BILL ANALYSIS                                                                                                                                                                                                    Ó

          |SENATE RULES COMMITTEE            |                        AB 359|
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                                    THIRD READING

          Bill No:  AB 359
          Author:   Gonzalez (D), et al.
          Amended:  5/18/15 in Assembly
          Vote:     21  

           SENATE LABOR & IND. REL. COMMITTEE:  4-1, 6/24/15
           AYES:  Mendoza, Jackson, Leno, Mitchell
           NOES:  Stone

           ASSEMBLY FLOOR:  46-27, 5/26/15 - See last page for vote

           SUBJECT:   Grocery workers

          SOURCE:    Community Food and Justice Coalition 
                     Roots of Change 
                     United Food and Commercial Workers Western States  

          DIGEST:  This bill establishes a worker retention requirement,  
          upon a change in   control of a grocery establishment, that  
          requires an incumbent employer to prepare a list of specified  
          eligible grocery workers for a successor grocery employer, and  
          requires the successor grocery employer to hire from this list  
          during a 90-day transition period. This bill requires the  
          successor grocery employer to retain eligible grocery workers  
          for a 90-day period, prohibits the successor grocery employer  
          from discharging those workers without cause during that period,  
          and, upon the close of that period, requires the successor  
          grocery employer to consider offering continued employment to  
          those workers. 


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          Existing law: 

          1)Establishes the Displaced Janitor Opportunity Act (The Act)  
            which requires contractors and subcontractors that are awarded  
            contracts or subcontracts by an awarding authority to provide  
            janitorial or building maintenance services, to follow  
            specified procedures when a service contract is being  

          2)Requires the terminated contractor, within three working days  
            after notification by the awarding body of the termination of  
            the contract, to provide to the successor contractor, the  
            name, date of hire, and job classification of each employee  
            employed at the site or sites covered by the terminated  
            service contract at the time of the contract termination. 
           3)Requires that the successor contractor or subcontractor do the  

             a)   Retain, for a 60-day transition period, employees who  
               have been employed by the terminated contractor, if any,  
               for the preceding four months or longer unless the  
               successor employer has reasonable and substantiated cause  
               not to hire a particular employee based on his/her  
               performance or conduct while working under the terminated  

             b)   During the initial 60-day transition employment period,  
               the successor employer shall not discharge without cause  
               any retained employee. Cause shall be based only on the  
               performance or conduct of the employee. 

             c)   At the end of the 60-day transition period, the  
               successor employer shall provide a written performance  
               evaluation to each employee retained. If the employee's  
               performance is satisfactory, the successor contractor or  
               subcontractor shall offer the employee continued employment  
               (made in writing) which shall be at-will employment.


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             d)   Nothing in The Act requires that the successor  
               contractor or subcontractor pay the same wages or offer the  
               same benefits as were provided by the prior contractor or  
               prior subcontractor. 

          4)Provides that an employee who was not offered employment or  
            who has been discharged in violation of The Act may bring an  
            action against a successor employer in any superior court of  
            the state having jurisdiction and seek back pay, as specified,  
            as well as reasonable attorneys' fees and costs.

          5)Requires, in the public transit industry, 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. Similarly, the successor contractor or  
            subcontractor is required to make a written offer of  
            employment to each employee to be rehired.  The wages and  
            benefits do not need to be at the same level as those provided  
            by the previous contractor or subcontractor and an aggrieved  
            employee may bring an action against the successor employer in  
            any superior court having jurisdiction.  
           This bill: 

          1)Establishes a worker retention requirement for the change in  
            ownership or control of grocery establishments, as specified.   

          2)Requires an incumbent grocery employer to provide to the  
            successor grocery employer the name, address, date of hire,  
            and employment occupation classification of each eligible  
            grocery worker.

          3)Requires the successor grocery employer to maintain a  
            preferential hiring list of eligible grocery workers.  The  
            successor grocery employer shall retain each eligible grocery  
            worker hired from the list for a period of at least 90 days  
            during which the eligible grocery workers shall be employed  
            under the terms and conditions established by the successor  
            and pursuant to the terms of a relevant collective bargaining  
            agreement, if any.


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          4)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.

          5)Provides that during the 90-day transition employment period,  
            the successor grocery employer shall not discharge without  
            cause an eligible worker.

          6)Requires, at the end of the 90-day transition period, the  
            successor grocery employer to make a written performance  
            evaluation for each grocery worker.  If the worker's  
            performance is satisfactory, the successor grocery employer  
            shall consider offering continued employment under the terms  
            and conditions established by the successor and as required by  

          7)Requires the incumbent employer to post public notice of the  
            change in control that must include the name and contact  
            information of the successor employer and the effective date  
            of the change in control, as specified. 

          8)Defines, among others, the following terms:

             a)   "Grocery establishment" means a retail store that is  
               over 15,000 square feet in size and that sells primarily  
               household foodstuffs for offsite consumption, as specified.  

             b)   "Eligible grocery worker" means individuals whose  
               primary place of employment is at the grocery establishment  
               and who have worked for the incumbent grocery employer for  
               at least six months prior to the transfer.  However, it  
               excludes managerial, supervisory or confidential employees.

             c)   "Change in control" means any sale, assignment,  


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               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.

          9)Exempts grocery establishments that will be located in  
            geographic areas designated by the U.S. Department of  
            Agriculture as a "food desert," as specified.


          Wages and Working Conditions of Food Retail Workers. A 2014  
          study by the Food Labor Research Center at U.C. Berkeley  
          (commissioned by the United Food and Commercial Workers) titled,  
          "Shelved: How Wages and Working Conditions for California's Food  
          Retail Workers Have Declined as the Industry has Thrived," made  
          the following findings, "California's food retail industry has  
          shown consistent and robust growth in sales and employment, with  
          employment growing 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 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)."


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          Local Ordinances on the Issue. In December 2005, the City of Los  
          Angeles adopted the Grocery Worker Retention Ordinance which  
          required that grocery stores of a specific size (15,000 sq. ft.  
          or larger) that undergo a change of ownership to do the  
          following during a 90-day transition period: 

          1)The incumbent owner must prepare a list of employees with at  
            least six months' employment as of the date of transfer in  
            ownership, and the successor employer must hire from that list  
            during the transition period. 

          2)During the 90 days, the employees may be discharge only for  

          3)At the conclusion of the 90 days, the successor employer must  
            prepare a written evaluation of each employee's performance. 

          4)If the employee's performance is satisfactory, the employer  
            must consider offering continued employment.

          5)If the workforce is unionized, however, the union and the  
            employer may agree on terms that supersede the Ordinance. 

          The California Grocers Association filed a complaint against the  
          City of Los Angeles. The case was appealed and a final decision  
          by the Supreme Court of California was issued on July 18, 2011,  
          stating that the 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. The court also  
          concluded that the ordinance was fully consistent with both  
          state and federal equal protection clauses. California Grocers  
          Association v. City of Los Angeles, 52 Cal. 4th 177 (2011).  

          This worker retention approach is also 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 substantially similar worker retention  


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          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). Additionally, similar worker retention  
          requirements can be found throughout the United States including  
          New York City (building service workers), Philadelphia (service  
          contract workers), Providence, Rhode Island (hospitality and  
          building service workers), and D.C. (health care, food service,  
          and janitorial workers). 

          Prior Legislation 
          AB 350 (Solorio, 2011) would have renamed the Displaced Janitor  
          Opportunity Act the Displaced Property Service Employee  
          Opportunity Act and would have extended those provisions of the  
          act to property services, which included licensed security,  
          building maintenance, window cleaning, and food cafeteria  
          services. AB 350 failed passage on the Senate Floor.

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:NoLocal:    No

          SUPPORT:   (Verified6/24/15)

          Community Food and Justice Coalition (co-source)
          Roots of Change (co-source) 
          United Food and Commercial Workers Western States Council  
          American Federation of State, County and Municipal Employees 
          California Labor Federation, AFL-CIO 
          California Professional Firefighters 
          California Rural Legal Assistance Foundation 
          California School Employees Association 
          California Teamsters Public Affairs Council 
          Food Chain Workers Alliance 
          Hunger Action Los Angeles 
          Los Angeles Alliance for a New Economy 
          North Valley Labor Federation 
          Orange County Communities for Responsible Development 
          Orange County Labor Federation, AFL-CIO 
          Partnership for Working Families 
          Service Employees International Union  


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          Tri-Counties Central Labor Council 
          UFCW Golden State Local 8 
          UFCW Local 135 
          UFCW Local 324 
          UFCW Local 648 
          UFCW Local 770 
          UFCW Local 1167 
          UFCW Local 1428 
          UFCW Local 1442
          Western Center on Law & Poverty 

          OPPOSITION:   (Verified6/24/15)

          Building Owners and Managers Association of California
          California Business Properties Association
          California Chamber of Commerce
          California Grocers Association
          California Retailers Association
          Camarillo Chamber of Commerce
          Chamber Alliance of Ventura and Santa Barbara Counties
          East Valley Business Legislative Advocacy Committee 
          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
          Redondo Beach Chamber of Commerce 
          San Diego Regional Chamber of Commerce 
          San Jose Silicon Valley Chamber of Commerce
          Santa Maria Chamber of Commerce Visitors and Convention Bureau
          South Bay Association of Chambers of Commerce 
          Southwest California Legislative Council
          Torrance Area Chamber of Commerce

          ARGUMENTS IN SUPPORT:     According to the author, there are  
          currently no state-level protections for grocery workers who can  
          be terminated, through no fault of their own, when  
          billion-dollar grocery store corporations merge together to  


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          generate more profits. Proponents argue that a change of workers  
          raises public health concerns since the effects are carried over  
          to the grocery store's clientele. They argue that experienced  
          workers possess valuable knowledge and skills regarding proper  
          sanitation procedures and local/state health regulations to  
          ensure high standards of food safety. AB 359 will allow grocery  
          workers 90 days to work at the successor grocery store, which  
          allows a reasonable amount of time for the successor employer to  
          hire them if they are satisfied with their performance or for  
          the employee to pursue employment elsewhere.

          ARGUMENTS IN OPPOSITION:     Opponents argue that this bill  
          unfairly forces grocery employers to hire a predecessor's  
          employees, undermines the at-will employment presumption in  
          California, ensures continued union representation and subjects  
          employers to litigation. They argue that 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. 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 - essentially forcing an employer to  
          offer continued employment to the predecessor's workforce  
          ensuring recognition of the incumbent union. 

          Similarly, they argue that this bill forces employers to adhere  
          to terms of a contract to which it is not a party. This bill  
          requires that employees be retained according to the "terms and  
          conditions" established by the successor grocery employer and  
          pursuant to the terms of a relevant collective bargaining  
          agreement (CBA), thereby forcing the successor employer to abide  
          by these contractual provisions, even though the successor  
          employer is not actually a party to that CBA. 

          ASSEMBLY FLOOR:  46-27, 5/26/15
          AYES:  Alejo, Bonilla, Bonta, Burke, Calderon, Campos, Chau,  


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            Chiu, Chu, Cooper, Dababneh, Daly, Dodd, Frazier, Cristina  
            Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,  
            Gordon, Gray, Roger Hernández, Holden, Irwin, Jones-Sawyer,  
            Lopez, Low, McCarty, Medina, Mullin, Nazarian, O'Donnell,  
            Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Santiago, Mark  
            Stone, Thurmond, Ting, Weber, Williams, Wood, Atkins
          NOES:  Achadjian, Travis Allen, Baker, Bigelow, Brough, Brown,  
            Chang, Cooley, Dahle, Beth Gaines, Gallagher, Grove, Hadley,  
            Jones, Kim, Lackey, Levine, Maienschein, Mayes, Melendez,  
            Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk
          NO VOTE RECORDED:  Bloom, Chávez, Eggman, Harper, Linder,  
            Mathis, Salas

          Prepared by:Alma Perez / L. & I.R. / (916) 651-1556
          7/13/15 9:55:15

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