BILL ANALYSIS Ó
AB 359
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Date of Hearing: May 6, 2015
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Roger Hernández, Chair
AB 359
(Gonzalez) - As Amended March 26, 2015
SUBJECT: Grocery workers
SUMMARY: Establishes a worker retention requirement for the
change on ownership or control of grocery establishments, as
specified. Specifically, this bill:
1)Defines "grocery establishment" as a retail store that is over
15,000 square feet in size and that sells primarily household
foodstuffs for offsite consumption, as specified.
2)Defines "incumbent grocery employer" as the person that owns,
controls, or operates a grocery establishment prior to a
change in control.
3)Defines "successor grocery employer" as the person that owns,
controls, or operates a grocery establishment after a change
in control.
4)Defines "eligible grocery worker" to mean any individual whose
primary place of employment is at the grocery establishment
subject to a change in control and who has worked for the
incumbent grocery employer for at least six months prior to
the execution of the transfer document. "Eligible grocery
worker" does not include a managerial, supervisory or
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confidential employee.
5)Defines "change in control" to mean any sale, assignment,
transfer, contribution, or other disposition of all or
substantially all of the assets or a controlling interest,
including by consolidation, merger, or reorganization, of the
incumbent grocery employer or any person who controls the
incumbent grocery employer or any grocery establishment under
the operation or control of either the incumbent grocery
employer or any person who controls the incumbent grocery
employer.
6)Requires an incumbent grocery employer, within 15 days after
the execution of the transfer document, to provide to the
successor grocery employer the name, address, date of hire,
and employment occupation classification of each eligible
grocery worker.
7)Requires the successor grocery employer to hire from the
aforementioned preferential hiring list for a period beginning
upon execution of the transfer document and continuing for 90
days after the grocery establishment is fully operational and
open to the public under the successor grocery employer.
8)Requires a successor grocery employer to retain each eligible
grocery worker hired from the preferential hiring list for a
period of at least 90 days after the eligible grocery worker's
employment commencement date. During this 90-day transition
employment period, eligible grocery workers shall be employed
under the terms and conditions established by the successor
grocery employer and pursuant to the terms of a relevant
collective bargaining agreement, if any.
9)Provides that if the successor grocery employer determines
that it requires fewer workers than were required by the
incumbent grocery employer, it shall retain workers by
seniority within each job classification, as specified.
10)Provides that during the 90-day transition employment period,
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the successor grocery employer shall not discharge without
cause an eligible grocery worker.
11)Provides that at the end of the 90-day transition employment
period, the successor grocery employer shall make a written
performance evaluation for each eligible grocery worker. If
the worker's performance during the 90-day period is
satisfactory, the successor grocery employer shall consider
offering the worker continued employment under the terms and
conditions established by the successor grocery employer and
as required by law.
12)Requires the incumbent grocery employer to post public notice
of the change in control, as specified.
13)Authorizes an eligible grocery worker to bring a civil action
against the incumbent grocery employer or the successor
grocery employer for violations of these requirements, and
authorizes the worker to be awarded hiring and restatement
rights, front pay or back pay, the value of benefits the
worker would have received, attorney's fees and costs, as
specified.
14)Specifies that parties subject to this bill may, by
collective bargaining agreement, provide that the agreement
supersedes the requirements of this bill.
15)Provides that this bill shall not apply to grocery
establishments that will be located in geographic areas
designated by the U.S. Department of Agriculture as a "food
desert," as specified, provided that both of the following
apply:
a) More than six years have elapsed since the most recent
grocery establishment was located in the area designated as
a food desert.
b) The grocery establishment stocks and during normal
business hours sells fresh fruits and vegetable in amounts
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and of a quality that is comparable to what the
establishment sells in its three geographically closest
stores, which are located outside of the food desert.
16)Specifies that this bill does not preempt any city, county,
or city and county ordinances that provide greater protection
to eligible grocery workers.
17)Establishes specified recordkeeping requirements for the
incumbent grocery employer and successor grocery employer to
document compliance with these requirements.
18)Makes other related changes.
19)Makes related legislative findings and declarations.
FISCAL EFFECT: None. This bill is keyed non-fiscal by the
Legislative Counsel.
COMMENTS: Existing law already contains specified worker
retention requirements for certain categories of workers. For
example, in the janitorial industry, existing law requires a
successor contractor to retain employees for 60 days and to
offer permanent employment to satisfactory employees at the end
of the 60-day period. (Labor Code Section 1060 et seq.). In
addition, in the public transit industry, existing law requires
an awarding body to give a 10 percent bid preference to a bidder
who agrees to retain the employees of the prior contractor for a
period of not less than 90 days. (Labor Code Section 1070 et
seq.).
This bill is sponsored by the United Food and Commercial Workers
Union Western States Council (UFCW) and would establish a worker
retention requirement for specified grocery establishments that
is similar, but not identical to, the janitorial industry
retention requirement referenced above.
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UFCW also indicates that this measure is modeled after a grocery
worker retention ordinance enacted by the City of Los Angeles in
2005. In 2011, the California Supreme Court held that the Los
Angeles ordinance was not preempted as intruding upon either
matters of health and safety already regulated by the state or
matters of employee organization and collective bargaining fully
occupied by federal labor law. California Grocers Association
v. City of Los Angeles, 52 Cal. 4th 177 (2011). The court also
concluded that the ordinance was fully consistent with both
state and federal equal protection clauses. Id.
In addition, UFCW contends that this approach is consistent with
other grocery worker retention ordinances adopted in the City
and County of San Francisco, the City of Santa Monica, and the
City of Gardena, as well as worker retention ordinances for
other industries adopted in the City of San Jose (airport
workers), the City of Oakland (hospitality workers), the City of
Emeryville (hotel workers), and the City of Berkeley (marina
workers).
RECENT RESEARCH ON WAGES AND WORKING CONDITIONS OF FOOD RETAIL
WORKERS
A 2014 study by the Food Labor Research Center at U.C. Berkeley
(and commissioned by the UFCW) made the following findings:
"California's food retail industry has shown consistent and
robust growth in sales and employment, with employment growing
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faster than in the economy overall. Between 2000 and 2011,
the number of grocery stores in California - the largest
segment of food retail establishments in the state- increased
by 5%, from 9,893 to 10,403. California's food retail
industry paid workers $7.7 billion in 2011, and generated
gross revenue of $98.2 billion in 2013. While grocery store
jobs have grown faster than overall employment since the year
2000, general merchandise store jobs have grown much faster -
almost tripling in number. From 1990 to 2012, general
merchandise employment grew 176%, increasing from 41,000
employees to 113,100 employees, while overall employment grew
by only 14%. Employment in grocery stores grew 23%, from
240,800 to 296,300. We estimate that there are now
approximately 383,900 food retail workers in California?
?While California food retail industry employment has grown in
the past decade, food retail workers' wages have declined.
According to Census data, in 2010 dollars, median hourly wages
of grocery store workers - the largest segment of food retail
workers - fell from $12.97 in 1999 to $11.33 in 2010, a
decline of 12.6%. Moreover, the proportion of food retail
workers earning poverty wages increased dramatically, from 43%
in 1999 to 54% in 2010. This means that in 2010, more than
half of all California food retail workers earned less than
the hourly wage needed to reach an annual income of $22,458,
the minimum income necessary to provide them with a low
standard of living for a family of three in the Western U.S.
if they worked full-time for the full year (2,080 hours).
While food retail workers' median hourly wages declined
drastically in the decade prior to 2010, overall private
sector median hourly wages rose slightly, from $16 to $16.16 -
an increase of 1%. As a result of these divergent trends, by
2010 the median hourly wage for grocery store workers had
declined to about 70% of that earned by the California
workforce overall. Similarly, while grocery store workers
suffered a serious decline in weekly wages over this period,
general merchandise workers experienced a slight weekly wage
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increase. As a result, by 2012, grocery store workers' weekly
wages, which were once much higher than those of general
merchandise store workers, had fallen to nearly the same
level."
RESEARCH ON LOS ANGELES ORDINANCE SUBMITTED BY SPONSOR
The sponsor of this bill has submitted a letter from a Professor
at the University of California at Davis that analyzes data on
the retail industry in Los Angeles since 2005 (when the local
grocery worker retention ordinance was enacted).
That letter states the following:
"Thus, overall, approximately 80,909 people were employed in
retail grocery sales in 2005, which grew to 95,990 in 2013.
This is more than an 18% increase in employment in this
timeframe?
?[T]he number of stores in Los Angeles County alone grew from
approximately 1,170 in 2006 to 1,280 in 2013. This is more
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than an 8.5% increase?
?Based on this data, I would conclude overall that the grocery
industry in Los Angeles has continued to grow since 2005 at a
rate that is substantially greater than the overall economy."
However, the California Grocers Association argues that this
research encompasses significantly more time and geography that
the City of Los Angeles's ordinance. While the aforementioned
data covers 2005 through 2013, they argue that the ordinance has
been in effect only since July 2011. Between passage of the
ordinance and that time, the ordinance was stayed as litigation
proceeded through to the California Supreme Court. In addition,
they argue that the aforementioned data covers the County of Los
Angles while the ordinance merely applies to the City of Los
Angeles. Therefore, they contend that the differences are so
significant as to make the information meaningless.
ARGUMENTS IN SUPPORT
The sponsor of this bill, UFCW, argues that it will protect
California's grocery workers from being dismissed when a large
grocery store goes through a change of ownership. Writing in
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support of this bill, they state the following:
"The cities of San Francisco, Los Angeles, Gardena, and Santa
Monica have taken proactive measures in protecting grocery
workers from Wall-Street style mergers. In July of 2011, the
California Supreme Court upheld the Grocery Worker Retention
Ordinance adopted by the City of Los Angeles in 2005.
Under [this bill], grocery stores that are larger than 15,000
square feet will have to ensure the retention of eligible
workers for a 90-day transition period. A worker must have
worked for a minimum of 6 months with the former grocer
company for retention eligibility.
There are approximately 383,900 grocery workers in California
that seek to benefit from this policy. The effect of a major
Wall Street-style merger can be detrimental to consumers and
workers alike, the latter of which face serious consequences
when their jobs are at jeopardy.
In a Pulitzer Prize-winning account of the human toll of the
1986 Safeway buyout, the Wall Street Journal found that 63,000
workers were "cut loose" from Safeway, and that, "while the
majority were re-employed by their new store owners, this was
largely at lower wages, and many thousands of Safeway people
wound up either unemployed or forced into part-time work
force.
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In addition, a change of workers raises a serious public
health concern since the effects are carried over to the
grocery store's clientele. Experienced workers possess
valuable knowledge and skills regarding proper sanitation
procedures and local/state health regulations to ensure high
standards of food safety.
We believe [this bill] is the right approach at the right time
for state lawmakers to advance a policy long overdue to
benefit both workers and overall economy of the state.
California has the eighth largest economy in the world, but
the nation's highest poverty rate and it is disproportionally
harming women and children. More than half of the state's
workforce in the service industry are women and are
increasingly becoming the family head of household, working 2
or 3 part-time jobs to meet their basic needs. Now is the time
to strongly advocate the willingness to close the income gap
and pursue employment retention strategies that reflects our
values and commitment to progress.
As the largest provider of food to the nation, California
should provide workers who sell groceries good jobs - jobs
that will allow their families to purchase and enjoy that food
themselves, and allow them to work in an appropriately
staffed, healthy, and safe environment. Retailers that offer
workers such an environment are the most successful in
California; others should follow their example."
ARGUMENTS IN OPPOSITION
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A coalition of employers, including the California Chamber of
Commerce, opposes this bill and argues that it unfairly forces
grocery employers to hire a predecessor's employees, undermines
the at-will employment presumption in California, and ensures
continued union representation.
Primarily, they argue that this bill denies employers the basic
choice of whom to hire in their workforce. Absent unlawful
conduct by the employer such as discrimination or retaliation,
the choice of whom an employer wants to hire and retain should
be left to the employer, not the government. Moreover,
opponents contend that this bill establishes an unequivocal
mandate that precludes the successor grocery employer from
conducting and pre-hiring background checks or interviews to
determine if the employees of the predecessor employer are
individuals who meet the unique and specific employment criteria
of the subsequent employer.
In addition, opponents argue that this bill undermines the
at-will presumption in order to protect the incumbent union,
stating:
"[This bill] is designed to ensure that an incumbent union who
has been elected as the bargaining representative for the
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prior employer will remain the bargaining unit for the
successor employer. Under the federal "successor employer"
doctrine, a subsequent employer who intends and voluntarily
chooses to (1) hire the majority of its predecessor's
employees and (2) is generally in the same business must
recognize the incumbent union and bargain with it in good
faith. See NLRB v. Burns Int'l Security Services, Inc., 406
U.S. 272, 281 (1972).
Because [this bill] mandates subsequent employers to hire the
predecessor's employees for at least the 90-day retention
period and, thereafter, only terminate such employees for
unsatisfactory performance committed during the 90-day period,
it limits a successor employer's ability to voluntarily choose
its workforce, thereby triggering the successor employer
doctrine. "Unsatisfactory" performance is a higher standard
to achieve than the current at-will presumption of employment
in California and will essentially force an employer to offer
continued employment to the predecessor's workforce, thereby
ensuring recognition of the incumbent union. If a successor
employer actually chooses not to offer continued employment
based upon "unsatisfactory" performance, it will undoubtedly
face unfair labor practice charges and civil litigation by the
employee or incumbent union.
We believe the decision of whether or not to have a union in
the workplace should be left to the employers and employees
after following the proper election procedures outlined by the
National Labor Relations Act. Neither party should be forced
into such a relationship as [this bill] seeks to do."
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Similarly, opponents argue that this bill forces an employer to
adhere to terms of a contract to which it is not a party. They
state:
"[This bill] mandates that a successor grocery employer "shall
retain" each eligible employee of a prior grocery employer
hired under this proposal for at least 90 days according to
the "terms and conditions" established by the successor
grocery employer and pursuant to the terms of a relevant
collective bargaining agreement (CBA). To the extent the
collective bargaining agreement referenced is the CBA with the
predecessor employer, [this bill] mandates a successor
employer to abide by these contractual provisions, even though
the successor employer is not actually a party to that CBA.
This mandate conflicts with the California Supreme Court
decision in California Grocers Association v. City of Los
Angeles, 52 Cal.4th 177, 205 (2011), wherein the Court agreed
that a successor grocery employer covered under the Los
Angeles grocery worker retention ordinance had no duty to
bargain or engage in negotiations with the incumbent
bargaining representative until after the transition period
expired. If the Supreme Court does not believe a successor
employer was not required to bargain with an incumbent union
for a new CBA until after the transition period expires, it is
unreasonable to suggest that a successor employer has a duty
to abide by the terms of any existing CBA, during the
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transition period, to which it is not a party."
In addition, the California Grocers Association raises a number
of concerns in their opposition letter to this bill. Among
other things, they state:
"Our member companies have experience with this concept in the
Cities of Los Angeles, San Francisco, Gardena, and Santa
Monica. Generally, that experience has shown that similar
worker retention mandates have a chilling effect on commerce
and hamper efforts to transition current grocery businesses to
new ownership rather than close locations outright?
?While [this bill] will not improve or protect public health
and safety, it will create significant new administrative and
record-keeping burdens for covered businesses and expose both
sellers and purchasers to liabilities they are unable to
determine or protect against?
?While it is appreciated that the author attempts to address
issues related to vacant locations, the "exception" included
in the bill is so limited and subjective as to be meaningless.
Only locations in USDA-designated "food deserts" are included
and only if the location has been closed for at least six
years. Those restrictions are limiting enough, but add to that
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the requirement that the new establishment stock and sell
fresh fruits and vegetables, "?in amounts and of a quality
that is comparable to what the establishment sells in its
three geographically closest stores?" outside the food desert
and there is no way for a grocery establishment to meet the
exception criteria. There will always be an avenue to allege
the offerings are not "similar" enough. In addition, the
criteria inexplicably limits the exception to companies with
four store locations or more. Smaller companies would be
singled out for arbitrary application of the worker retention
requirement until they opened their fifth store. Assuming, of
course, the location and length of closure criteria are met?
?As noted previously, real world experience in jurisdictions
covered by current local grocery worker retention ordinances
tells us that these requirements have a chilling effect on
business transactions. In some instances, potential purchasers
have declined to proceed with transactions when they have
learned of the requirement to retain employees not of their
own choosing. In other instances, companies have determined it
unwise to proceed with the purchase of existing grocery
locations and rather seek out building opportunities or
non-grocery retail space as they look to expand and grow their
own businesses.
Given current attempts to expand food access, it makes little
sense for lawmakers to enact legislation that could directly
undermine those attempts. Placing additional barriers in the
path to store development will not help communities or
companies looking to expand food access. Provisions in the
bill allowing for companies to avoid the worker retention
requirements are simply not broad enough to be helpful even in
underserved communities and do nothing to alleviate the
burdens created by the bill."
This bill is double referred to Assembly Judiciary Committee.
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REGISTERED SUPPORT / OPPOSITION:
Support
American Federation of State, County and Municipal Employees
California Labor Federation, AFL-CIO
California Professional Firefighters
California Rural Legal Assistance Foundation
California School Employees
California Teamsters Public Affairs Council
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Community Food and Justice Coalition (co-sponsor)
Community Health Council, Inc.
Consumer Attorneys of California
Hunger Action LA
Los Angeles Alliance for a New Economy
Orange County Communities for Responsible Development
Partnership for Working Families
Professional Engineers in California Government
Roots of Change (co-sponsor)
SEIU California
Tri-Counties Central Labor Council
UFCW Golden State Local 8
UFCW Local 135
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UFCW Local 324
UFCW Local 648
UFCW Local 770
UFCW Local 1167
UFCW Local 1428
UFCW Local 1442
UFCW Western States Council (co-sponsor)
Opposition
Building Owners and Managers Association of California
California Business Properties Association
California Chamber of Commerce
California Grocers Association
California Retailers Association
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Camarillo Chamber of Commerce
Chamber Alliance of Ventura and Santa Barbara Counties
El Centro Chamber of Commerce and Visitors Bureau
Family Business Association
Fullerton Chamber of Commerce
International Council of Shopping Centers
NAIOP - Commercial Real Estate Development Association
Orange Chamber of Commerce
Oxnard Chamber of Commerce
Rancho Cordova Chamber of Commerce
San Jose Silicon Valley Chamber of Commerce
Santa Maria Chamber of Commerce Visitors and Convention Bureau
Southwest California Legislative Council
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Analysis Prepared by:Ben Ebbink / L. & E. / (916) 319-2091