Law, which states that a “cause” termination has a “procedural dimension.” Section 2.04(e) of the Restatement states: “When the [employment] agreement specifies termination procedures, those terms control.”

Under New York law, sometimes they do—and sometimes they don’t. Some case law prioritizes procedure—i.e., if the procedure is not followed, the employee prevails regardless of the existence of “cause.” Other case law prioritizes substance—i.e., a procedural breach by the employer only matters if is “material.” This column analyzes competing New York case law and its implications.

The Formalist Position