Cities Can Ban Grocery Store Layoffs

The California Supreme Court upheld a Los Angeles ordinance that forbids new owners of large grocery stores from laying off the existing workforce for 90 days after the new ownership takes over. California Grocers Assn. v. City of Los Angeles, (S176099, July 18, 2011).

The Supreme Court’s 6-1 decision reinstated the Los Angeles ordinance, which was originally enacted in 2005. The ordinance was blocked by the lower court’s earlier decision invalidating the ordinance. The ordinance, backed by organized labor, requires large grocery stores that go through a change in ownership to recognize a period of 90 days as an employee job vesting period during the ownership transition period.

This would require the new owners of large grocery stores to hire previous employees, excluding managers, for at least 90 days after the store reopens. Large grocery stores are defined as stores that are 15,000 square feet or larger. It is unknown at this time whether the ruling will be appealed to the U.S. Supreme Court.

The ordinance requires:

• The prior owner to prepare a list of nonmanagerial employees with at least six months employment.
• The new owner to hire from that list during the 90-day transition period.
  The new owner to only discharge the hired employees “for cause” during the transition period.
• The new owner to prepare a written evaluation of each employee’s performance at the end of the transition period.  
• The new owner to consider offering continued employment if the employee’s performance is satisfactory.

The ordinance does state that if the workforce is unionized, the union and the employer can agree on alternative hiring arrangements.

The cities of Gardena, Santa Monica and San Francisco enacted similar grocery worker retention ordinances. Worker retention ordinances for other fields of employment are also in effect in San Jose (airport business workers), Oakland (hospitality workers), Emeryville (hotel workers) and Berkeley (marina workers).

The lower court ruled that state law and the federal National Labor Relations Act pre-empted the ordinance. The California Supreme Court disagreed.

The one dissenting judge, Justice Grimes stated that the ordinance interferes with free market forces.  Also, Grimes said, “[t]he city’s ordinance requires a new grocery employer to … function during the important initial period of its operation with a work force it deems, for entirely legitimate reasons, unsuitable for its planned operations.”

Gail Cecchettini Whaley, Employment Law Editor/Staff Counsel