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CALIFORNIA CORPORATE & SECURITIES LAW

California Enacts Change-in-Control Benefits For Grocery Workers

Last week, Governor Jerry Brown signed AB 359 (Gonzalez) that will impose a worker retention requirement when there has been a change in ownership or control of grocery establishments.  In general, the bill will require the successor grocery employer to retain eligible grocery workers for a 90-day period.  After that period expires, the successor grocery employer will be required to make a written performance evaluation for each eligible grocery worker retained.  If the eligible grocery worker’s performance during the 90-day transition employment period is satisfactory, the successor grocery employer must “consider offering the eligible grocery worker continued employment” under the terms and conditions established by the successor grocery employer and as required by law.

Sponsored by the Community Food and Justice Coalition, Roots of Change, and United Food and Commercial Workers Western States Council, the bill is obviously intended to benefit unions.  The federal “successor employer” doctrine that imposes a duty on successor employers to recognize and bargain with unions when they hire a majority of the former employer’s employees to conduct the same business.

The bill also imposes notice and record keeping requirements and expressly renounces preemption of local ordinances that provide equal or greater protection to eligible grocery workers.  According to the bill analysis, the following local governments have adopted similar ordinances:  the City of Los Angeles, the City and County of San Francisco, the City of Santa Monica, and the City of Gardena.  The California Grocery Association challenged the Los Angeles ordinance in California Grocers Ass’n v. City of Los Angeles, 52 Cal. 4th 177 (2011) (finding no preemption).

The bill is very poorly drafted.  For example, newly added Labor Code Section 2506(a) appears to immunize eligible grocery workers from termination for at least 90 days (“A successor grocery employer shall retain each eligible grocery worker hired pursuant to this part for at least 90 days after the eligible grocery worker’s employment commencement date”).  However, Section 2506(c) implies that employees may be terminated for cause during the transition period (“During the 90-day transition employment period, the successor grocery employer shall not discharge without cause an eligible grocery worker retained pursuant to this part”).

Governor Brown acknowledged in his signing message that the new law is less than pellucid, at least in regards to grocery stores that have ceased operations before a sale.

There are exceptions (including one for “food deserts”), please read the bill.

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