Employment contracts typically guarantee employment for a definite period of a time absent “cause,” “good cause,” “just cause,” or the like. Sometimes the “cause” standard specifies particular misconduct and a minimum level of culpability, such as “gross negligence” or “recklessness.” Sometimes the “cause” standard is left undefined. Either way, these provisions leave open a critical issue: the relevance, if any, of the employer’s honesty, good faith and evenhandedness in applying the “cause” standard.

Surprisingly, the New York case law on this point is a mixed bag. This article analyzes the conflicting case law to help employer-side and employee-side counsel avoid a blind spot.

Objective Versus Subjective ‘Cause’ Standards