Grocery Worker Retention Ordinance Upheld

October 13, 2011 by Beeson Tayer & Bodine

When a new owner takes over a business, all too often the current employees are the first things to go. In an effort to curb this longstanding tradition in the retail grocery industry, the City of Los Angeles enacted the Grocery Worker Retention Ordinance in December 2005. The Ordinance, which applies only to large grocery stores, requires new owners to respect certain rights of the employees of the former owner during a 90- day transition period. The Ordinance requires the seller of the grocery store to provide the buyer with a list of all non-managerial employees with at least six months employment as of the date of the transfer of ownership. All hiring during the 90-transition period must first come from that list of employees. During the 90- day transition period, employees may only be discharged for cause. At the end of the 90-day period, the new owner must provide written evaluations for each employee and “consider” offering satisfactory employees continued employment.

The California Grocers Association challenged the ordinance. This past July the California Supreme Court in California Grocers Assn. v. City of Los Angeles (2011) 52 Cal.4th 177, upheld the Ordinance. The Court rejected the Association’s contention that the Ordinance is preempted by the National Labor Relations Act. The Court explained that the NLRA is primarily concerned with the hiring and terminating of employees in the context of discrimination based on union affiliation. Here, the Ordinance applied across the board to employees of grocery stores regardless of union affiliation. Had the Ordinance applied only to union members or even only to non-union members, it would have forced employees to choose between being covered by a collective bargaining agreement or being covered by the law. The Ordinance did not give unionization either a favorable or unfavorable status and, therefore, the Court held, the Ordinance was not preempted by the NLRA.

The California Supreme Court’s approval of the Los Angeles Ordinance sends a powerful message to employers in California and opens the door for similar legislation in other cities and in other industries.

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