Existing law, upon change in control of a grocery establishment, requires an incumbent grocery employer, within 15 days after the execution of the transfer document, to provide to the successor grocery employer a list of eligible grocery workers, as specified, and requires the successor grocery employer to maintain a preferential hiring list of eligible grocery workers, to hire from that list for 90 days after the grocery establishment is fully operational and open to the public under the successor grocery employer, and to retain each eligible grocery worker hired for at least 90 days after their commencement date, except as specified. Existing law defines grocery establishment for purposes of these provisions as a retail store that is over 15,000 square feet that meets specified requirements, and excludes from the definition a retail store that has ceased operations for 6 months or more.

This bill would instead exclude a retail store that has ceased operations for 12 months or more, and would include distribution centers that meet specified requirements within the definition of grocery establishment, regardless of square footage. The bill would require an incumbent grocery employer to also provide the list of eligible grocery workers to any collective bargaining representatives, and would revise the employee information an incumbent grocery employer is required to provide to the successor grocery employer. The bill would authorize a successor grocery employer to obtain the list of eligible grocery workers from a collective bargaining representative if the incumbent grocery employer does not provide the information within 15 days. The bill would prohibit an employer from taking adverse action against an employee for seeking to enforce their rights. The bill would authorize an employee or employee representative to bring an action in the superior court and would specify remedies in that regard, including front pay or back pay and punitive damages, and would authorize the court to award reasonable attorneys fees and costs to the employee or employee representative who prevails in an enforcement action. The bill would authorize the Labor Commissioner to enforce the provisions and would establish remedies in that regard. The bill would make an employer, agent of any employer, or other person who violates or causes to be violated the provisions, subject to civil penalties and liquidated damages, and would require the liquidated damages to be deposited into the Labor and Workforce Development Fund and paid to the employee as compensatory damages.

Existing law specifies that parties may, by collective bargaining agreement, provide that the agreement supersedes the provisions described above providing for employment protections for grocery workers.

This bill would require the agreement to explicitly set forth the requirements that are superseded.

This bill would also exempt certain incumbent grocery employers and successor grocery employers, based upon their total nationwide employment, from all of the above-described requirements.

Existing law, upon change in control of a grocery establishment, requires an incumbent grocery employer, within 15 days after the execution of the transfer document, to provide to the successor grocery employer a list of eligible grocery workers, as specified, and requires the successor grocery employer to maintain a preferential hiring list of eligible grocery workers, to hire from that list for 90 days after the grocery establishment is fully operational and open to the public under the successor grocery employer, and to retain each eligible grocery worker hired for at least 90 days after their commencement date, except as specified. Existing law defines grocery establishment for purposes of these provisions as a retail store that is over 15,000 square feet that meets specified requirements, and excludes from the definition a retail store that has ceased operations for 6 months or more.

This bill would instead exclude a retail store that has ceased operations for 12 months or more, and would include distribution centers that meet specified requirements within the definition of grocery establishment, regardless of square footage. The bill would require an incumbent grocery employer to also provide the list of eligible grocery workers to any collective bargaining representatives, and would revise the employee information an incumbent grocery employer is required to provide to the successor grocery employer. The bill would authorize a successor grocery employer to obtain the list of eligible grocery workers from a collective bargaining representative if the incumbent grocery employer does not provide the information within 15 days. The bill would prohibit an employer from taking adverse action against an employee for seeking to enforce their rights. The bill would authorize an employee or employee representative to bring an action in the superior court and would specify remedies in that regard, including front pay or back pay and punitive damages, and would authorize the court to award reasonable attorneys fees and costs to the employee or employee representative who prevails in an enforcement action. The bill would authorize the Labor Commissioner to enforce the provisions and would establish remedies in that regard. The bill would make an employer, agent of any employer, or other person who violates or causes to be violated the provisions, subject to civil penalties and liquidated damages, and would require the liquidated damages to be deposited into the Labor and Workforce Development Fund and paid to the employee as compensatory damages.

Existing law specifies that parties may, by collective bargaining agreement, provide that the agreement supersedes the provisions described above providing for employment protections for grocery workers.

This bill would require the agreement to explicitly set forth the requirements that are superseded.

This bill would also exempt certain incumbent grocery employers and successor grocery employers, based upon their total nationwide employment, from all of the above-described requirements.

Existing law, upon change in control of a grocery establishment, requires an incumbent grocery employer, within 15 days after the execution of the transfer document, to provide to the successor grocery employer a list of eligible grocery workers, as specified, and requires the successor grocery employer to maintain a preferential hiring list of eligible grocery workers, to hire from that list for 90 days after the grocery establishment is fully operational and open to the public under the successor grocery employer, and to retain each eligible grocery worker hired for at least 90 days after their commencement date, except as specified. Existing law defines grocery establishment for purposes of these provisions as a retail store that is over 15,000 square feet that meets specified requirements, and excludes from the definition a retail store that has ceased operations for 6 months or more.

This bill would instead exclude a retail store that has ceased operations for 18 12 months or more, and would include distribution centers that meet specified requirements within the definition of grocery establishment, regardless of square footage. The bill would include within the definition of eligible grocery worker for purposes of the provisions a separated employee, as defined. The bill would create a rebuttable presumption that any termination occurring within a year of a change in control was due to a nondisciplinary reason. The bill would require an incumbent grocery employer to also provide the list of eligible grocery workers to any collective bargaining representatives, and would revise the employee information an incumbent grocery employer is required to provide to the successor grocery employer. The bill would authorize a successor grocery store employer to obtain the list of eligible grocery workers from a collective bargaining representative if the incumbent grocery employer does not provide the information within 15 days. The bill would prohibit an employer from taking adverse action against a person an employee for seeking to enforce their rights. The bill would authorize an employee, collective bargaining representative, or nonprofit corporation employee or employee representative to bring an action in the superior court and would specify remedies in that regard, including front pay or back pay and punitive damages, and would authorize the court to award reasonable attorneys fees and costs to the collective bargaining representative or employee or employee representative who prevails in an enforcement action. The bill would require the Division of Labor Standards Enforcement authorize the Labor Commissioner to enforce the provisions and would establish remedies in that regard. The bill would make an employer, agent of any employer, or other person who violates or causes to be violated the provisions, subject to civil penalties and liquidated damages, and would require the liquidated damages to be deposited into the Labor and Workforce Development Fund and paid to the employee as compensatory damages. The bill would require the Labor Commissioner to enforce the provisions, including by issuing a citation against the employer and filing a civil action in accordance with specified procedures.

Existing law specifies that parties may, by collective bargaining agreement, provide that the agreement supersedes the provisions described above providing for employment protections for grocery workers.

This bill would require the waiver to be explicitly set forth in the collective bargaining agreement. agreement to explicitly set forth the requirements that are superseded.

This bill would also exempt certain incumbent grocery employers and successor grocery employers, based upon their total nationwide employment, from all of the above-described requirements.

Existing law, upon change in control of a grocery establishment, requires an incumbent grocery employer, within 15 days after the execution of the transfer document, to provide to the successor grocery employer a list of eligible grocery workers, as specified, and requires the successor grocery employer to maintain a preferential hiring list of eligible grocery workers, to hire from that list for 90 days after the grocery establishment is fully operational and open to the public under the successor grocery employer, and to retain each eligible grocery worker hired for at least 90 days after their commencement date, except as specified. Existing law defines grocery establishment for purposes of these provisions as a retail store that is over 15,000 square feet that meets specified requirements, and excludes from the definition a retail store that has ceased operations for 6 months or more.

This bill would instead exclude a retail store that has ceased operations for 18 months or more, and would include distribution centers that meet specified requirements within the definition of grocery establishment, regardless of square footage. The bill would include within the definition of eligible employee grocery worker for purposes of the provisions a separated employee, as defined. The bill would create a rebuttable presumption that any termination occurring within a year of a change in control was due to a nondisciplinary reason. The bill would require an incumbent grocery employer to also provide the list of eligible grocery workers to any collective bargaining representatives, and would revise the employee information an incumbent grocery employer is required to provide to the successor grocery employer. The bill would authorize a successor grocery store employer to obtain the list of eligible grocery workers from a collective bargaining representative if the incumbent grocery employer does not provide the information within 15 days. The bill would grant a separated employee who is offered a position that is more than 15 miles from their place of residence the right to refuse an offer of employment that is more than 15 miles from the employees residence without a loss of seniority, and would grant a separated employee a right to recall based on seniority before hiring any new employees for one year. The bill would prohibit an employer from taking adverse action against a person for seeking to enforce their rights. The bill would authorize an employee, collective bargaining representative, or nonprofit corporation to bring an action in the superior court and would specify remedies in that regard, including front pay or back pay and punitive damages, and would authorize the court to award reasonable attorneys fees and costs to the collective bargaining representative or employee who prevails in an enforcement action. The bill would require the Division of Labor Standards Enforcement to enforce the provisions and would establish remedies in that regard. The bill would make an employer, agent of any employer, or other person who violates or causes to be violated the provisions, subject to civil penalties and liquidated damages, and would require the liquidated damages to be deposited into the Labor and Workforce Development Fund and paid to the employee as compensatory damages. The bill would require the Labor Commissioner to enforce the provisions, including by issuing a citation against the employer and filing a civil action in accordance with specified procedures.

Existing law specifies parties may, by collective bargaining agreement, provide that the agreement supersedes the provisions described above providing for employment protections for grocery workers.

This bill would require the waiver to be explicitly set forth in the collective bargaining agreement.

Existing law, upon change in control of a grocery establishment, requires an incumbent grocery employer, within 15 days after the execution of the transfer document, to provide to the successor grocery employer a list of eligible grocery workers, as specified, and requires the successor grocery employer to maintain a preferential hiring list of eligible grocery workers, to hire from that list for 90 days after the grocery establishment is fully operational and open to the public under the successor grocery employer, and to retain each eligible grocery worker hired for at least 90 days after their commencement date, except as specified. Existing law defines grocery establishment for purposes of these provisions as a retail store that is over 15,000 square feet that meets specified requirements, and excludes from the definition a retail store that has ceased operations for 6 months or more.

This bill would instead exclude a retail store that has ceased operations for 18 months or more, and would include distribution centers that meet specified requirements within the definition of grocery establishment, regardless of square footage. The bill would include within the definition of eligible employee for purposes of the provisions a separated employee, as defined. The bill would create a rebuttable presumption that any termination occurring within a year of a change in control was due to a nondisciplinary reason. The bill would require an incumbent grocery employer to also provide the list of eligible grocery workers to any collective bargaining representatives, and would revise the employee information an incumbent grocery employer is required to provide to the successor grocery employer. The bill would authorize a successor grocery store employer to obtain the list of eligible grocery workers from a collective bargaining representative if the incumbent grocery employer does not provide the information within 15 days. The bill would grant a separated employee who is offered a position that is more than 15 miles from their place of residence the right to refuse an offer of employment that is more than 15 miles from the employees residence without a loss of seniority, and would grant a separated employee a right to recall based on seniority before hiring any new employees for one year. The bill would prohibit an employer from taking adverse action against a person for seeking to enforce their rights. The bill would authorize an employee, collective bargaining representative, or nonprofit corporation to bring an action in the superior court and would specify remedies in that regard, including front pay or back pay and punitive damages, and would authorize the court to award reasonable attorneys fees and costs to the collective bargaining representative or employee who prevails to recover reasonable attorneys fees and costs. prevails in an enforcement action. The bill would require the Division of Labor Standards Enforcement to enforce the provisions and would establish remedies in that regard. The bill would make an employer, agent of any employer, or other person who violates or causes to be violated the provisions, subject to civil penalties and liquidated damages, and would require the liquidated damages to be deposited into the Labor and Workforce Development Fund and paid to the employee as compensatory damages. The bill would require the Labor Commissioner to enforce the provisions, including by issuing a citation against the employer and filing a civil action in accordance with specified procedures.

Existing law specifies parties may, by collective bargaining agreement, provide that the agreement supersedes the provisions described above providing for employment protections for grocery workers.

This bill would require the waiver to be explicitly set forth in the collective bargaining agreement.

Existing law, upon change in control of a grocery establishment, requires an incumbent grocery employer, within 15 days after the execution of the transfer document, to provide to the successor grocery employer a list of eligible grocery workers, as specified, and requires the successor grocery employer to maintain a preferential hiring list of eligible grocery workers, to hire from that list for 90 days after the grocery establishment is fully operational and open to the public under the successor grocery employer, and to retain each eligible grocery worker hired for at least 90 days after their commencement date, except as specified. Existing law defines grocery establishment for purposes of these provisions as a retail store that is over 15,000 square feet that meets specified requirements, and excludes from the definition a retail store that has ceased operations for 6 months or more.

This bill would instead exclude a retail store that has ceased operations for 18 months or more, and would include distribution centers that meet specified requirements within the definition of grocery establishment, regardless of square footage. The bill would include within the definition of eligible employee for purposes of the provisions a separated employee, as defined. The bill would create a rebuttable presumption that any termination occurring within a year of a change in control was due to a nondisciplinary reason. The bill would require an incumbent grocery employer to also provide the list of eligible grocery workers to any collective bargaining representatives, and would revise the employee information an incumbent grocery employer is required to provide to the successor grocery employer. The bill would authorize a successor grocery store employer to obtain the list of eligible grocery workers from a collective bargaining representative if the incumbent grocery employer does not provide the information within 15 days. The bill would grant a separated employee who is offered a position that is more than 15 miles from their place of residence the right to refuse an offer of employment that is more than 15 miles from the employees residence without a loss of seniority, and would grant a separated employee a right to recall based on seniority before hiring any new employees for one year. The bill would prohibit an employer from taking adverse action against a person for seeking to enforce their rights. The bill would authorize an employee, collective bargaining representative, or nonprofit corporation to bring an action in the superior court and would specify remedies in that regard, including front pay or back pay and punitive damages, and would authorize the collective bargaining representative or employee who prevails to recover reasonable attorneys fees and costs. The bill would require the Division of Labor Standards Enforcement to enforce the provisions and would establish remedies in that regard. The bill would make an employer, agent of any employer, or other person who violates or causes to be violated the provisions, subject to civil penalties and liquidated damages, and would require the liquidated damages to be deposited into the Labor and Workforce Development Fund and paid to the employee as compensatory damages. The bill would require the Labor Commissioner to enforce the provisions, including by issuing a citation against the employer and filing a civil action in accordance with specified procedures.

Existing law specifies parties may, by collective bargaining agreement, provide that the agreement supersedes the provisions described above providing for employment protections for grocery workers.

This bill would require the waiver to be explicitly set forth in the collective bargaining agreement.

Existing law, upon change in control of a grocery establishment, requires an incumbent grocery employer, within 15 days after the execution of the transfer document, to provide to the successor grocery employer a list of eligible grocery workers, as specified, and requires the successor grocery employer to maintain a preferential hiring list of eligible grocery workers, to hire from that list for 90 days after the grocery establishment is fully operational and open to the public under the successor grocery employer, and to retain each eligible grocery worker hired for at least 90 days after their commencement date, except as specified. Existing law defines grocery establishment for purposes of these provisions to exclude as a retail store that is over 15,000 square feet that meets specified requirements, and excludes from the definition a retail store that has ceased operations for 6 months or more.

This bill would instead require the successor grocery employer to hire from the list for 120 days after the grocery establishment is fully operational and open to the public and retain each eligible grocery worker for at least 120 days after their commencement date, except as specified. exclude a retail store that has ceased operations for 18 months or more, and would include distribution centers that meet specified requirements within the definition of grocery establishment, regardless of square footage. The bill would include within the definition of eligible employee for purposes of the provisions a separated employee, as defined. The bill would create a rebuttable presumption that any termination occurring within a year of a change in control was due to a nondisciplinary reason. The bill would require an incumbent grocery employer to also provide the list of eligible grocery workers to any collective bargaining representatives, and would revise the employee information an incumbent grocery employer is required to provide to the successor grocery employer. The bill would authorize a successor grocery store employer to obtain the list of eligible grocery workers from a collective bargaining representative if the incumbent grocery employer does not provide the information within 15 days. The bill would make the above-specified provisions providing for a transition employment period applicable to separated employees, as defined. The bill would grant a separated employee who is offered a position that is more than 15 miles from their place of residence the right to refuse an offer of employment that is more than 15 miles from the employees residence without a loss of seniority, and would grant a separated employee a right to recall based on seniority before hiring any new employees for one year. The bill would prohibit an employer from taking adverse action against a person for seeking to enforce their rights. The bill would authorize an employee, collective bargaining representative, or nonprofit corporation to bring an action in the superior court and would specify remedies in that regard, including front pay or back pay and punitive damages and the recovery of damages, and would authorize the collective bargaining representative or employee who prevails to recover reasonable attorneys fees and costs to the collective bargaining representative or employee. The bill would also authorize an employer who prevails to recover attorneys fees upon obtaining a court determination that the workers lawsuit was frivolous. costs. The bill would require the Division of Labor Standards Enforcement to enforce the provisions, provisions and would establish remedies in that regard, and would authorize the division to promulgate and enforce rules and regulations and issue determinations and interpretations that would have the force and effect of law. regard. The bill would make an employer, agent of any employer, or other person who violates or causes to be violated the provisions, subject to specified monetary penalties, civil penalties and liquidated damages, and would require the funds liquidated damages to be deposited into the Labor and Workforce Development Fund and paid to the employee as compensatory damages. The bill would require the Labor Commissioner to enforce the provisions. The bill would make a controlling private fund, as defined, and any holder of an active interest of a controlling private fund jointly and severally liable for specified liabilities. provisions, including by issuing a citation against the employer and filing a civil action in accordance with specified procedures.

Existing law specifies parties may, by collective bargaining agreement, provide that the agreement supersedes the provisions described above providing for employment protections for grocery workers.

This bill would require the waiver to be explicitly set forth in the collective bargaining agreement. The bill would also add and revise various definitions, including revising the definition of grocery establishment by including specified distribution centers and revising the exclusion for retail stores that have ceased operations for 18 months or more instead of 6 months or more.

Existing law, upon change in control of a grocery establishment, as defined, requires an incumbent grocery employer, within 15 days after the execution of the transfer document, to provide to the successor grocery employer a list of eligible grocery workers, as specified, and requires the successor grocery employer to maintain a preferential hiring list of eligible grocery workers, to hire from that list for 90 days after the grocery establishment is fully operational and open to the public under the successor grocery employer, and to retain each eligible grocery worker hired for at least 90 days after their commencement date, except as specified. Existing law exempts from those provisions grocery establishments that are located in geographic areas designated by the United States Department of Agriculture as a food desert if specified conditions apply. Existing law defines grocery establishment for purposes of these provisions to exclude a retail store that has ceased operations for 6 months or more.

This bill would instead require the successor grocery employer to hire from the list for 120 days after the grocery establishment is fully operational and open to the public and retain each eligible grocery worker for at least 120 days after their commencement date, except as specified. The bill would require an incumbent grocery employer to also provide the list of eligible grocery workers to any collective bargaining representatives, and would revise the employee information an incumbent grocery employer is required to provide to the successor grocery employer. The bill would authorize a successor grocery store employer to obtain the list of eligible grocery workers from a collective bargaining representative if the incumbent grocery employer does not provide the information within 15 days. The bill would make the above-specified provisions providing for a transition employment period applicable to separated employees, as defined. The bill would grant a separated employee who is offered a position that is more than 15 miles from their place of residence the right to refuse an offer of employment that is more than 15 miles from the employees residence without a loss of seniority, and would grant a separated employee a right to recall based on seniority before hiring any new employees for one year. The bill would prohibit an employer from taking adverse action against a person for seeking to enforce their rights. The bill would authorize an employee, collective bargaining representative, or nonprofit corporation to bring an action in the superior court and would specify remedies in that regard, including punitive damages and the recovery of reasonable attorneys fees and costs to the collective bargaining representative or employee. The bill would also authorize an employer who prevails to recover attorneys fees upon obtaining a court determination that the workers lawsuit was frivolous. The bill would require the Division of Labor Standards Enforcement to enforce the provisions, would establish remedies in that regard, and would authorize the division to promulgate and enforce rules and regulations and issue determinations and interpretations that would have the force and effect of law. The bill would make an employer, agent of any employer, or other person who violates or causes to be violated the provisions, subject to specified monetary penalties, would require the funds to be deposited into the Labor and Workforce Development Fund and paid to the employee as compensatory damages. The bill would require the Labor Commissioner to enforce the provisions. The bill would make a controlling private fund, as defined, and any holder of an active interest of a controlling private fund jointly and severally liable for specified liabilities.

Existing law specifies parties may, by collective bargaining agreement, provide that the agreement supersedes the provisions described above providing for employment protections for grocery workers.

This bill would require the waiver to be explicitly set forth in the collective bargaining agreement. The bill would also add and revise various definitions, including revising the definition of grocery establishment by including specified distribution centers and revising an the exclusion for retail stores that have ceased operations. operations for 18 months or more instead of 6 months or more.

Existing law, upon change in control of a grocery establishment, as defined, requires an incumbent grocery employer, within 15 days after the execution of the transfer document, to provide to the successor grocery employer a list of eligible grocery workers, as specified, and requires the successor grocery employer to maintain a preferential hiring list of eligible grocery workers, to hire from that list for 90 days after the grocery establishment is fully operational and open to the public under the successor grocery employer, and to retain each eligible grocery worker hired for at least 90 days after their commencement date, except as specified. Existing law exempts from those provisions grocery establishments that are located in geographic areas designated by the United States Department of Agriculture as a food desert if specified conditions apply.

This bill would instead require the successor grocery employer to hire from the list for 120 days after the grocery establishment is fully operational and open to the public and retain each eligible grocery worker for at least 120 days after their commencement date, except as specified. The bill would require an incumbent grocery employer to also provide the list of eligible grocery workers to any collective bargaining representatives, and would revise the employee information an incumbent grocery employer is required to provide to the successor grocery employer. The bill would authorize a successor grocery store employer to obtain the list of eligible grocery workers from a collective bargaining representative if the incumbent grocery employer does not provide the information within 15 days. The bill would make the above-specified provisions providing for a transition employment period applicable to separated employees, as defined. The bill would grant a separated employee who is offered a position that is more than 15 miles from their place of residence the right to refuse an offer of employment that is more than 15 miles from the employees residence without a loss of seniority, and would grant a separated employee a right to recall based on seniority before hiring any new employees for one year. The bill would prohibit a successor grocery store employer to cause a grocery establishment that is located in a geographic area designated as a food desert to cease being fully operational and open to the public until the establishment provides notice to the city council, city attorney, board of supervisors, county counsel, State Department of Public Health, and Attorney General 180 days before the establishment ceases to be fully operational and open to the public. The bill would require the notice to include, among other things, a written analysis and explanation, including data, on how residents living in the geographic area will be able, at a comparable cost, including transportation cost and time off work and childcare costs, to purchase food. The bill would prohibit an employer from taking adverse action against a person for seeking to enforce their rights. The bill would authorize an employee, collective bargaining representative, or nonprofit corporation to bring an action in the superior court and would specify remedies in that regard, including punitive damages and the recovery of reasonable attorneys fees and costs to the collective bargaining representative or employee. The bill would also authorize an employer who prevails to recover attorneys fees upon obtaining a court determination that the workers lawsuit was frivolous. The bill would require the Division of Labor Standards Enforcement to enforce the provisions, would establish remedies in that regard, and would authorize the division to promulgate and enforce rules and regulations and issue determinations and interpretations that would have the force and effect of law. The bill would make an employer, agent of any employer, or other person who violates or causes to be violated the provisions, subject to specified monetary penalties, would require the funds to be deposited into the Labor and Workforce Development Fund and paid to the employee as compensatory damages. The bill would require the Labor Commissioner to enforce the provisions. The bill would make a controlling private fund, as defined, and any holder of an active interest of a controlling private fund jointly and severally liable for specified liabilities.

Existing law specifies parties may, by collective bargaining agreement, provide that the agreement supersedes the provisions described above providing for employment protections for grocery workers.

This bill would require the waiver to be explicitly set forth in the collective bargaining agreement. The bill would also add and revise various definitions, including revising the definition of grocery establishment by including specified distribution centers and revising an exclusion for retail stores that have ceased operations.

Existing law, upon change in control of a grocery establishment, as defined, requires an incumbent grocery employer, within 15 days after the execution of the transfer document, to provide to the successor grocery employer a list of eligible grocery workers, as specified, and requires the successor grocery employer to maintain a preferential hiring list of eligible grocery workers, to hire from that list for 90 days after the grocery establishment is fully operational and open to the public under the successor grocery employer, and to retain each eligible grocery worker hired for at least 90 days after their commencement date, except as specified. Existing law exempts from those provisions grocery establishments that are located in geographic areas designated by the United States Department of Agriculture as a food desert if specified conditions apply.

This bill would instead require a successor grocery employer to provide the list of eligible grocery workers within 25 days after the execution of the transfer document. The bill would require the successor grocery employer to hire from the list for 100 120 days after the grocery establishment is fully operational and open to the public and retain each eligible grocery worker for at least 90 120 days after their commencement date, except as specified. The bill would require an incumbent grocery employer to also provide the list of eligible grocery workers to any collective bargaining representatives, and would revise the employee information an incumbent grocery employer is required to provide to the successor grocery employer. The bill would authorize a successor grocery store employer to obtain the list of eligible grocery workers from a collective bargaining representative if the incumbent grocery employer does not provide the information within 15 days. The bill would make the above-specified provisions providing for a transition employment period applicable to separated employees, as defined. The bill would grant a separated employee who is offered a position that is more than 15 miles from their place of residence the right to refuse an offer of employment that is more than 15 miles from the employees residence without a loss of seniority, and would grant a separated employee a right to recall based on seniority before hiring any new employees for one year. The bill would prohibit a successor grocery store employer to cause a grocery establishment that is located in a geographic area designated as a food desert to cease being fully operational and open to the public until the establishment provides notice to the city council, city attorney, board of supervisors, county counsel, State Department of Public Health, and Attorney General 180 days before the establishment ceases to be fully operational and open to the public. The bill would require the notice to include, among other things, a written analysis and explanation, including data, on how residents living in the geographic area will be able, at a comparable cost, including transportation cost and time off work and childcare costs, to purchase food. The bill would prohibit an employer from taking adverse action against a person for seeking to enforce their rights. The bill would authorize an employee, collective bargaining representative, or nonprofit corporation to bring an action in the superior court and would specify remedies in that regard, including punitive damages and the recovery of reasonable attorneys fees and costs to the collective bargaining representative or employee. The bill would also authorize an employer who prevails to recover attorneys fees upon obtaining a court determination that the workers lawsuit was frivolous. The bill would require the Division of Labor Standards Enforcement to enforce the provisions, would establish remedies in that regard, and would authorize the division to promulgate and enforce rules and regulations and issue determinations and interpretations that would have the force and effect of law. The bill would make an employer, agent of any employer, or other person who violates or causes to be violated the provisions, subject to specified monetary penalties, would require the funds to be deposited into the Labor and Workforce Development Fund and paid to the employee as compensatory damages. The bill would require the Labor Commissioner to enforce the provisions. The bill would make a controlling private fund, as defined, and any holder of an active interest of a controlling private fund jointly and severally liable for specified liabilities.

Existing law, upon change in control of a grocery establishment, requires an incumbent grocery employer, within 15 days after the execution of the transfer document, to provide to the successor grocery employer a list of eligible grocery workers, as specified, and requires the successor grocery employer to maintain a preferential hiring list of eligible grocery workers, to hire from that list for 90 days after the grocery establishment is fully operational and open to the public under the successor grocery employer, and to retain each eligible grocery worker hired for at least 90 days after their commencement date, except as specified. Existing law exempts from those provisions grocery establishments that are located in geographic areas designated by the United States Department of Agriculture as a food desert if specified conditions apply.

This bill would instead require a successor grocery employer to provide the list of eligible grocery workers within 25 days after the execution of the transfer document. The bill would require the successor grocery employer to hire from the list for 100 days after the grocery establishment is fully operational and open to the public and retain each eligible grocery worker for at least 90 days after their commencement date, except as specified. The bill would prohibit a successor grocery store employer to cause a grocery establishment that is located in a geographic area designated as a food desert to cease being fully operational and open to the public until the establishment provides notice to the city council, city attorney, board of supervisors, county counsel, State Department of Public Health, and Attorney General 180 days before the establishment ceases to be fully operational and open to the public. The bill would require the notice to include, among other things, a written analysis and explanation, including data, on how residents living in the geographic area will be able, at a comparable cost, including transportation cost and time off work and childcare costs, to purchase food.

(Without Reference to File)

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 647

Author:(Holden)

As Amended Ver:September 11, 2023

Majority vote

SUMMARY

Revises recall rights for grocery workers when there is a change of control in a grocery establishment to: 1) cover workers of a grocery distribution center; and 2) create a private right of action with an opportunity for an employer to cure and an administrative complaint process for violations of recall provisions.

Senate Amendments

1. Make clarifying and technical changes.
2. Remove the definition of "employer" and "separated employee."
3. Revise the number of months that a retail store has to cease operations from 18 to 12 to be exempted from the definition of grocery establishment.
4. Define "job classification" to mean a system for categorizing certain duties into certain jobs.
5. Make it permissive for a court to award reasonable attorney's fees and costs to any employee or employee representative who prevails in an enforcement action.
6. Provide that prior to an employee or employee representative bringing an action in court for a violation of this part, both of the following requirements must be met:
   1. The employee has provided written notice to the employer of the provisions alleged to have been violated and the facts to support the alleged violation.
   2. The employer has not cured the alleged violation within 33 days from receipt of the written notice.
7. Clarify that remedies awarded to a prevailing plaintiff may be recovered by the Labor Commissioner on behalf of the aggrieved employee.
8. Make the assessment of civil penalties provided by this bill permissive.
9. Exempt from this bill a change in control where the total sum of grocery workers employed nationally immediately prior to the change in control by the incumbent and successor employer is less than 300.
10. Strike the recall provision that a separated employee shall have the right to refuse a position offered that is more than 15 miles from their place of residence.

COMMENTS

The last few decades have seen a rise in the consolidation of grocery store chains by mergers and acquisitions. The recent Kroger and Albertsons proposed billion-dollar merger is just one example. Researchers studying past supermarket mergers have identified significant risks for grocery store workers. They argue that the "consolidation of the food industries is what leads to the exploitation of workers… In the past it has led store closings and loss of good jobs.^[1]" In addition, the impact of supermarket consolidation extends to consumers and local communities that rely on and are beholden to food prices. According to the United States (U.S.) Department of Agriculture, the merger comes as food prices have risen precipitously – 11.2% from September 2021 to September 2022.^[2]

According to the Author

"In October 2022, Kroger and Albertsons announced their plans for an unprecedented $25 billion merger. These two grocery giants operate as some of the nation's largest full-service grocery chains, and have retail footprints in nearly every state and most major metropolitan areas. In addition, they employ over 700,000 workers across their numerous banners, with over 50 manufacturing facilities and over 5,000 retail stores.

While Kroger is leading consumers and workers to believe that this merger will result in more access to cheaper foods, a merger between these two companies will instead result in large scale layoffs for workers and grocery stores closing down. Based on the volume of both chains in California, this could result in an estimated 5,750 jobs lost in the Los Angeles region alone. The latter consequence of grocery store closures will contribute to food deserts, occurring rural areas or vulnerable communities. This will result in increased food costs and a reduction in product variety, including seasonal, organic, and climate-friendly plant-based foods for consumers. With already dwindling grocery store numbers, an unregulated merger of this size has very real implications for our grocery store workers and the communities they serve.

AB 647 addresses these concerns by strengthening the existing California Grocery Worker Retention Law, specifically by including warehouse employees in retention laws, and authorizing the Labor Commissioner to enforce a private right of action for aggrieved employees. In addition, this bill adopts a process for recall and rehiring of grocery workers by creating a specific right of recall for employees unable to work due to a transfer and giving employees the right to refuse a transfer or recall without loss of seniority. With this, AB 647 ensures that skilled and trained workers can continue to provide our communities with access to safe food and lessen the economic impact to our social safety net."

The author also points out that this bill will benefit underserved and marginalized communities. "For example, the sponsor, UFCW, has a Southern California chapter that represents over 55,000 workers at Kroger and Albertsons stores, a majority of whom identify as female, 49% of which identify as Hispanic, 7% of which identify as Black, and 6% of which identify as Asian. In a 2022 report conducted by the Economic Roundtable, Kroger employees reported that 78% are food insecure, 67% cannot pay for basic expenses every month, 44% are unable to pay for rent, 29% are below or near the federal poverty level, and 14% are homeless now or in the past year. In sum, this bill would not only help provide job protections for those employees in marginalized communities, but it will also prevent the creation of food deserts – or lack of access to affordable food – which primarily affects our most vulnerable, underserved communities."

Arguments in Support

The United Food and Commercial Workers Western States Council, sponsor of the bill, states, "The number of grocery stores has already declined by 30 percent from 1993 to 2019. The trend is clear: the U.S. grocery supermarket industry is moving toward a tiny handful of nation-spanning corporations.

California is not immune from these national consolidating trends. Again, consider the Albertsons-Kroger merger. There are 734 Albertsons, Safeway, Vons and Ralphs stores in the state. Obviously, these stores are critically important sources for Californians being able to buy food.

However, the merger could force store closures in California neighborhoods where Vons, Albertsons, Ralphs or Safeway overlap. Putting aside stores closing to increase profits, as many as 400 stores could be sold or closed, just to avoid antitrust scrutiny of the merger.

Based on the volume of both chains in California, this could result in an estimated 5,750 grocery jobs lost in the Los Angeles region alone. When federal regulators require the sale of stores as a condition of approving a merger, the results are, at best, uncertain. In 2015, there was the disastrous fall out of the Safeway-Haggen merger where thousands of workers were laid off, 100 stores were shut down, and Haggen declared bankruptcy 4-months after the merger. Indeed, from experience we know grocery store and pharmacy closures will specifically occur in existing food deserts and rural areas. This will not only result in increased food costs and a reduction in product variety, including seasonal, organic, and climate-friendly plant-based foods for consumers. Skilled grocery employees experienced and trained in food safety and public health requirements will need to leave their neighborhoods to seek comparable work elsewhere."

Arguments in Opposition

The California Chamber of Commerce, the California Grocers Association, and the California Retailers Association are opposed and state, "the most recent amendment to limit this bill to grocery employers with 300 employees or more nationwide, includes family owned and independent operators. Depending on the location of the store, stores in Southern California can employ up to 150 employees per store. Family owned and independent operators with three or more stores will be covered under this bill.

Rather than discourage the growth of the independent grocery market, we should be encouraging the access to groceries in communities where there is a need. For these reasons, the undersigned organizations oppose AB 647."

FISCAL COMMENTS

According to the Senate Appropriations Committee, DIR indicates that it would incur first-year costs of $700,000, and $656,000 annually thereafter, to implement its provisions of this bill (Labor Enforcement and Compliance Fund).

This bill could result in an unknown, probably minor increase in penalty revenue (Labor and Workforce Development Fund).

This bill would result in unknown court workload cost pressures by authorizing a cause of action for violation of grocery worker retention laws. (Trial Court Trust Fund, General Fund).

VOTES:

ASM LABOR AND EMPLOYMENT: 5-2-0

YES: Kalra, Haney, Ortega, Reyes, Ward

NO: Flora, Chen

ASM JUDICIARY: 7-3-1

YES: Maienschein, Connolly, Haney, Pacheco, Papan, Reyes, Robert Rivas

NO: Essayli, Dixon, Sanchez

ABS, ABST OR NV: Kalra

ASM APPROPRIATIONS: 11-4-1

YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Papan, Pellerin, Weber, Ortega

NO: Megan Dahle, Dixon, Mathis, Sanchez

ABS, ABST OR NV: Robert Rivas

ASSEMBLY FLOOR: 58-16-6

YES: Addis, Aguiar-Curry, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Connolly, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Holden, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Ortega, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Santiago, Schiavo, Soria, Ting, Valencia, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon

NO: Alanis, Megan Dahle, Davies, Dixon, Essayli, Flora, Vince Fong, Gallagher, Hoover, Mathis, Jim Patterson, Joe Patterson, Sanchez, Ta, Waldron, Wallis

ABS, ABST OR NV: Chen, Lackey, Stephanie Nguyen, Pacheco, Blanca Rubio, Villapudua

UPDATED

VERSION: September 1, 2023

CONSULTANT: Megan Lane / L. & E. / (916) 319-2091 FN: 0002396

1. "Kroger-Albertsons mega-merger could cause more US food deserts, experts say," The Guardian, Matt Krupnick, October 27, 2022, quoting Suzanne Adley, co-director of the Food Chain Workers Alliance. ↑

2. Quoted in the article in the above footnote. ↑

 THIRD READING  

Bill No: AB 647

Author: Holden (D)

Amended: 9/11/23 in Senate

Vote: 21

SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 4-1, 6/22/23

AYES: Cortese, Durazo, Laird, Smallwood-Cuevas

NOES: Wilk

SENATE JUDICIARY COMMITTEE: 8-2, 7/11/23

AYES: Umberg, Allen, Ashby, Durazo, Laird, Min, Stern, Wiener

NOES: Wilk, Niello

NO VOTE RECORDED: Caballero

SENATE APPROPRIATIONS COMMITTEE: 5-2, 9/1/23

AYES: Portantino, Ashby, Bradford, Wahab, Wiener

NOES: Jones, Seyarto

ASSEMBLY FLOOR: 58-16, 5/30/23 - See last page for vote

SUBJECT: Grocery workers

SOURCE: United Food and Commercial Workers, Western States Council

DIGEST:

This bill strengthens the existing recall and retention protections for grocery workers under the Grocery Worker Retention Law by, among other things, (1) adding an enforcement mechanism to hold the employer accountable for violations of grocery worker rights; (2) including distribution centers that meet specified requirements within the definition of “grocery establishment”; and (3) exempting incumbent and successor grocery employers whose sum of employees is less than 300 nationwide, as specified.

Senate Floor Amendments of 9/11/23, among other things, exclude retail stores that cease operations for 12 months or more, instead of 18 months or more; remove the rebuttable presumption that a termination was due to a nondisciplinary reason if it occurred within a year of a change in control; and require employees and their representatives to provide written notice to the employer of alleged violations and provide the employer with a right to cure the alleged violations before bringing actions in superior court.

ANALYSIS:

Existing law:

1. Establishes grocery worker retention provisions requiring the buyer of an existing grocery store to retain employees for a 90-day transition period during which an employee may only be discharged for cause, as specified, and considered for continued employment at the end of the transition period. (Labor Code §2500-2522)
2. Defines “eligible grocery worker” to mean any individual (except managerial, supervisory or confidential employees) 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. (Labor Code §2502 (b))
3. Defines “grocery establishment” to mean a retail store that is over 15,000 square feet in size and that sells primarily household foodstuffs for offsite consumption, including the sale of fresh produce, meats, poultry, fish, deli products, dairy products, canned foods, dry foods, beverages, baked foods, or prepared foods. A grocery establishment does not include a retail store that has ceased operations for six months or more. (Labor Code §2502 (d))
4. Requires an incumbent grocery employer, within 15 days after the execution of the transfer document (defined as the purchase agreement or other document effecting the change in control, as defined), to provide to the successor grocery employer the name, address, date of hire, and employment occupation classification of each eligible grocery worker. (Labor Code §2504 (a))
5. Requires the successor grocery employer to maintain a preferential hiring list of eligible grocery workers identified by the incumbent grocery employer, per the above, and to hire from that list for a period beginning upon the execution of the transfer document and continuing for 90 days after the grocery establishment is fully operational and open to the public. (Labor Code §2504)
6. Requires a successor grocery employer to retain each eligible grocery worker hired for 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. (Labor Code § 2506 (a))
7. Prohibits the successor grocery employer during the 90-day transition employment period from discharging without cause an eligible grocery worker retained per these provisions. (Labor Code § 2506 (c))
8. Requires, at the end of the 90-day transition employment period, the successor grocery employer to make a written performance evaluation for each eligible grocery worker who was retained. If the eligible grocery worker’s performance is satisfactory, the successor grocery employer shall consider offering continued employment under the terms and conditions established by the successor grocery employer and as required by law. (Labor Code § 2506 (d))

This bill:

1. Revises the definition of “eligible grocery worker” to include separated employees.
2. Revises the definition of a “grocery establishment” to:
   1. Include a distribution center owned and operated by a grocery establishment and used primarily to distribute goods to or from its owned stores regardless of its square footage.
   2. Specify that it does not include a retail store that has ceased operations for 12 months or more (increase from the current six months reference in law).
3. Revises the definition of “successor grocery employer” to specify that a successor grocery employer may be the same entity as an incumbent employer when a change in control occurs but the covered employer remains the same.
4. Defines “job classification” as a system for categorizing certain duties into certain jobs.
5. Requires the incumbent grocery employer, in addition to providing the successor employer with specified employee information, to also provide the eligible worker list and contact information, including their cellular telephone number and email address, to any collective bargaining representative.
6. Specifies that if the incumbent grocery employer does not provide, within 15 days, the information on eligible grocer workers as required by law, the successor grocery employer may obtain the information from a collective bargaining representative.
7. Prohibits an employer from refusing to employ, terminating, reducing the compensation of, or otherwise taking adverse action against any employee for seeking to enforce their rights under these provisions, as specified.
8. Provides that an aggrieved employee or an employee representative, such as a collective bargaining representative or nonprofit corporation, may bring an action in the superior court of the State of California for violation and may be awarded the following:
   1. Hiring and reinstatement rights, as specified.
   2. Front pay or back pay for each day during which the violation continues.
   3. The value of the benefits the employee would have received under any benefit plans.
   4. Punitive damages pursuant to Section 3294 of the Civil Code.
   5. Authorizes the court to award reasonable attorney's fees and costs to any employee or employee representative who prevails in an enforcement action.
9. Provides that before an employee or an employee representative brings an action in the superior court for a violation of these provisions, both of the following requirements shall be met: a) the employee has provided written notice to the employer of the provisions of this part alleged to have been violated and the facts to support the alleged violation; and b) the employer has not cured the alleged violation within 33 days from receipt of the written notice.
10. Provides that the Labor Commissioner may recover the following remedies on behalf of an aggrieved employee:
    1. Hiring and reinstatement rights, as specified.
    2. Front pay or back pay for each day during which the violation continues.
    3. The value of the benefits the employee would have received under any benefit plans.
11. Provides that the following civil penalties may be imposed for a violation of these provisions and may be recovered by the Labor Commissioner (LC), deposited into the Labor and Workforce Development Fund, and paid to the employee as compensatory damages:
    1. $100 for each employee whose rights are violated.
    2. An additional amount payable as liquidated damages not to exceed $1,000 per employee, as specified.
12. Provides that the LC may enforce these provisions, including investigating an alleged violation and ordering appropriate temporary relief to mitigate the violation and pending the completion of a full investigation or hearing, through specified procedures in existing law, such as issuing a citation against an employer who violates this section and by filing a civil action.
13. Authorizes a court, in an action brought by the LC for enforcement of these provisions, to issue preliminary and permanent injunctive relief to vindicate the rights of employees. Provides that in a civil action, the LC may also recover all remedies set forth in 8) above.
14. Requires the LC or court, in an administrative or civil action brought pursuant to these provisions, to award interest on all amounts due and unpaid at the rate of interest specified in subdivision (b) of Section 3289 of the Civil Code.
15. Specifies that these remedies, penalties, and procedures are cumulative.
16. Provides that citation procedures for issuing, contesting, and enforcing judgments for citations and civil penalties issued by the LC shall be the same as those set out in Labor Code sections 98.74 or 1197.1, as appropriate.
17. Authorizes the LC to promulgate and enforce rules and regulations and issue determinations and interpretations consistent with and necessary for the implementation of these provisions.
18. Provides that, when parties agree that a collective bargaining agreement supersedes these grocery retention requirements, in whole or in part, per existing law, such agreement must explicitly set forth in clear and unambiguous terms the requirements of these provisions that are superseded.
19. Exempts from all the grocery worker retention provisions, an incumbent grocery employer and the successor grocery employer executing the transfer document with that incumbent grocery employer, if the sum of both of the following is less than 300:
    1. The number of grocery workers employed, immediately prior to the change in control, by the incumbent grocery employer across that employer’s grocery establishments nationwide.
    2. The number of grocery workers employed, immediately prior to the change in control, by the successor grocery employer across that employer’s grocery establishments nationwide.

Background

Need for this bill? According to the author, “In October 2022, Kroger and Albertsons announced their plans for an unprecedented $25 billion merger. These two grocery giants operate as some of the nation’s largest full-service grocery chains, and have retail footprints in nearly every state and most major metropolitan areas. In addition, they employ over 700,000 workers across their numerous banners, with over 50 manufacturing facilities and over 5,000 retail stores.

“While Kroger is leading consumers and workers to believe that this merger will result in more access to cheaper foods, a merger between these two companies will instead result in large scale layoffs for workers and grocery stores closing down. Based on the volume of both chains in California, this could result in an estimated 5,750 jobs lost in the Los Angeles region alone. The latter consequence of grocery store closures will contribute to food deserts, occurring rural areas or vulnerable communities. This will result in increased food costs and a reduction in product variety, including seasonal, organic, and climate-friendly plant-based foods for consumers. With already dwindling grocery store numbers, an unregulated merger of this size has very real implications for our grocery store workers and the communities they serve.”

[NOTE: Please see the Senate Labor, Public Employment and Retirement Committee and Senate Judiciary Committee analyses on this bill for more background information and information on prior and pending related legislation.]

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee:

• DIR indicates that it would incur first-year costs of $700,000, and $656,000 annually thereafter, to implement its provisions of this bill (Labor Enforcement and Compliance Fund).
• This bill could result in an unknown, probably minor increase in penalty revenue (Labor and Workforce Development Fund).
• This bill would result in unknown court workload cost pressures by authorizing a cause of action for violation of grocery worker retention laws. (Trial Court Trust Fund, General Fund).

SUPPORT: (Verified 9/11/23)

United Food and Commercial Workers, Western States Council (source)

Office of the Attorney General

California Employment Lawyers Association

California Federation of Teachers, AFL-CIO

California Food and Farming Network

California Labor Federation, AFL-CIO

California State Legislative Board of the Sheet Metal, Air, Rail and Transportation Workers - Transportation Division

California Teamsters Public Affairs Council

California Work & Family Coalition

Central California Environmental Justice Network

Centro Binacional Para El Desarrollo Indígena Oaxaqueno

CleanEarth4Kids.org

Consumer Attorneys of California

Economic Security Project Action

Indivisible CA: StateStrong

Los Angeles Alliance for a New Economy

Los Angeles County Federation of Labor

Pesticide Action Network

San Mateo Labor Council

TechEquity Collaborative

Western Center on Law and Poverty

OPPOSITION: (Verified 9/11/23)

California Chamber of Commerce

California Grocers Association

California Retailers Association

Westside Council of Chambers of Commerce

ARGUMENTS IN SUPPORT: According to the sponsors of this bill, “the loss of a grocery store and jobs is devastating to communities and local economies. Californians are already struggling with rising food prices and the loss of a job will make it even harder for families to make ends meet, while grocery corporations rake in profits from a merger.”

In rebuttal to the Chamber of Commerce’s letter, the sponsor argues, “The enforcement mechanism provided in this bill will preserve these workers’ jobs, not kill them. Without any private right of action, workers would have to rely on an underfunded and overwhelmed Labor Commissioner’s Office where wait times for workers’ claims average over 505 days.”

ARGUMENTS IN OPPOSITION: Opponents of this bill argue that the changes and additions to existing law are unnecessary, as there is no data that supports the changes. Additionally, they are opposed to the private right of action created by the bill whereby employees, collective bargaining representatives and nonprofit corporations are granted the right to bring actions in superior court for violations and to pursue a broad list of remedies.

ASSEMBLY FLOOR: 58-16, 5/30/23

AYES: Addis, Aguiar-Curry, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Connolly, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Holden, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Ortega, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Santiago, Schiavo, Soria, Ting, Valencia, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon

NOES: Alanis, Megan Dahle, Davies, Dixon, Essayli, Flora, Vince Fong, Gallagher, Hoover, Mathis, Jim Patterson, Joe Patterson, Sanchez, Ta, Waldron, Wallis

NO VOTE RECORDED: Chen, Lackey, Stephanie Nguyen, Pacheco, Blanca Rubio, Villapudua

Prepared by: Margie Estrada / JUD. / (916) 651-4113

9/12/23 18:09:03

**** END ****

 THIRD READING  

Bill No: AB 647

Author: Holden (D)

Amended: 9/1/23 in Senate

Vote: 21

SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 4-1, 6/22/23

AYES: Cortese, Durazo, Laird, Smallwood-Cuevas

NOES: Wilk

SENATE JUDICIARY COMMITTEE: 8-2, 7/11/23

AYES: Umberg, Allen, Ashby, Durazo, Laird, Min, Stern, Wiener

NOES: Wilk, Niello

NO VOTE RECORDED: Caballero

SENATE APPROPRIATIONS COMMITTEE: 5-2, 9/1/23

AYES: Portantino, Ashby, Bradford, Wahab, Wiener

NOES: Jones, Seyarto

ASSEMBLY FLOOR: 58-16, 5/30/23 - See last page for vote

SUBJECT: Grocery workers

SOURCE: United Food and Commercial Workers, Western States Council

DIGEST:

This bill strengthens the existing recall and retention protections for grocery workers under the Grocery Worker Retention Law by, among other things, (1) adding an enforcement mechanism to hold the employer accountable for violations of grocery worker rights; (2) including distribution centers that meet specified requirements within the definition of “grocery establishment”; (3) expanding the definition of “eligible employee” to include a separated employee, as defined; (4) creating a rebuttable presumption that any termination occurring within a year of a change in control was due to a nondisciplinary reason; and (5) exempting incumbent and successor grocery employers whose sum of employees is less than 300 nationwide, as specified.

ANALYSIS:

Existing law:

1. Establishes grocery worker retention provisions requiring the buyer of an existing grocery store to retain employees for a 90-day transition period during which an employee may only be discharged for cause, as specified, and considered for continued employment at the end of the transition period. (Labor Code §2500-2522)
2. Defines “eligible grocery worker” to mean any individual (except managerial, supervisory or confidential employees) 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. (Labor Code §2502 (b))
3. Defines “grocery establishment” to mean a retail store that is over 15,000 square feet in size and that sells primarily household foodstuffs for offsite consumption, including the sale of fresh produce, meats, poultry, fish, deli products, dairy products, canned foods, dry foods, beverages, baked foods, or prepared foods. A grocery establishment does not include a retail store that has ceased operations for six months or more. (Labor Code §2502 (d))
4. Requires an incumbent grocery employer, within 15 days after the execution of the transfer document (defined as the purchase agreement or other document effecting the change in control, as defined), to provide to the successor grocery employer the name, address, date of hire, and employment occupation classification of each eligible grocery worker. (Labor Code §2504 (a))
5. Requires the successor grocery employer to maintain a preferential hiring list of eligible grocery workers identified by the incumbent grocery employer, per the above, and to hire from that list for a period beginning upon the execution of the transfer document and continuing for 90 days after the grocery establishment is fully operational and open to the public. (Labor Code §2504)
6. Requires a successor grocery employer to retain each eligible grocery worker hired for 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. (Labor Code § 2506 (a))
7. Prohibits the successor grocery employer during the 90-day transition employment period from discharging without cause an eligible grocery worker retained per these provisions. (Labor Code § 2506 (c))
8. Requires, at the end of the 90-day transition employment period, the successor grocery employer to make a written performance evaluation for each eligible grocery worker who was retained. If the eligible grocery worker’s performance is satisfactory, the successor grocery employer shall consider offering continued employment under the terms and conditions established by the successor grocery employer and as required by law. (Labor Code § 2506 (d))

This bill:

1. Revises the definition of “eligible grocery worker” to include separated employees.
2. Defines “separated employee” as an employee who was employed by the incumbent grocery employer for 6 months or more in the 12 months preceding the change in control and employment was terminated or suspended by the employer because of a change in control, lack of business, reduction in force, a transfer of more than 15 miles from the employee’s residence, or another economic nondisciplinary reason.
   1. Establishes a rebuttable presumption that any termination occurring within a year of a change in control was due to a nondisciplinary reason.
3. Revises the definition of a “grocery establishment” to:
   1. Include a distribution center owned and operated by a grocery establishment and used primarily to distribute goods to or from its owned stores regardless of its square footage.
   2. Specify that it does not include a retail store that has ceased operations for 18 months or more (increase from the current six months reference in law).
4. Revises the definition of “successor grocery employer” to specify that a successor grocery employer may be the same entity as an incumbent employer when a change in control occurs but the covered employer remains the same.
5. Requires the incumbent grocery employer, in addition to providing the successor employer with specified employee information, to also provide the eligible worker list and contact information, including their cellular telephone number and email address, to any collective bargaining representative.
6. Specifies that if the incumbent grocery employer does not provide, within 15 days, the information on eligible grocer workers as required by law, the successor grocery employer may obtain the information from a collective bargaining representative.
7. Prohibits an employer from refusing to employ, terminating, reducing the compensation of, or otherwise taking adverse action against any laid-off employee for seeking to enforce their rights under these provisions, as specified.
8. Provides that an aggrieved employee or an employee representative, such as a collective bargaining representative or nonprofit corporation, may bring an action in the superior court of the State of California for violation and may be awarded the following:
   1. Hiring and reinstatement rights, as specified.
   2. Front pay or back pay for each day during which the violation continues.
   3. The value of the benefits the employee would have received under any benefit plans.
   4. Punitive damages pursuant to Section 3294 of the Civil Code.
   5. Authorizes the court to award reasonable attorney's fees and costs to any employee or employee representative who prevails in an enforcement action.
9. Authorizes an aggrieved employee or employee representative to file a complaint with the Division of Labor Standards Enforcement (DLSE) for a violation of these provisions and may be awarded remedies as follows:
   1. Hiring and reinstatement rights, as specified.
   2. Front pay or back pay for each day during which the violation continues.
   3. The value of the benefits the employee would have received under any benefit plans.
10. Provides the following civil penalties for a violation of these provisions which shall be recovered by the Labor Commissioner (LC), deposited into the Labor and Workforce Development Fund, and paid to the employee as compensatory damages:
    1. $100 for each employee whose rights are violated.
    2. An additional amount payable as liquidated damages not to exceed $1,000 per employee, as specified.
11. Requires the LC to enforce these provisions, including investigating an alleged violation and ordering appropriate temporary relief to mitigate the violation and pending the completion of a full investigation or hearing, through specified procedures in existing law, such as issuing a citation against an employer who violates this section and by filing a civil action.
12. Authorizes a court, in an action brought by the LC for enforcement of these provisions, to issue preliminary and permanent injunctive relief to vindicate the rights of employees.
13. Authorizes the LC or court, in an administrative or civil action brought pursuant to these provisions, to award interest on all amounts due and unpaid at the rate of interest specified in subdivision (b) of Section 3289 of the Civil Code.
14. Specifies that these remedies, penalties, and procedures are cumulative.
15. Authorizes the DLSE to promulgate and enforce rules and regulations and issue determinations and interpretations consistent with and necessary for the implementation of these provisions.
16. Provides that, when parties agree that a collective bargaining agreement supersedes these grocery retention requirements, per existing law, such waiver must be explicitly set forth in that agreement in clear and unambiguous terms.
17. Exempts from all the grocery worker retention provisions, an incumbent grocery employer and the successor grocery employer executing the transfer document with that incumbent grocery employer, if the sum of both of the following is less than 300:
    1. The number of grocery workers employed, immediately prior to the change in control, by the incumbent grocery employer across that employer’s grocery establishments nationwide.
    2. The number of grocery workers employed, immediately prior to the change in control, by the successor grocery employer across that employer’s grocery establishments nationwide.

Background

Need for this bill? According to the author, “In October 2022, Kroger and Albertsons announced their plans for an unprecedented $25 billion merger. These two grocery giants operate as some of the nation’s largest full-service grocery chains, and have retail footprints in nearly every state and most major metropolitan areas. In addition, they employ over 700,000 workers across their numerous banners, with over 50 manufacturing facilities and over 5,000 retail stores.

“While Kroger is leading consumers and workers to believe that this merger will result in more access to cheaper foods, a merger between these two companies will instead result in large scale layoffs for workers and grocery stores closing down. Based on the volume of both chains in California, this could result in an estimated 5,750 jobs lost in the Los Angeles region alone. The latter consequence of grocery store closures will contribute to food deserts, occurring rural areas or vulnerable communities. This will result in increased food costs and a reduction in product variety, including seasonal, organic, and climate-friendly plant-based foods for consumers. With already dwindling grocery store numbers, an unregulated merger of this size has very real implications for our grocery store workers and the communities they serve.”

[NOTE: Please see the Senate Labor, Public Employment and Retirement Committee analysis on this bill for more background information and information on prior and pending related legislation.]

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee:

• DIR indicates that it would incur first-year costs of $700,000, and $656,000 annually thereafter, to implement its provisions of the bill (Labor Enforcement and Compliance Fund).
• This bill could result in an unknown, probably minor increase in penalty revenue (Labor and Workforce Development Fund).
• This bill would result in unknown court workload cost pressures by authorizing a cause of action for violation of grocery worker retention laws. (Trial Court Trust Fund, General Fund).

SUPPORT: (Verified 9/8/23)

United Food and Commercial Workers, Western States Council (source)

Office of the Attorney General

California Employment Lawyers Association

California Federation of Teachers, AFL-CIO

California Food and Farming Network

California Labor Federation, AFL-CIO

California State Legislative Board of the Sheet Metal, Air, Rail and Transportation Workers - Transportation Division

California Teamsters Public Affairs Council

California Work & Family Coalition

Central California Environmental Justice Network

Centro Binacional Para El Desarrollo Indígena Oaxaqueno

CleanEarth4Kids.org

Consumer Attorneys of California

Economic Security Project Action

Indivisible CA: StateStrong

Los Angeles Alliance for a New Economy

Los Angeles County Federation of Labor

Pesticide Action Network

San Mateo Labor Council

TechEquity Collaborative

Western Center on Law and Poverty

OPPOSITION: (Verified 9/1/23)

California Chamber of Commerce

California Grocers Association

California Retailers Association

Westside Council of Chambers of Commerce

ARGUMENTS IN SUPPORT: According to the sponsors of this bill, “the loss of a grocery store and jobs is devastating to communities and local economies. Californians are already struggling with rising food prices and the loss of a job will make it even harder for families to make ends meet, while grocery corporations rake in profits from a merger.”

In rebuttal to the Chamber of Commerce’s letter, the sponsor argues, “The enforcement mechanism provided in this bill will preserve these workers’ jobs, not kill them. Without any private right of action, workers would have to rely on an underfunded and overwhelmed Labor Commissioner’s Office where wait times for workers’ claims average over 505 days.” Additionally, in response to opponent concerns regarding the rebuttable presumption, the sponsors argue, “the bill establishes a rebuttable presumption, meaning it can be rebutted by evidence to the contrary. Evidence that an employee is dismissed for cause is clearly sufficient to defeat the presumption.”

ARGUMENTS IN OPPOSITION: Opponents of this bill argue that these changes and additions are unnecessary, as there is no data that supports such a drastic change. They argue that, “AB 647 creates a broad definition of “separated employee” that will expand the list of covered workers in the GWRL and create legal liabilities.” This new definition, they argue, “goes further and creates a rebuttable presumption that any termination occurring within a year of a change in control was due to non-disciplinary reasons.” According to the coalition, this new definition “will tie a grocery employers’ hands. In the instance that an ethnic grocer wants to purchase a traditional American grocery store, the ethnic grocer will not be able to hire staff that speaks the language and knows the products their customer base consumes, due to the restrictions of this bill. This bill will most likely impact the growth of independent ethnic grocers who wish to expand to other diverse communities.” Additionally, they argue that AB 647 creates a private right of action by granting employees, collective bargaining representatives and nonprofit corporations the right to bring action in superior court for violations of an employee’s right and has a broad list of remedies.

ASSEMBLY FLOOR: 58-16, 5/30/23

AYES: Addis, Aguiar-Curry, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Connolly, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Holden, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Ortega, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Santiago, Schiavo, Soria, Ting, Valencia, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon

NOES: Alanis, Megan Dahle, Davies, Dixon, Essayli, Flora, Vince Fong, Gallagher, Hoover, Mathis, Jim Patterson, Joe Patterson, Sanchez, Ta, Waldron, Wallis

NO VOTE RECORDED: Chen, Lackey, Stephanie Nguyen, Pacheco, Blanca Rubio, Villapudua

Prepared by: Alma Perez-Schwab / L., P.E. & R. / (916) 651-1556

9/8/23 9:30:54

**** END ****

SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

AB 647 (Holden) - Grocery workers

Bill Summary:

AB 647 would make specified changes to existing recall and retention protections for grocery workers in the Labor Code (the Grocery Worker Retention Law).

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on September 1, 2023

Fiscal Impact:

• DIR indicates that it would incur first-year costs of $700,000, and $656,000 annually thereafter, to implement its provisions of the bill (Labor Enforcement and Compliance Fund).
• The bill could result in an unknown, probably minor increase in penalty revenue (Labor and Workforce Development Fund).
• The bill would result in unknown court workload cost pressures by authorizing a cause of action for violation of grocery worker retention laws. (Trial Court Trust Fund, General Fund).

Author Amendments:

• Clarify that a successor grocery employer may be the same entity as the incumbent employer when a change in control occurs but the covered employer remains the same.
• Expand on the existing 300-employee threshold, exempting successor and incumbent employers from these bill’s provisions if the sum of both their workers employed immediately prior to the change in control is less than 300.
• Strike the provision stating that “any separated employee who is offered a position that is more than 15 miles from their place of residence shall have the right to refuse such recall without a loss of seniority and shall still retain a right to recall based on seniority prior to hiring of any new employees for one year after the separation of employment.”

-- END --

SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

AB 647 (Holden) - Grocery workers

Bill Summary:

AB 647 would make specified changes to existing recall and retention protections for grocery workers in the Labor Code (the Grocery Worker Retention Law).

Fiscal Impact:

• DIR indicates that it would incur first-year costs of $700,000, and $656,000 annually thereafter, to implement its provisions of the bill (Labor Enforcement and Compliance Fund).
• The bill could result in an unknown, probably minor increase in penalty revenue (Labor and Workforce Development Fund).
• The bill would result in unknown court workload cost pressures by authorizing a cause of action for violation of grocery worker retention laws. (Trial Court Trust Fund, General Fund). See Staff Comments for additional details.

Background:

In 2015, the Legislature passed the Grocery Worker Retention Law that provides grocery workers with a 90-day transitional retention period upon change of ownership, control, or operation of the grocery establishment for whom they work. (AB 359, Gonzalez). Specifically, successor grocery employers are required to hire employees from a list of specified eligible grocery workers who worked at the prior establishment. The successor grocery employer is required to maintain a preferential hiring list of eligible grocery workers and must hire from that list for a period beginning upon the 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.

In order to be covered by the protections of the law, eligible grocery workers had to be working for the incumbent grocery employer for at least six months prior to the execution of the document that initiated the change in control. In order to come under the requirements of AB 359, the grocery establishment must be over 15,000 square feet and sell primarily household foodstuffs, as specified. A grocery establishment that ceases operations for six months or longer is not subject to the retention requirements under the law.

Eligible grocery workers must be retained by the successor employer for a transition period of 90 days, however the employer retains their right to discharge the employee for cause. At the end of the 90-day transition employment period, the successor grocery employer is required to make a written performance evaluation of the retained worker and consider offering the worker continued employment. During the 90-day transitional retention period the successor employer can reduce the work force but must retain the workers by seniority within each job classification or pursuant to the collective bargaining agreement.

Proposed Law:

This bill would, among other thing, do the following:

• Revise the definition of “eligible grocery worker” to include a separated employee.
• Define “separated employee” as an employee who was employed by the incumbent grocery employer for six months or more in the 12 months preceding the change in control and whose most recent separation from active service was due to change in control, lack of business, reduction in force, a transfer of more than 15 miles from the employee’s residence, or another economic nondisciplinary reason. Establish a rebuttable presumption that any termination occurring within a year of a change in control was due to a nondisciplinary reason.
• Define “employer” to mean any person, as defined, including a proprietorship, joint venture, corporate officer, or executive, who has 300 or more employees nationwide.
• Revise the definition of a “grocery establishment” to (1) include a distribution center owned and operated by a grocery establishment that is used primarily to distribute goods to or from its owned stores regardless of its square footage, and (2) specify that it does not include a retail store that has ceased operations for 18 months or more (increase from the current six months reference in current law).
• Require the incumbent grocery employer, in addition to providing the successor employer with specified employee information, to also provide the eligible worker list and contact information, including their cellular telephone number and email address, to any collective bargaining representative.
• Provide that any separated employee who is offered a position that is more than 15 miles from their place of residence shall have the right to refuse such recall without a loss of seniority and shall still retain a right to recall based on seniority prior to the hiring of any new employees for one year after the separation from employment.
• Prohibit an employer from refusing to employ, terminating, reducing the compensation of, or otherwise taking adverse action against any laid-off employee for seeking to enforce their rights under these provisions, as specified.
• Provide that an aggrieved employee or an employee representative, such as a collective bargaining representative or nonprofit corporation, may bring an action in the superior court of the State of California for violation and may be awarded the following: (1) hiring and reinstatement rights, as specified, (2) front pay or back pay for each day during which the violation continues, (3) the value of the benefits the employee would have received under any benefit plans, (4) punitive damages pursuant to Section 3294 of the Civil Code, and (5) reasonable attorney's fees and costs to any employee or employee representative who prevails in an enforcement action.
• Authorize an aggrieved employee or employee representative to file a complaint with the Division of Labor Standards Enforcement (DLSE) for a violation of these provisions and may be awarded remedies as follows: (1) hiring and reinstatement rights, as specified, (2) front pay or back pay for each day during which the violation continues, and (3) the value of the benefits the employee would have received under any benefit plans.
• Provide the following civil penalties for a violation of these provisions which shall be recovered by the Labor Commissioner, deposited into the Labor and Workforce Development Fund, and paid to the employee as compensatory damages: (1) $100 for each employee whose rights are violated, and (2) an additional amount payable as liquidated damages not to exceed $1,000 per employee, as specified.
• Require the Labor Commissioner to enforce these provisions, including investigating an alleged violation and ordering appropriate temporary relief to mitigate the violation and pending the completion of a full investigation or hearing, through specified procedures in existing law, such as issuing a citation against an employer who violates this section and by filing a civil action.
• Authorize a court, in an action brought by the Labor Commissioner for enforcement of these provisions, to issue preliminary and permanent injunctive relief to vindicate the rights of employees.
• Authorize the Labor Commissioner or court, in an administrative or civil action brought pursuant to these provisions, to award interest on all amounts due and unpaid at the rate of interest specified in Civil Code section 3289 (b).
• Specify that these remedies, penalties, and procedures are cumulative.
• Authorize DLSE to promulgate and enforce rules and regulations and issue determinations and interpretations consistent with and necessary for the implementation of these provisions.

Related Legislation:

• AB 853 (Maienschein) would prohibit a person from acquiring any voting securities or assets of a retail grocery firm or retail drug firm, as those terms are defined, unless specified written notice is given to the Attorney General at least 180 days before the acquisition is to become effective. The bill would specify information required to be included in the notice, including information required to assess the competitive effects of the proposed acquisition and to assess the economic and community impact of any planned divestiture or store closures. The bill is currently pending in this Committee.
• SB 627 (Smallwood-Cuevas) would establish the Displaced Worker Retention and Transfer Rights Act to (1) prohibit a chain employer (100 or more establishments, as defined) from closing a covered establishment without first giving a displacement notice to workers; (2) require a chain employer to provide workers the opportunity to transfer to a location of the chain within 25 miles of the closing establishment; (3) require chain employers to maintain a preferential transfer list and make job offers based on length of service; (4) prohibit a chain employer from taking adverse action against a covered worker for asserting these rights; and (5) requires the DLSE to enforce these provisions, as specified. The bill is currently pending in the Assembly Appropriations Committee.
• SB 725 (Smallwood-Cuevas) would require a successor grocery employer to provide an eligible grocery employee severance pay equal to one week of pay for each full year of employment with the incumbent grocery employer if the successor grocery employer does not hire an eligible grocery worker following a change in control or does not retain an eligible grocery worker for at least 90 days following the change in control or the eligible grocery worker’s employment commencement date. The provisions of this bill would apply to successor grocery employers and incumbent grocery employers with less than 300 employees combined. The bill is currently pending on the Assembly Floor.
• SB 93 (Committee on Budget and Fiscal Review, Chapter 16, Statutes of 2021) requires hospitality and service industry employers to offer to rehire qualified former employees who were laid off due to the COVID-19 pandemic. These employees must be notified for the same or similar positions as they last held.
• AB 897 (Gonzalez, Chapter 305, Statutes of 2015) specified that AB 359 did not include a retail store that had ceased operations for six months or more.
• AB 359 (Gonzalez, Chapter 212, Statutes of 2015) established the 90-day worker retention requirements upon a change in control of a grocery establishment.

Staff Comments:

It is unknown how many additional actions would be brought as a result of the implementation of this bill.  However, it generally costs about $8,000 to operate a courtroom for one eight-hour day.  Although courts are not funded on the basis of workload, increased pressure on the trial courts and staff may create a need for increased funding for courts from the General Fund to perform existing duties. Numerous trial court operations are funded through the imposition and collection of criminal fines and fees. However, the Legislature has reduced and eliminated criminal fines and fees over the past decade. As a result, the 2023-24 budget includes an ongoing annual allocation of $105 million backfill from the General Fund in order to address declining revenue to the Trial Court Trust Fund.

-- END --

SENATE JUDICIARY COMMITTEE

Senator Thomas Umberg, Chair

2023-2024 Regular Session

Bill No: AB 647 (Author:Holden)

Version: June 26, 2023

Hearing Date: July 11, 2023

Fiscal: Yes

Urgency: No

Consultant: ME

SUBJECT

Grocery workers

DIGEST

This bill strengthens the existing recall and retention protections for grocery workers in the Labor Code (the Grocery Worker Retention Law) by, among other things, adding an enforcement mechanism to hold the employer accountable for violations of grocery worker rights.

EXECUTIVE SUMMARY

In 2015 the Legislature passed the Grocery Worker Retention Law that provides grocery workers with a 90-day transitional retention period upon change of ownership, control, or operation of the grocery establishment for whom they work. (AB 359, Gonzalez, Ch. 212, Stats. 2015). In other words, successor grocery employers are required to hire employees from a list of specified eligible grocery workers who worked at the prior establishment. The successor grocery employer is required to maintain a preferential hiring list of eligible grocery workers and required to must hire from that list for a period beginning upon the 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. In order to be covered by the protections of the law, eligible grocery workers had to be working for the incumbent grocery employer for at least six months prior to the execution of the document that effectuated the change in control. In order to come under the requirements of AB 359 the grocery establishment must be over 15,000 square feet and sell primarily household foodstuffs, as specified. A grocery establishment that ceases operations for six months or longer is not subject to the retention requirements under the law. Eligible grocery workers must be retained by the successor employer for a transition period of 90 days, however the employer retains their right to discharge the employee for cause. At the end of the 90-day transition employment period, the successor grocery employer is required to make a written performance evaluation of the retained worker and consider offering the worker continued employment. During the 90-day transitional retention period the successor employer can reduce the work force but must retain the workers by seniority within each job classification or pursuant to the collective bargaining agreement.

The author and sponsor of this bill assert that a pending merger between Albertsons and Kroger necessitates that the current law be strengthened. The bill establishes enforcement mechanisms to hold the successor employers accountable if they violate the law that protects grocery workers. The bill also strengthens recall and retention provisions by, among other things, requiring retail stores that cease operations for up to 18 months to provide these recall rights. Additionally, the bill provides that former employees, as specified, are also entitled to recall rights.

The bill is sponsored by the United Food and Commercial Workers, Western States Council and is supported by organizations that advocate for and to protect workers. The bill is opposed by the California Chamber of Commerce, the California Grocers Association, and the California Retailers Association. The bill passed out of the Senate Labor, Public Employment and Retirement Committee with a 4 to 1 vote.

PROPOSED CHANGES TO THE LAW

Existing law:

1. Establishes within the Department of Industrial Relations (DIR) and under the direction of the Labor Commissioner, the Division of Labor Standards Enforcement (DLSE) tasked with administering and enforcing labor code provisions concerning wages, hours and working conditions. (Labor Code § 56.) Establishes grocery worker retention provisions requiring the buyer of an existing grocery store to retain employees for a 90-day transition period during which an employee may only be discharged for cause, as specified, and considered for continued employment at the end of the transition period. (Labor Code § 2500-2522.)
2. Defines grocery establishment to mean a retail store that is over 15,000 square feet in size and that sells primarily household foodstuffs for offsite consumption, including the sale of fresh produce, meats, poultry, fish, deli products, dairy products, canned foods, dry foods, beverages, baked foods, or prepared foods. A grocery establishment does not include a retail store that has ceased operations for six months or more. (Labor Code § 2502 (d).)
3. 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. An eligible grocery worker does not include a managerial, supervisory, or confidential employee. (Labor Code § 2502 (b).)
4. Defines transfer document to mean the purchase agreement or other document effecting the change in control. (Labor Code § 2502 (h).)
5. Requires the 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. (Labor Code § 2504 (a).)
6. Requires the successor grocery employer to maintain a preferential hiring list of eligible grocery workers identified by the incumbent grocery employer in 5) above and to hire from that list for a period beginning upon the execution of the transfer document and continuing for 90 days after the grocery establishment is fully operational and open to the public. (Labor Code § 2504 (b).)
7. Requires a successor grocery employer to retain each eligible grocery worker hired pursuant to 6) above for 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. (Labor Code § 2506 (a).)
   
8. Prohibits the successor grocery employer during the 90-day transition employment period from discharging without cause an eligible grocery worker retained pursuant to 6) above. (Labor Code § 2506 (c).)
   
9. Requires, at the end of the 90-day transition employment period, the successor grocery employer to make a written performance evaluation for each eligible grocery worker who was retained. If the eligible grocery worker’s performance during the 90-day transition employment period is satisfactory, the successor grocery employer shall consider offering the eligible grocery worker continued employment under the terms and conditions established by the successor grocery employer and as required by law. (Labor Code § 2506 (d).)
10. 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. (Labor Code §2502 (a).)
    
11. 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. An eligible grocery worker does not include a managerial, supervisory, or confidential employee. (Labor Code §2502 (b).)
    
12. Defines “grocery establishment” to mean a retail store that is over 15,000 square feet in size and that sells primarily household foodstuffs for offsite consumption, including the sale of fresh produce, meats, poultry, fish, deli products, dairy products, canned foods, dry foods, beverages, baked foods, or prepared foods. A grocery establishment does not include a retail store that has ceased operations for six months or more. (Labor Code §2502 (d).)
    
13. Requires an incumbent grocery employer, within 15 days after the execution of the transfer document (defined as the purchase agreement or other document effecting the change in control), to provide to the successor grocery employer the name, address, date of hire, and employment occupation classification of each eligible grocery worker. (Labor Code §2504 (a).)
    
14. Requires the successor grocery employer to maintain a preferential hiring list of eligible grocery workers identified by the incumbent grocery employer, per the above, and to hire from that list for a period beginning upon the execution of the transfer document and continuing for 90 days after the grocery establishment is fully operational and open to the public. (Labor Code §2504 (b).)
    
15. Requires a successor grocery employer to retain each eligible grocery worker hired for 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. (Labor Code § 2506 (a).)
    
16. Prohibits the successor grocery employer during the 90-day transition employment period from discharging without cause an eligible grocery worker retained per these provisions. (Labor Code § 2506 (c).)
    
17. Requires, at the end of the 90-day transition employment period, the successor grocery employer to make a written performance evaluation for each eligible grocery worker who was retained. If the eligible grocery worker’s performance during the 90-day transition employment period is satisfactory, the successor grocery employer shall consider offering the eligible grocery worker continued employment under the terms and conditions established by the successor grocery employer and as required by law. (Labor Code § 2506 (d).)

This bill:

1. Revises the definition of “eligible grocery worker” to include separated employee.
2. Defines “separated employee” as an employee who was employed by the incumbent grocery employer for 6 months or more in the 12 months preceding the change in control and whose most recent separation from active service was due to change in control, lack of business, reduction in force, a transfer of more than 15 miles from the employee’s residence, or another economic nondisciplinary reason.
   1. Establishes a rebuttable presumption that any termination occurring within a year of a change in control was due to a nondisciplinary reason.
3. Defines “employer” to mean any person, as defined, including a proprietorship, joint venture, corporate officer, or executive, who has 300 or more employees nationwide.
4. Revises the definition of a “grocery establishment” to:
   1. include a distribution center owned and operated by a grocery establishment that is used primarily to distribute goods to or from its owned stores regardless of its square footage;
   2. specify that it does not include a retail store that has ceased operations for 18 months or more (increase from the current six months reference in current law).
5. Requires the incumbent grocery employer, in addition to providing the successor employer with specified employee information, to also provide the eligible worker list and contact information, including their cellular telephone number and email address, to any collective bargaining representative.
6. Specifies that if the incumbent grocery employer does not provide, within 15 days, the information on eligible grocery workers as required by law, the successor grocery employer may obtain the information from a collective bargaining representative.
7. Provides that any separated employee who is offered a position that is more than 15 miles from their place of residence shall have the right to refuse such recall without a loss of seniority and shall still retain a right to recall based on seniority prior to the hiring of any new employees for one year after the separation from employment.
8. Prohibits an employer from refusing to employ, terminating, reducing the compensation of, or otherwise taking adverse action against any laid-off employee for seeking to enforce their rights under these provisions, as specified.
9. Provides that an aggrieved employee or an employee representative, such as a collective bargaining representative or nonprofit corporation, may bring an action in the superior court of the State of California for violation and may be awarded the following:
   1. hiring and reinstatement rights, as specified;
   2. front pay or back pay for each day during which the violation continues;
   3. the value of the benefits the employee would have received under any benefit plans;
   4. punitive damages pursuant to Section 3294 of the Civil Code; and
   5. reasonable attorney's fees and costs to any employee or employee representative who prevails in an enforcement action.
10. Authorizes an aggrieved employee or employee representative to file a complaint with the Division of Labor Standards Enforcement (DLSE) for a violation of these provisions and may be awarded remedies as follows:
    1. hiring and reinstatement rights, as specified;
    2. front pay or back pay for each day during which the violation continues; and
    3. the value of the benefits the employee would have received under any benefit plans.
11. Provides the following civil penalties for a violation of these provisions which shall be recovered by the Labor Commissioner, deposited into the Labor and Workforce Development Fund, and paid to the employee as compensatory damages:
    1. $100 for each employee whose rights are violated; and
    2. an additional amount payable as liquidated damages not to exceed $1,000 per employee, as specified.
12. Requires the Labor Commissioner to enforce these provisions, including investigating an alleged violation and ordering appropriate temporary relief to mitigate the violation and pending the completion of a full investigation or hearing, through specified procedures in existing law, such as issuing a citation against an employer who violates this section and by filing a civil action.
13. Authorizes a court, in an action brought by the Labor Commissioner for enforcement of these provisions, to issue preliminary and permanent injunctive relief to vindicate the rights of employees.
14. Authorizes the Labor Commissioner or court, in an administrative or civil action brought pursuant to these provisions, to award interest on all amounts due and unpaid at the rate of interest specified in Civil Code section 3289 (b).
15. Specifies that these remedies, penalties, and procedures are cumulative.
16. Authorizes the DLSE to promulgate and enforce rules and regulations and issue determinations and interpretations consistent with and necessary for the implementation of these provisions.
17. Requires, when parties agree that a collective bargaining agreement supersedes the existing grocery retention requirements, as specified, the waiver to be explicitly set forth in the agreement in clear and unambiguous terms.

COMMENTS

1. Stated need for the bill

According to the author:

In October 2022, Kroger and Albertsons announced their plans for an unprecedented $25 billion merger. These two grocery giants operate as some of the nation’s largest full-service grocery chains, and have retail footprints in nearly every state and most major metropolitan areas. In addition, they employ over 700,000 workers across their numerous banners, with over 50 manufacturing facilities and over 5,000 retail stores.

While Kroger is leading consumers and workers to believe that this merger will result in more access to cheaper foods, a merger between these two companies will instead result in large scale layoffs for workers and grocery stores closing down. Based on the volume of both chains in California, this could result in an estimated 5,750 jobs lost in the Los Angeles region alone. The latter consequence of grocery store closures will contribute to food deserts, occurring rural areas or vulnerable communities. This will result in increased food costs and a reduction in product variety, including seasonal, organic, and climate-friendly plant-based foods for consumers. With already dwindling grocery store numbers, an unregulated merger of this size has very real implications for our grocery store workers and the communities they serve.

AB 647 addresses these concerns by strengthening the existing California Grocery Worker Retention Law, specifically including warehouse employees in retention laws and authorizing the Labor Commissioner to enforce a private right of action for aggrieved employees. In addition, this bill adopts a process for recall and rehiring of grocery workers by requiring the use of a preferential hiring list for successor grocery employers, creating a specific right of recall for employees unable to work due to a transfer, and giving employees the right to refuse a transfer or recall without loss of seniority. With this, AB 647 ensures that skilled and trained workers can continue to provide our communities with access to safe food and lessen the economic impact to our social safety net.

1. Current law protects grocery workers through the Grocery Worker Retention Law

In 2015 the Legislature passed the Grocery Worker Retention Law that provides grocery workers with a 90-day transitional retention period upon change of ownership, control, or operation of the grocery establishment for whom they work. (AB 359, Gonzalez, Ch. 212, Stats. 2015). In other words, successor grocery employers are required to hire employees from a list of specified eligible grocery workers who worked at the prior establishment. The successor grocery employer is required to maintain a preferential hiring list of eligible grocery workers and required to hire from that list for a period beginning upon the 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. In order to be covered by the protections of the law, eligible grocery workers had to be working for the incumbent grocery employer for at least six months prior to the execution of the document that effectuated the change in control. In order to come under the requirements of AB 359 the grocery establishment must be over 15,000 square feet and sell primarily household foodstuffs, as specified. A grocery establishment that ceases operations for six months or longer is not subject to the retention requirements under the law. Eligible grocery workers must be retained by the successor employer for a transition period of 90 days, however the employer retains their right to discharge the employee for cause. At the end of the 90-day transition employment period, the successor grocery employer is required to make a written performance evaluation of the retained worker and consider offering the worker continued employment. During the 90-day transitional retention period the successor employer can reduce the work force but must retain the workers by seniority within each job classification or pursuant to the collective bargaining agreement.

3. This bill closes loopholes that allow grocery stores to skirt the intent of the original Grocery Worker Retention Law

This bill expands the protections initially established by AB 359 in several ways. The bill expands the types of positions covered by the recall and retention requirements to include warehouse workers and those who are unable to accept a position due to a transfer to a location more than 15 miles from their home without any loss of seniority.

The bill also attempts to close a potential loophole by modifying the exemption for retail stores that have been inoperative for at least six months. Under existing law, a retailer that has been closed for six months or more is exempted from any recall or retention requirements. The bill excludes a grocery establishment that ceases operations for 18 months or longer, thus replacing the 6 month period under current law with an 18 month period. Proponents contend that grocery establishments remodel the newly acquired grocery establishments and commonly take longer than 6 months to reopen thus thwarting the protections established under the Grocery Worker Retention Law. Changing the exemption period to 18 months would close this loophole and protect more grocery workers.

The bill also covers distribution centers if they are owned and operated by grocery establishments that are used primarily to distribute goods to or from their owned stores regardless of the distribution center’s square footage. The bill also makes employees who were employed by the incumbent grocery employer for 6 months or more in the 12 months preceding the change in control and whose employment was terminated or suspended by the employer because of a change in control, lack of business, reduction in force, a transfer of more than 15 miles from the employee’s residence, or another economic nondisciplinary reason eligible for the protections of the Grocery Worker Retention Law. The bill establishes a rebuttable presumption that any termination occurring within a year of a change in control was due to a nondisciplinary reason. This provision exists to protect workers who are let go of through no fault of their own during a period of time leading up to a transfer of ownership. Given the fact that grocery mergers or acquisitions usually occur for economic reasons, it seems reasonable to presume that workers are let go of or seek other employment due to economic reasons, and not necessarily because they want to leave the grocery establishment. For these reasons the rebuttable presumption is arguably needed. The new employer could rebut the presumption if the termination was for reasons such as cause.

The bill also grants separated employees who are offered positions more than 15 miles from their place of residence the right to refuse an offer of employment that is more than 15 miles from the employee’s residence without a loss of seniority. Separated employees are granted a right to recall based on seniority before hiring any new employees for one year. The bill prohibits an employer from taking adverse action against a person for seeking to enforce their rights.

The bill preserves the provision in the Grocery Worker Retention Law that provides that parties may, by collective bargaining agreement, agree to have the agreement supersede the provisions of the Grocery Worker Retention Law.

4. Enforcement mechanisms to effectuate compliance with the Grocery Worker Retention Law

This bill authorizes a private right of action for aggrieved employees, as well as an administrative complaint process via the DLSE and the Labor Commissioner. The proposed private right of action authorizes an aggrieved employee, or their employee representative (collective bargaining representative or nonprofit corporation), to bring an action for a violation of either the employees’ recall or retention rights in the superior court. A successful claim would entitle the employee to remedies, including front and back pay calculated at the highest of various pay rates, the value of any benefits the employee would have received, and punitive damages. The bill requires a court to award reasonable attorney’s fees and costs to any employee or employee representative who prevails in an enforcement action. The new administrative process through the Labor Commissioner would require an employee, or their employee representative, to file a complaint with DLSE, and for the agency’s investigation to be conducted pursuant to existing statutory procedures. The remedies available through an administrative complaint are similar in scope to those available through a claim made in court, but the bill adds civil penalties for claims made through the Labor Commissioner. The amounts recovered under this provision are directed to the Labor and Workforce Development Fund, and subsequently distributed to the employee as compensatory damages. A court is also authorized to order injunctive relief in a claim brought by the Labor Commissioner.

The author has agreed to amend the bill to ensure that it is not mandatory to award a prevailing employee or prevailing employee representative reasonable attorney’s fees and costs.

Amendment

The court shall may award reasonable attorney’s fees and costs to any employee or employee representative who prevails in an enforcement action.

5. Proponents arguments in support of the bill

A coalition of supporters, led by the California Labor Federation, AFL-CIO writes:

When federal regulators require the sale of stores as a condition of approving a merger, the results are, at best, uncertain. In 2015, there was the disastrous fall out of the Safeway-Haggen merger where thousands of workers were laid off, 100 stores were shut down, and Haggen declared bankruptcy four months after the merger. Indeed, from experience we know grocery store and pharmacy closures will specifically occur in existing food deserts and rural areas. This will result in skilled grocery employees experienced and trained in food safety and public health requirements will need to leave their neighborhoods to seek comparable work elsewhere.

Current law requires that a successor grocery employer retain their current workforce for a minimum of 90 days after a change in ownership, and requires hospitality and service industry employers to offer to rehire qualified former employees who were laid off due to the COVID-19 pandemic. But, there are loopholes and gaps that need to be filled.

AB 647 will strengthen this existing law to the benefit of our neighborhoods by closing a loophole that incentivizes successor grocery employers to keep their stores closed for longer than six months after the finalization of a merger or acquisition, expand the grocery worker retention law to include warehousing, and add enforcement provisions that allow for Labor Commissioner enforcement and grant a private right of action for aggrieved employees. Additionally, AB 647 adopts a specific process to recall and rehire grocery workers by creating a specific right of recall for employees unable to work due to a transfer of more than 15 miles from their place of residence, give workers the right to refuse a transfer or recall that is more than 15 miles from their place of residence without loss of seniority while maintaining recall rights for one year from separation, and create a preferential hiring list based on seniority, among other criteria, for the successor grocery employer to utilize.

Communities need to retain, to the extent possible, experienced grocery retail workers with knowledge of proper sanitation procedures, health regulations and laws, and an experience-based understanding of the clientele and communities in which the retailer is located.

6. Opponents arguments against the bill

The California Chamber of Commerce opposes this bill and has designated it a job killer. The California Chamber of Commerce writes:

AB 647 creates a private right of action by granting employees, collective bargaining representatives and nonprofit corporations the right to bring action in superior court for violations of an employee’s right. The bill has a broad list of remedies including, hiring and reinstatement rights, front pay or back pay for each day during which the violation continues, the value of the benefits the employee would have received under any benefit plans, and attorney’s fees and costs to any employee or employee representative.

The bill expands the list of eligible grocery workers covered by worker retention and private right of action conditions to include a newly-defined “separated employee.” The broad definition of “separated employee” includes any employee employed by a grocer impacted by a change in ownership that was employed for 6 months or more in the 12 months preceding the change in store control and whose most recent separation was due to change in control, lack of business, reduction in force, or transfer. Under AB 647 grocers would now have to reenlist “separated employees” within an arbitrary 15-mile radius of their residence.

The bill also creates a rebuttable presumption that any employee’s termination within a year of change of ownership was due to nondisciplinary reasons. It then goes further by requiring the successor grocer to offer these employees right of refusal to return for employment. This requirement could force the successor grocer to rehire employees dismissed for cause. The bill ties a grocer employer’s hands in hiring decisions, which may negatively impact current grocery employees during the transition period.

SUPPORT

United Food and Commercial Workers Western States Council (sponsor)

California Employment Lawyers Association

California Food and Farming Network
California Labor Federation, AFL-CIO

California State Legislative Board of the Sheet Metal, Air, Rail and Transportation Workers – Transportation Division

California Work and Family Coalition

Consumer Attorneys of California

Los Angeles Alliance for a New Economy
San Mateo Central Labor Council, AFL-CIO

TechEquity Collaborative

OPPOSITION

California Chamber of Commerce

California Grocers Association

California Retailers Association

RELATED LEGISLATION

Pending Legislation:

SB 627 (Smallwood-Cuevas, 2023) establishes the Displaced Worker Retention and Transfer Rights Act to (1) prohibit a chain employer (100 or more establishments, as defined) from closing a covered establishment without first giving a displacement notice to workers; (2) require a chain employer to provide workers the opportunity to transfer to a location of the chain within 25 miles of the closing establishment; (3) require chain employers to maintain a preferential transfer list and make job offers based on length of service; (4) prohibit a chain employer from taking adverse action against a covered worker for asserting these rights; and (5) requires the Division of Labor Standards Enforcement to enforce these provisions, as specified.

SB 627 is pending before the Assembly Judiciary Committee.

SB 725 (Smallwood-Cuevas, 2023) requires a successor grocery employer to provide an eligible grocery employee severance pay equal to one week of pay for each full year of employment with the incumbent grocery employer if the successor grocery employer does not hire an eligible grocery worker following a change in control or does not retain an eligible grocery worker for at least 90 days following the change in control or the eligible grocery worker’s employment commencement date. The provisions of this bill would apply to successor grocery employers and incumbent grocery employers with less than 300 employees combined. AB 725 is pending before the Assembly Labor and Employment Committee.

Prior Legislation: AB 359 (Gonzalez, Ch. 212, Stats. 2015) See Comment 2.

PRIOR VOTES:

Senate Labor, Public Employment and Retirement Committee (Ayes 4, Noes 1)

Assembly Floor (Ayes 58, Noes 16)

Assembly Appropriations Committee (Ayes 11, Noes 4)

Assembly Judiciary Committee (Ayes 7, Noes 3)

Assembly Labor and Employment Committee (Ayes 5, Noes 2)

**************

SENATE COMMITTEE ON LABOR, PUBLIC EMPLOYMENT AND RETIREMENT

Senator Dave Cortese, Chair

2023 - 2024 Regular

Bill No: AB 647 Hearing Date: June 22, 2023

SUBJECT: Grocery workers

KEY ISSUES

Should grocery worker retention provisions in existing law be revised to include employees of distribution centers and specified “separated employees” who would now be required to be retained by a successor grocery employer for a 90-day transition employment period when a change in control occurs?

Should there be a rebuttable presumption that any employee termination occurring within a year of a change in control of a grocery establishment was due to a nondisciplinary reason?

Should the grocery worker retention provisions apply to any person, as defined, including a proprietorship, joint venture, corporate officer, or executive, who has 300 or more employees nationwide?

Should the Legislature create a private right of action and administrative complaint process, and provide specified remedies, for enforcement of violations of the grocery worker retention provisions?

ANALYSIS

Existing law:

1. Establishes grocery worker retention provisions requiring the buyer of an existing grocery store to retain employees for a 90-day transition period during which an employee may only be discharged for cause, as specified, and considered for continued employment at the end of the transition period. (Labor Code §2500-2522)
2. 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. (Labor Code §2502 (a))
3. 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. An eligible grocery worker does not include a managerial, supervisory, or confidential employee. (Labor Code §2502 (b))
4. Defines “grocery establishment” to mean a retail store that is over 15,000 square feet in size and that sells primarily household foodstuffs for offsite consumption, including the sale of fresh produce, meats, poultry, fish, deli products, dairy products, canned foods, dry foods, beverages, baked foods, or prepared foods. A grocery establishment does not include a retail store that has ceased operations for six months or more. (Labor Code §2502 (d))
5. Requires an incumbent grocery employer, within 15 days after the execution of the transfer document (defined as the purchase agreement or other document effecting the change in control), to provide to the successor grocery employer the name, address, date of hire, and employment occupation classification of each eligible grocery worker. (Labor Code §2504 (a))
6. Requires the successor grocery employer to maintain a preferential hiring list of eligible grocery workers identified by the incumbent grocery employer, per the above, and to hire from that list for a period beginning upon the execution of the transfer document and continuing for 90 days after the grocery establishment is fully operational and open to the public. (Labor Code §2504 (b))
7. Requires a successor grocery employer to retain each eligible grocery worker hired for 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. (Labor Code § 2506 (a))
8. Prohibits the successor grocery employer during the 90-day transition employment period from discharging without cause an eligible grocery worker retained per these provisions. (Labor Code § 2506 (c))
9. Requires, at the end of the 90-day transition employment period, the successor grocery employer to make a written performance evaluation for each eligible grocery worker who was retained. If the eligible grocery worker’s performance during the 90-day transition employment period is satisfactory, the successor grocery employer shall consider offering the eligible grocery worker continued employment under the terms and conditions established by the successor grocery employer and as required by law.
   (Labor Code § 2506 (d))

This bill:

Definitions

1. Revises the definition of “eligible grocery worker” to include separated employee.
2. Defines “separated employee” as an employee who was employed by the incumbent grocery employer for 6 months or more in the 12 months preceding the change in control and whose most recent separation from active service was due to change in control, lack of business, reduction in force, a transfer of more than 15 miles from the employee’s residence, or another economic nondisciplinary reason.
   1. Establishes a rebuttable presumption that any termination occurring within a year of a change in control was due to a nondisciplinary reason.
3. Defines “employer” to mean any person, as defined, including a proprietorship, joint venture, corporate officer, or executive, who has 300 or more employees nationwide.
4. Revises the definition of a “grocery establishment” to:
   1. include a distribution center owned and operated by a grocery establishment that is used primarily to distribute goods to or from its owned stores regardless of its square footage.
   2. specify that it does not include a retail store that has ceased operations for 18 months or more (increase from the current six months reference in current law).

Retention Provisions

1. Requires the incumbent grocery employer, in addition to providing the successor employer with specified employee information, to also provide the eligible worker list and contact information, including their cellular telephone number and email address, to any collective bargaining representative.
2. Specifies that if the incumbent grocery employer does not provide, within 15 days, the information on eligible grocer workers as required by law, the successor grocery employer may obtain the information from a collective bargaining representative.
3. Provides that any separated employee who is offered a position that is more than 15 miles from their place of residence shall have the right to refuse such recall without a loss of seniority and shall still retain a right to recall based on seniority prior to the hiring of any new employees for one year after the separation from employment.

Enforcement Provisions

1. Prohibits an employer from refusing to employ, terminating, reducing the compensation of, or otherwise taking adverse action against any laid-off employee for seeking to enforce their rights under these provisions, as specified.
2. Provides that an aggrieved employee or an employee representative, such as a collective bargaining representative or nonprofit corporation, may bring an action in the superior court of the State of California for violation and may be awarded the following:
   1. Hiring and reinstatement rights, as specified.
   2. Front pay or back pay for each day during which the violation continues.
   3. The value of the benefits the employee would have received under any benefit plans.
   4. Punitive damages pursuant to Section 3294 of the Civil Code.
   5. Reasonable attorney's fees and costs to any employee or employee representative who prevails in an enforcement action.
3. Authorizes an aggrieved employee or employee representative to file a complaint with the Division of Labor Standards Enforcement (DLSE) for a violation of these provisions and may be awarded remedies as follows:
   1. Hiring and reinstatement rights, as specified.
   2. Front pay or back pay for each day during which the violation continues.
   3. The value of the benefits the employee would have received under any benefit plans.
4. Provides the following civil penalties for a violation of these provisions which shall be recovered by the Labor Commissioner (LC), deposited into the Labor and Workforce Development Fund, and paid to the employee as compensatory damages:
   1. One hundred dollars ($100) for each employee whose rights are violated.
   2. An additional amount payable as liquidated damages not to exceed one thousand dollars ($1,000) per employee, as specified.
5. Requires the Labor Commissioner (LC) to enforce these provisions, including investigating an alleged violation and ordering appropriate temporary relief to mitigate the violation and pending the completion of a full investigation or hearing, through specified procedures in existing law, such as issuing a citation against an employer who violates this section and by filing a civil action.
6. Authorizes a court, in an action brought by the LC for enforcement of these provisions, to issue preliminary and permanent injunctive relief to vindicate the rights of employees.
7. Authorizes the LC or court, in an administrative or civil action brought pursuant to these provisions, to award interest on all amounts due and unpaid at the rate of interest specified in subdivision (b) of Section 3289 of the Civil Code.
8. Specifies that these remedies, penalties, and procedures are cumulative.
9. Authorizes the DLSE to promulgate and enforce rules and regulations and issue determinations and interpretations consistent with and necessary for the implementation of these provisions.
10. Requires, when parties agree that a collective bargaining agreement supersedes the existing grocery retention requirements, as specified, the waiver to be explicitly set forth in the agreement in clear and unambiguous terms.

COMMENTS

1. Background:

Effective January 1, 2016, AB 359 (Gonzalez, Chapter 212, Statutes of 2015) requires the buyer of an existing grocery store to retain employees for at least 90 days from the date the grocery store is fully operational and open to the public under the new owner. An amendment to the statute by AB 897 (Gonzalez, Chapter 305, Statutes of 2015) specifies that the law does not apply to retail stores that have ceased operations for six months or more. Proponents of the measures argued that good middle class grocery jobs and the benefits that come with them should not be lost just because shareholders of billion-dollar retailers seek to make even more profits through a Wall Street-style merger.

In 1990, a Wall Street Journal Pulitzer Prize winning article took a look at the impact of the 1986 Safeway buy-out which returned to its new buyers $7.2 billion from an initial $129 million investment. According to the article, “…63,000 managers and workers were cut loose from Safeway through store sales or layoffs. 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 the part-time work force.” (“Safeway Buy-Out? Take a Trip down Memory Lane,” March 5, 2014)

As noted in the Assembly Labor and Employment Committee analysis of this bill, “The last few decades have seen a rise in the consolidation of grocery store chains by mergers and acquisitions. The recent Kroger and Albertsons proposed billion-dollar merger is just one example. Researchers studying past supermarket mergers have identified significant risks for grocery store workers. They argue that the “consolidation of the food industries is what leads to the exploitation of workers… In the past it has led store closings and loss of good jobs.^[1]” In addition, the impact of supermarket consolidation extends to consumers and local communities that rely on and are beholden to food prices. According to the U.S. Department of Agriculture, the merger comes as food prices have risen precipitously—11.2% from September 2021 to September 2022.^[2]”

Additionally, according to a report by Food & Water Watch, an advocacy organization fighting for safe food, clean water and a livable climate, “the research shows an alarming trend towards fewer, bigger stores. From 1993 to 2019, the number of grocery stores nationwide declined by roughly 30 percent, as the combined market share of the four largest grocery retailers tripled to 69 percent.”^[3]

2. Need for this bill?

According to the author, “In October 2022, Kroger and Albertsons announced their plans for an unprecedented $25 billion merger. These two grocery giants operate as some of the nation’s largest full-service grocery chains, and have retail footprints in nearly every state and most major metropolitan areas. In addition, they employ over 700,000 workers across their numerous banners, with over 50 manufacturing facilities and over 5,000 retail stores.

While Kroger is leading consumers and workers to believe that this merger will result in more access to cheaper foods, a merger between these two companies will instead result in large scale layoffs for workers and grocery stores closing down. Based on the volume of both chains in California, this could result in an estimated 5,750 jobs lost in the Los Angeles region alone. The latter consequence of grocery store closures will contribute to food deserts, occurring rural areas or vulnerable communities. This will result in increased food costs and a reduction in product variety, including seasonal, organic, and climate-friendly plant-based foods for consumers. With already dwindling grocery store numbers, an unregulated merger of this size has very real implications for our grocery store workers and the communities they serve.

AB 647 addresses these concerns by strengthening the existing California Grocery Worker Retention Law, specifically by expanding retention laws to include warehouse employees in retention laws and authorizing the Labor Commissioner to enforce a private right of action for aggrieved employees. In addition, this bill adopts a process for recall and rehiring of grocery workers by requiring the use of a preferential hiring list for successor grocery employers. With this, AB 647 ensures that skilled and trained workers can continue to provide our communities with access to safe food and lessen the economic impact to our social safety net.”

3. Proponent Arguments:

The California Labor Federation is in support of the measure arguing that, “the pandemic demonstrated that grocery store workers are essential to the health of the economy and communities. Grocery store workers are trained to ensure access to safe, sanitary food—both on shelves and prepared. Distribution warehouse workers make sure food is delivered to stock grocery shelves. Fully stocked and staffed grocery stores improve community health by providing basic staples, like milk, produce, and bread, at lower prices than liquor or convenience stores. Retail pharmacists provide access to medications and health care services that became even more important during the pandemic as hospitals grappled with the crisis.”

According to the sponsors of the measure, the United Food and Commercial Workers, the community-devastating consequences of the proposed Albertsons-Kroger merger underscores the need for AB 647. They note, “the loss of a grocery store and jobs is devastating to communities and local economies. Californians are already struggling with rising food prices and the loss of a job will make it even harder for families to make ends meet, while grocery corporations rake in profits from a merger.”

In rebuttal to the Chamber of Commerce’s letter, the sponsors argue, “the Chamber’s letter labels the bill a “job killer” because “it establishes a private right of action. Yet, this enforcement mechanism is for a very narrow set of circumstances under a law that only covers very large grocery establishments. The enforcement mechanism provided in this bill will preserve these workers’ jobs, not kill them. Without any private right of action, workers would have to rely on an underfunded and overwhelmed Labor Commissioner’s Office where wait times for workers’ claims average over 505 days.” Additionally, in response to opponent concerns regarding the rebuttable presumption, the sponsors argue, “the bill establishes a rebuttable presumption, meaning it can be rebutted by evidence to the contrary. Evidence that an employee is dismissed for cause is clearly sufficient to defeat the presumption.”

The sponsors conclude by stating that, “this bill is aimed at ensuring that “[e]xperienced grocery retail workers with knowledge of proper sanitation procedures, health regulations and laws, and an experience-based understanding of the clientele and communities in which the retailer is located” are retained in their communities to the extent possible, to their enduring benefit.”

4. Opponent Arguments:

The California Chamber of Commerce, the California Grocers Association and the California Retailers Association are opposed to the measure arguing that the changes and additions to the Grocery Worker Retention Law (GWRL) are unnecessary as there is no data that supports such a drastic change. They argue that, “AB 647 creates a broad definition of “separated employee” that will expand the list of covered workers in the GWRL and create legal liabilities.” This new definition, they argue, “goes further and creates a rebuttable presumption that any termination occurring within a year of a change in control was due to non-disciplinary reasons.” According to the coalition, this new definition “will tie a grocery employers’ hands. In the instance that an ethnic grocer wants to purchase a traditional American grocery store, the ethnic grocer will not be able to hire staff that speaks the language and knows the products their customer base consumes, due to the restrictions of this bill. This bill will most likely impact the growth of independent ethnic grocers who wish to expand to other diverse communities.”

Additionally, they argue, “AB 647 creates a private right of action by granting employees, collective bargaining representatives and nonprofit corporations the right to bring action in superior court for violations of an employee’s right. The bill has a broad list of remedies including, hiring and reinstatement rights, front pay or back pay for each day during which the violation continues, the value of the benefits the employee would have received under any benefit plans, and attorney’s fees and costs to any employee or employee representative.

Finally, the most recent amendment to limit this bill to grocery employers with 300 employees or more nationwide, includes family owned and independent operators. Depending on the location of the store, stores in Southern California can employ up to 150 employees per store. Family owned and independent operators with three or more stores will be covered under this bill. Rather than discourage the growth of the independent grocery market, we should be encouraging the access to groceries in communities where there is a need.”

5. Staff Comments:

As noted above, this bill would expand the list of eligible grocery workers to include a “separated employee” who would now be eligible to be retained per the grocery worker retention provisions in existing law. This new category of workers includes an employee “whose most recent separation from active service was due to the change in control, lack of business, reduction in force, a transfer of more than 15 miles from the employee’s residence, or another economic nondisciplinary reason.” Opponents of the measure note that employee separation occurs for many reasons, including by choice, and that this bill would require grocers to reenlist “separated employees,” even if that employee separated by choice. To address this concern, the author may wish to amend the bill to revise the definition of “separated employee” to clarify that it applies only to terminations by the employer for the specified reasons.

6. Double referral:

This bill has been double referred and if approved by this Committee today, will be sent to Senate Judiciary Committee for a hearing.

7. Prior and Related Legislation:

AB 853 (Maienschein, 2023) would prohibit a person from acquiring any voting securities or assets of a retail grocery firm or retail drug firm, as those terms are defined, unless specified written notice is given to the Attorney General at least 180 days before the acquisition is to become effective. The bill would specify information required to be included in the notice, including information required to assess the competitive effects of the proposed acquisition and to assess the economic and community impact of any planned divestiture or store closures. This bill is pending in Senate Judiciary Committee.

SB 627 (Smallwood-Cuevas, 2023) establishes the Displaced Worker Retention and Transfer Rights Act to (1) prohibit a chain employer (100 or more establishments, as defined) from closing a covered establishment without first giving a displacement notice to workers; (2) require a chain employer to provide workers the opportunity to transfer to a location of the chain within 25 miles of the closing establishment; (3) require chain employers to maintain a preferential transfer list and make job offers based on length of service; (4) prohibit a chain employer from taking adverse action against a covered worker for asserting these rights; and (5) requires the DLSE to enforce these provisions, as specified. This bill is pending in Assembly Labor and Employment Committee.

SB 725 (Smallwood-Cuevas, 2023) would require a successor grocery employer to provide an eligible grocery employee severance pay equal to one week of pay for each full year of employment with the incumbent grocery employer if the successor grocery employer does not hire an eligible grocery worker following a change in control or does not retain an eligible grocery worker for at least 90 days following the change in control or the eligible grocery worker’s employment commencement date. The provisions of this bill would apply to successor grocery employers and incumbent grocery employers with less than 300 employees combined. This bill is pending in Assembly Labor and Employment Committee.

SB 93 (Committee on Budget and Fiscal Review) Chapter 16, Statutes of 2021 requires hospitality and service industry employers to offer to rehire qualified former employees who were laid off due to the COVID-19 pandemic. These employees must be notified for the same or similar positions as they last held.

AB 897 (Gonzalez – Chapter 305, Statutes of 2015) specified that AB 359 did not include a retail store that had ceased operations for six months or more.

AB 359 (L. Gonzalez, Chapter 212, Statutes of 2015) established the 90-day worker retention requirements upon a change in control of a grocery establishment.

SUPPORT

United Food and Commercial Workers, Western States Council (Sponsor)

California Employment Lawyers Association
California Food and Farming Network
California Labor Federation, AFL-CIO
California State Legislative Board of the Sheet Metal, Air, Rail and Transportation Workers -

Transportation Division (SMART-TD)
California Work & Family Coalition
Central California Environmental Justice Network
Centro Binacional Para El Desarrollo Indígena Oaxaqueno
Consumer Attorneys of California
Economic Security Project Action

Indivisible CA: StateStrong
Los Angeles Alliance for A New Economy (LAANE)
Los Angeles County Federation of Labor
Pesticide Action Network
San Mateo Labor Council
TechEquity Collaborative
Western Center on Law and Poverty

OPPOSITION

California Chamber of Commerce
California Grocers Association
California Retailers Association
Westside Council of Chambers of Commerce (WC3)

-- END --

1. “Kroger-Albertsons mega-merger could cause more US food deserts, experts say,” The Guardian, Matt Krupnick, October 27, 2022, quoting Suzanne Adley, co-director of the Food Chain Workers Alliance. ↑

2. Quoted in the article in the above footnote. ↑

3. https://www.foodandwaterwatch.org/2021/11/15/as-food-prices-soar-new-report-details-vast-grocery-industry-consolidation-crisis/#:%7E:text=The%20research%20also%20shows%20an,retailers%20tripled%20to%2069%20percent ↑

ASSEMBLY THIRD READING

ATR Bill Id:AB 647

Author:(Holden)

As Amended Ver:May 18, 2023

Majority vote

SUMMARY

Revises recall rights for grocery workers when there is a change of control in a grocery establishment to: 1) cover workers of a grocery distribution center; 2) provide that a separated employee who is offered a position more than 15 miles from their residence has a right to refuse such recall; and 3) create a private right of action and administrative complaint process for violations of these provisions.

Major Provisions

Definitions:

1. Provides that an employer means any person, as defined, including a proprietorship, joint venture, corporate officer, or executive, who has 300 or more employees nationwide.
2. Revises the definition of eligible grocery worker to include a separated employee.
3. Revises the definition of a grocery establishment to include a distribution center owned and operated by a grocery establishment that is used primarily to distribute goods to and from its owned stores.
4. Defines separated employee to mean an employee who was employed by the incumbent grocery employer for six months or more in the 12 months preceding the change in control and whose most recent separation from active service was due to change in control, lack of business, reduction in force, a transfer of more than 15 miles from the employee's residence, or another economic nondisciplinary reason.
   1. There is a rebuttable presumption that any termination of an employee occurring within a year of a change in control was due to a nondisciplinary reason.

Recall Provisions:

1. Requires the incumbent grocery employer to also provide the eligible grocery worker list to any collective bargaining representative.
2. Provides that any separated employee who is offered a position that is more than 15 miles from their place of residence shall have the right to refuse such recall without a loss of seniority and shall still retain a right to recall based on seniority prior to hiring of any new employees for one year after the separation from employment.

Enforcement Provisions:

1. Prohibits an employer from refusing to employ, terminating, reducing the compensation of, or otherwise taking adverse action against any laid-off employee for seeking to enforce their rights under this part, as specified.
2. Provides that an aggrieved employee or an employee representative, as specified, may bring an action in the superior court of the State of California for violations of this part and may be awarded various remedies, including but not limited to:
   1. Hiring and reinstatement rights pursuant to this part, as specified.
   2. Front pay or back pay for each day during which the violation continues.
   3. The value of the benefits the employee would have received under any benefit plans.
   4. Reasonable attorney's fees and costs to any employee or employee representative who prevails in an enforcement action.
3. Provides that an aggrieved employee or employee representative may file a complaint with the Division of Labor Standards Enforcement (DLSE) for a violation of this section and may be awarded the remedies in 8) (a-c) above.
4. Provides for civil penalties for a violation of this part, as specified, which shall be recovered by the Labor Commissioner (LC), deposited into the Labor and Workforce Development Fund, and paid to the employee as compensatory damages.
5. Requires the LC to enforce this section, including investigating an alleged violation and ordering appropriate temporary relief to mitigate the violation and pending the completion of a full investigation or hearing, through specified procedures, such as issuing a citation against an employer who violates this section and by filing a civil action.
6. Authorizes a court, in an action brought by the LC for enforcement of this section, to issue preliminary and permanent injunctive relief.
7. Authorizes the DLSE to promulgate and enforce rules and regulations and issue determinations and interpretations consistent with and necessary for the implementation of this section.

COMMENTS

The last few decades have seen a rise in the consolidation of grocery store chains by mergers and acquisitions. The recent Kroger and Albertsons proposed billion-dollar merger is just one example. Researchers studying past supermarket mergers have identified significant risks for grocery store workers. They argue that the "consolidation of the food industries is what leads to the exploitation of workers… In the past it has led store closings and loss of good jobs.^[1]" In addition, the impact of supermarket consolidation extends to consumers and local communities that rely on and are beholden to food prices. According to the United States (U.S.) Department of Agriculture, the merger comes as food prices have risen precipitously – 11.2% from September 2021 to September 2022.^[2]

According to the Author

"In October 2022, Kroger and Albertsons announced their plans for an unprecedented $25 billion merger. These two grocery giants operate as some of the nation's largest full-service grocery chains, and have retail footprints in nearly every state and most major metropolitan areas. In addition, they employ over 700,000 workers across their numerous banners, with over 50 manufacturing facilities and over 5,000 retail stores.

While Kroger is leading consumers and workers to believe that this merger will result in more access to cheaper foods, a merger between these two companies will instead result in large scale layoffs for workers and grocery stores closing down. Based on the volume of both chains in California, this could result in an estimated 5,750 jobs lost in the Los Angeles region alone. The latter consequence of grocery store closures will contribute to food deserts, occurring rural areas or vulnerable communities. This will result in increased food costs and a reduction in product variety, including seasonal, organic, and climate-friendly plant-based foods for consumers. With already dwindling grocery store numbers, an unregulated merger of this size has very real implications for our grocery store workers and the communities they serve.

AB 647 addresses these concerns by strengthening the existing California Grocery Worker Retention Law, specifically by including warehouse employees in retention laws, and authorizing the Labor Commissioner to enforce a private right of action for aggrieved employees. In addition, this bill adopts a process for recall and rehiring of grocery workers by creating a specific right of recall for employees unable to work due to a transfer and giving employees the right to refuse a transfer or recall without loss of seniority. With this, AB 647 ensures that skilled and trained workers can continue to provide our communities with access to safe food and lessen the economic impact to our social safety net."

The author also points out that the bill will benefit underserved and marginalized communities. "For example, the sponsor, UFCW, has a Southern California chapter that represents over 55,000 workers at Kroger and Albertsons stores, a majority of whom identify as female, 49% of which identify as Hispanic, 7% of which identify as Black, and 6% of which identify as Asian. In a 2022 report conducted by the Economic Roundtable, Kroger employees reported that 78% are food insecure, 67% cannot pay for basic expenses every month, 44% are unable to pay for rent, 29% are below or near the federal poverty level, and 14% are homeless now or in the past year. In sum, this bill would not only help provide job protections for those employees in marginalized communities, but it will also prevent the creation of food deserts – or lack of access to affordable food – which primarily affects our most vulnerable, underserved communities."

Arguments in Support

The United Food and Commercial Workers Western States Council, sponsor of the bill, states, "The number of grocery stores has already declined by 30 percent from 1993 to 2019. The trend is clear: the U.S. grocery supermarket industry is moving toward a tiny handful of nation-spanning corporations.

California is not immune from these national consolidating trends. Again, consider the Albertsons-Kroger merger. There are 734 Albertsons, Safeway, Vons and Ralphs stores in the state. Obviously, these stores are critically important sources for Californians being able to buy food.However, the merger could force store closures in California neighborhoods where Vons,Albertsons, Ralphs or Safeway overlap. Putting aside stores closing to increase profits, as manyas 400 stores could be sold or closed, just to avoid antitrust scrutiny of the merger.

Based on the volume of both chains in California, this could result in an estimated 5,750 grocery jobs lost in the Los Angeles region alone. When federal regulators require the sale of stores as a condition of approving a merger, the results are, at best, uncertain. In 2015, there was the disastrous fall out of the Safeway-Haggen merger where thousands of workers were laid off, 100 stores were shut down, and Haggen declared bankruptcy 4-months after the merger. Indeed, from experience we know grocery store and pharmacy closures will specifically occur in existing food deserts and rural areas. This will not only result in increased food costs and a reduction in product variety, including seasonal, organic, and climate-friendly plant-based foods for consumers. Skilled grocery employees experienced and trained in food safety and public health requirements will need to leave their neighborhoods to seek comparable work elsewhere."

Arguments in Opposition

The California Chamber of Commerce, the California Grocers Association, and the California Retailers Association are opposed and state, "Several provisions of AB 647 contain overly broad definitions of critical terms, which will lead to confusion in implementation and wide-sweeping impacts. As an example, the bill proposes to expand the list of eligible grocery workers privy to worker retention and private right of action conditions to include "separate[d] employees." It further defines separated employees as any employee who was employed by the incumbent grocer for 6 months or more in the 12 months preceding the change in store control, and whose most recent separation was due to change in control, lack of business, reduction in force, or transfer. Employee separation occurs for a wide range of reasons, including by choice. Under AB 647, a successor grocer would have to reenlist separated employees within an arbitrary 15 miles radius of their residence, even if that employee separated on their own accord. It would cause a tiering system that may disenfranchise current grocery employees during the transition period or limit the ability for a successor grocer to tailor their employees and services to respond to the needs of specific communities, including hiring culturally competent staff."

FISCAL COMMENTS

According to the Assembly Appropriations Committee:

1. Costs of less than approximately $700,000 in the first year and approximately $656,000 annually thereafter to DLSE to enforce grocery worker retention laws through administrative procedures or the courts (special fund).
2. Annual cost pressures (General Fund (GF) or Trial Court Trust Fund) of an unknown amount, potentially in the low hundreds of thousands of dollars or more, to the courts in additional workload. This bill authorizes a cause of action for violation of grocery worker retention laws. It is unclear how many actions may be filed statewide, but the estimated workload cost of one hour of court time is $1,000. If 10 cases are filed statewide resulting in 20 hours of court time for each case, costs would be approximately $200,000. Although courts are not funded on the basis of workload, increased pressure on staff and the TCTF may create a need for increased court funding from the GF to perform existing duties. The Governor's 2023-24 state budget already proposes $109.3 million in ongoing GF revenue to continue backfilling the TCTF for expected revenue declines.

VOTES

ASM LABOR AND EMPLOYMENT: 5-2-0

YES: Kalra, Haney, Ortega, Reyes, Ward

NO: Flora, Chen

ASM JUDICIARY: 7-3-1

YES: Maienschein, Connolly, Haney, Pacheco, Papan, Reyes, Robert Rivas

NO: Essayli, Dixon, Sanchez

ABS, ABST OR NV: Kalra

ASM APPROPRIATIONS: 11-4-1

YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Papan, Pellerin, Weber, Ortega

NO: Megan Dahle, Dixon, Mathis, Sanchez

ABS, ABST OR NV: Robert Rivas

UPDATED

VERSION: May 18, 2023

CONSULTANT: Megan Lane / L. & E. / (916) 319-2091 FN: 0000576

1. "Kroger-Albertsons mega-merger could cause more US food deserts, experts say," The Guardian, Matt Krupnick, October 27, 2022, quoting Suzanne Adley, co-director of the Food Chain Workers Alliance. ↑

2. Quoted in the article in the above footnote. ↑

Date of Hearing: May 10, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

ABPCA Bill Id:AB 647

Author:(Holden) – As Amended Ver:March 30, 2023

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill expands grocery worker retention laws by requiring a successor grocery employer to retain workers for a minimum of 120 days, instead of 90 days, and establishing new enforcement mechanisms through the court system or the Division of Labor Standards Enforcement (DLSE).

Specifically, this bill:

1. Revises the definition of “grocery establishment” to include a distribution center owned and operated by a grocery establishment and exclude a retail store that has ceased operations for 18 months or more, instead of six months or more.
2. Requires, upon change in control of a grocery establishment, a successor grocery employer to hire from a list of incumbent eligible grocery workers for 120 days, instead of 90 days, after the establishment is fully operational and open to the public and retain the worker for at least 120 days, instead of 90 days, after the worker’s commencement date.
3. Grants a separated employee who is offered a position more than 15 miles from their place of residence the right to refuse that offer of employment without losing seniority. The separated employee retains, for one year, a right to recall based on seniority, before a new employee can be hired. A “separated employee” is an employee who was separated from active service by the incumbent grocery employer due to an economic non-disciplinary reason.
4. Prohibits an employer from taking adverse action against a laid-off grocery employee seeking to enforce the above-described rights.
5. Authorizes an aggrieved employee or employee representative to bring an action in superior court for violation of these rights and establishes specified remedies, including back pay and benefits, punitive damages, and recovery of reasonable attorney’s fees and costs.
6. Requires DLSE (also known as the Labor Commissioner) to enforce these rights and establishes specified remedies, including back pay and benefits. An employer violating these rights is subject to a $100 civil penalty per employee, as well as liquidated damages of $500 per employee, per day until the violation is cured, paid to the employee as compensatory damages. DLSE enforcement includes administrative procedures or filing a civil action.
7. Establishes joint and several liability for a controlling private fund that is a controlling person of a grocery establishment.

FISCAL EFFECT:

1. Costs of approximately $700,000 in the first year and approximately $656,000 annually thereafter to DLSE to enforce grocery worker retention laws through administrative procedures or the courts (special fund).
2. Annual cost pressures (General Fund (GF) or Trial Court Trust Fund) of an unknown amount, potentially in the low hundreds of thousands of dollars or more, to the courts in additional workload. This bill authorizes a cause of action for violation of grocery worker retention laws. It is unclear how many actions may be filed statewide, but the estimated workload cost of one hour of court time is $1,000. If 10 cases are filed statewide resulting in 20 hours of court time for each case, costs would be approximately $200,000. Although courts are not funded on the basis of workload, increased pressure on staff and the TCTF may create a need for increased court funding from the GF to perform existing duties. The Governor’s 2023-24 state budget already proposes $109.3 million in ongoing GF revenue to continue backfilling the TCTF for expected revenue declines.

COMMENTS:

1. Proposed Grocery Store Merger. In October 2022, Kroger announced its plan to purchase Albertsons in a $24.6 billion deal. Kroger and Albertsons own 302 and 593 stores, respectively, in California. As part of its proposal to the Federal Trade Commission, Kroger announced a preemptive divestiture plan to sell a portion of grocery stores in a given geographic area to other retailers, thus maintaining sufficient competition within the area. This proposed merger has drawn significant attention and criticism from federal and state regulators, as well as consumer advocacy groups, evaluating the merger’s impact.
2. Purpose. The author intends to strengthen the existing California Grocery Worker Retention Law to address the following concerns:

While Kroger is leading consumers and workers to believe that this merger will result in more access to cheaper foods, a merger between these two companies will instead result in large scale layoffs for workers and grocery stores closing down. Based on the volume of both chains in California, this could result in an estimated 5,750 jobs lost in the Los Angeles region alone. The latter consequence of grocery store closures will contribute to food desserts, occurring [in] rural areas or vulnerable communities.

1. Support and Opposition. This bill is sponsored by the United Food and Commercial Workers (UFCW), Western States Council, and supported by other labor organizations and economic justice groups. UFCW argues this bill “enacts new reforms and closes current loopholes” to prevent mass layoffs of grocery workers and pharmacy staff that would “abruptly and irrevocably compel skilled workers to seek employment elsewhere, draining neighborhoods of their essential skills.”

This bill is opposed by business organizations led by the California Grocers Association, which argues this bill’s provisions are “redundant with existing employee protections offered, without sufficient data to substantiate them,” and will “dramatically discourage growth of the grocery industry, and conversely, exacerbate workforce opportunities in the future.”

1. Existing Grocery Worker Recall and Retention Laws. Prior to the enactment of AB 359 (Gonzalez), Chapter 212, Statutes of 2015, a grocery retailer that purchased another store often terminated the employees who worked at that store. AB 359 provided continuity by requiring the successor grocery employer to recall (or rehire) employees from a list eligible employees provided by the purchased store, beginning upon the execution of the transfer document until 90 days after the successor store reopened to the public. Recalled employees must also be retained by the successor store for a minimum of 90 days.

This bill extends both of these 90-day requirements to 120 days and expands protections to warehouse workers and workers unable to accept a transfer position at a location more than 15 miles from their home. This bill also closes an alleged loophole exempting a store that has been closed for at least six months from recall and retention requirements, by extending the exemption timeframe to 18 months. Most notably, this bill proposes significant new enforcement mechanisms authorizing a private right of action for aggrieved employees, as well as an administrative complaint process through DLSE. Potential remedies include back pay, punitive damages, attorney’s fees, and civil penalties redistributed to the worker as compensatory damages.

1. Related Legislation. AB 853 (Maienschein) requires a party intending to acquire a retail grocery or drug store to submit written notice, including an economic assessment of any planned divestiture or store closures, to the Attorney General at least 180 days before the acquisition is effective. AB 853 is pending hearing in this committee.

SB 627 (Smallwood-Cuevas) requires an employer, for one year after closure of a covered establishment, to provide all covered workers the opportunity to remain employed by the employer and transfer to another chain location within 25 miles of the covered establishment. SB 627 is pending on the Senate Committee on Appropriations’ suspense file.

SB 725 (Smallwood-Cuevas) requires a successor grocery employer to provide an incumbent eligible grocery worker with severance pay equal to one of week pay for each full year of employment by the incumbent grocery employer, if the worker is not rehired and retained. SB 725 is pending on Senate Third Reading.

Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081

Date of Hearing: March 28, 2023

ASSEMBLY COMMITTEE ON JUDICIARY

Brian Maienschein, Chair

ABPCA Bill Id:AB 647

Author:(Holden) – As Amended Ver:March 16, 2023

As Proposed to be Amended

SUBJECT: Grocery workers

KEY ISSUES:

1. IN ORDER TO PROVIDE INCREASED STABILITY FOR EMPLOYEES OF LARGE GROCERY STORES ACQUIRED IN SPECIFIED TRANSACTIONS, SHOULD THE EXISTING RECALL AND RETENTION PROVISIONS FOR GROCERY WORKERS IN THE LABOR CODE BE EXTENDED FROM 90 DAYS TO 120 DAYS?
2. IN ORDER TO ENCOURAGE THE GREATEST DEGREE OF COMPLIANCE, AND TO PROVIDE REMEDIES TO AFFECTED EMPLOYEES IN THE EVENT COMPLIANCE IS NOT ACHIEVED, SHOULD THE LEGISLATURE ESTABLISH A PRIVATE RIGHT OF ACTION FOR AGGRIEVED EMPLOYEES AND AN ADMINISTRATIVE COMPLAINT PROCESS AVAILABLE THROUGH THE LABOR COMMISSIONER FOR VIOLATIONS OF THE RECALL AND RETENTION REQUIREMENTS?

SYNOPSIS

In 2015, the Legislature passed AB 359 (Gonzalez), which addressed the prevalent practice at the time of grocery retailers that purchased or acquired other stores (referred to as successor grocery retailer, or successor) and terminating the employees of the grocery retailer that was purchased or acquired (referred to as the incumbent grocery retailer, or incumbent). AB 359 established requirements that the successor must recall, or rehire, employees from a list of eligible employees provided by the incumbent for 90 days after the successor reopens the purchased establishment to the public. Additionally, pursuant to AB 359, the successor retailer must retain eligible employees for a minimum of 90 days. While AB 359 was certainly a landmark bill in its own right, a pending merger between Kroger and Albertsons, two of America’s largest grocery conglomerates, has highlighted a need to update the law to further strengthen protections for impacted grocery workers.

This bill proposes modifications to existing grocery worker retention laws. Specifically, the bill proposes to increase the period during which a successor grocery employer must hire from the eligible grocery list and retain those same workers from 90 to 120 days. The bill also establishes two enforcement mechanisms: a private right of action for aggrieved employees or their representative, and an administrative complaint process through the Labor Commissioner, with accompanying remedies for each. As proposed to be amended, the bill modifies the existing exemption from the recall and retention provisions for establishments that have been closed for six months or more to stores that have been closed for 18 months or more.

This bill is sponsored by the United Food and Commercial Workers, Western States Council and is supported by a broad coalition of workers’ rights and legal services advocates. It is opposed by the California Chamber of Commerce, the California Grocers Association, and the California Retailers Association. The bill was previously heard in the Assembly Committee on Labor and Employment which approved the bill by a vote of 5-2.

SUMMARY: Increases the recall and retention periods under existing law for grocery workers affected by the purchase or sale of a grocery retailer from 90 to 120 days, and creates a private right of action for aggrieved employers as well as a right of action for the Labor Commissioner to enforce the proposed provisions. Specifically, this bill:

1. Defines the following for the purpose of this bill:
   1. “Change in control” means any sale, purchase, assignment, acquisition, transfer, contribution, or other disposition of all or substantially all of the assets, cash on hand, 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.
   2. “Controlling person” means a person who directly or indirectly owns, controls, or holds with power to vote, including through coordination with other persons, 20 percent or more of the outstanding voting interests of a corporation.
   3. “Controlling private fund” means a private fund that directly or through an affiliate becomes a control person with respect to a grocery establishment.
   4. “Eligible grocery worker” includes a separated employee, but does not include a managerial, supervisory, or confidential employee.
   5. “Grocery establishment” includes a distribution center owned and operated by a grocery establishment that is used primarily to distribute goods to or from its own store regardless of its square footage. A grocery establishment does not include a retail store that has ceased operation for 18 months.
   6. “Separated employee” means an employee who was employed by the incumbent grocery employer for 6 months or more in the 12 months preceding the change in control and whose most recent separation from active service was due to change in control, lack of business, reduction in force, a transfer of more than 15 miles from the employee’s residence, or another economic nondisciplinary reason. There is a rebuttable presumption that any termination occurring within a year of a change in control was due to a nondisciplinary reason.
2. Requires an incumbent grocery store, within 15 days after the execution of the transfer document, to provide to the successor grocery employer and any collective bargaining representative the name, address, date of hire, employment occupation classification, and, if known, the cellular telephone number and email address of each eligible grocery worker.
3. Authorizes the successor grocery employer to obtain the information from a collective bargaining representative if the incumbent grocery employer does not provide the information specified in 2) within 15 days.
4. Increases the period of time during which a successor grocery employer must hire from the eligible grocery worker list described in 2) from 90 to 120 days.
5. Grants any separated employee who is offered a position that is more than 15 miles from their place of residence the right to refuse such recall without a loss of seniority, and retains a right to recall based on seniority prior to hiring of any new employees for one year after the separation from employment.
6. Increases the period of time during which a successor grocery employer must retain each eligible grocery worker hired pursuant to 4) from 90 to 120 days.
   1. Makes conforming changes to existing law.
7. Prohibits an employer from refusing to employ, terminate, reduce the compensation of, or otherwise take adverse action against any laid-off employee for seeking to enforce their rights under the provisions of this bill. Makes the section applicable to an employee who mistakenly, but in good faith, alleges noncompliance with the provisions.
8. Authorizes an aggrieved employee or an employee representative, such as a collective bargaining representative or nonprofit corporation, to bring an action in the superior court of the State of California for violations of the provisions of this bill.
9. Authorizes the following remedies for a successful claim under 8):
   1. Hiring and reinstatement rights pursuant to the provisions of this bill. For violations of the retention provision, the 120-day transition employment period does not commence until the eligible grocery worker’s employment commencement date with the successor grocery employer.
   2. Front pay and back pay for each day during which the violation continues, which shall be calculated at a rate of compensation not less than the highest of any of the following rates:
      1. The average regular rate of pay received by the employee during the last three years of the employee’s employment in the same job classification.
      2. The most recent regular rate received by the employee while employed by the employer.
      3. The regular rate of pay received by the employee during the last three years of that employee’s employment in the same job classification.
   3. The value of the benefits the employee would have received under any benefit plans.
   4. Punitive damages pursuant to existing provisions of the Civil Code.
   5. Requires a court to award reasonable attorney’s fees and costs to any employee or employee representative who prevails in an enforcement action and to an employer who prevails and obtains a court determination that the employee’s lawsuit was frivolous.
10. Authorizes the Division of Labor Standards to enforce the provisions of this bill as follows:
    1. Authorizes an aggrieved employee or employee representative to file a complaint with the division for a violation of the provisions of this bill and authorizes the following remedies:
       1. Hiring and reinstatement rights pursuant to the provisions of this bill. For violations of the retention provision, the 120-day transition employment period does not commence until the eligible grocery worker’s employment commencement date with the successor grocery employer.
       2. Front pay and back pay for each day during which the violation continues, which shall be calculated at a rate of compensation not less than the highest of any of the following rates:
          1. The average regular rate of pay received by the employee during the last three years of the employee’s employment in the same job classification.
          2. The most recent regular rate received by the employee while employed by the employer.
          3. The regular rate of pay received by the employee during the last three years of that employee’s employment in the same job classification.
       3. The value of the benefits the employee would have received under any benefit plans.
    2. Makes an employer, agent of an employer, or other person who violates this part or causes a violation of this part liable for civil penalties as follows:
       1. $100 for each employee whose rights under these provisions are violated.
       2. An additional $500 per employee, for each day the rights of an employee under this part are violated and continuing until the violation is cured, which shall be recovered by the Labor Commissioner, deposited into the Labor and Workforce Development Fund, and paid to the employee as compensatory damages.
    3. Requires the Labor Commissioner to enforce the provisions of this bill, including investigating an alleged violation and ordering appropriate temporary relief to mitigate the violation and pending the completion of a full investigation or hearing, through the procedures set forth in existing provisions of the Labor Code, including by issuing a citation against an employer who violates this section and by filing a civil action.
    4. Authorizes a court to issue preliminary and permanent injunctive relief to vindicate the rights of employees in an action brought by the Labor Commissioner.
    5. Authorizes the Division of Labor Standards Enforcement to promulgate and enforce rules and regulations and issue determinations and interpretations consistent with and necessary for the implementation of this section.
11. Makes a controlling private fund and any holder of an active interest in a controlling private fund jointly and severally liable for all liabilities created by this part of each grocery establishment for which the controlling private fund is a controlling person, and for all liabilities of any affiliate of each grocery store establishment.
12. Authorizes parties subject to the provisions of this bill, by collective bargaining agreement, to provide that the agreement supersedes the requirements of the provisions, in whole or in part, if the waiver is explicitly set forth in the agreement in clear and unambiguous terms.

EXISTING LAW:

1. Defines grocery establishment to mean a retail store that is over 15,000 square feet in size and that sells primarily household foodstuffs for offsite consumption, including the sale of fresh produce, meats, poultry, fish, deli products, dairy products, canned foods, dry foods, beverages, baked foods, or prepared foods. A grocery establishment does not include a retail store that has ceased operations for six months or more. (Labor Code Section 2502 (d). Unless otherwise noted all references are to the Labor Code.)
2. 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. An eligible grocery worker does not include a managerial, supervisory, or confidential employee. (Section 2502 (b).)
3. Defines transfer document to mean the purchase agreement or other document effecting the change in control. (Section 2502 (h).)
4. Requires the 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. (Section 2504 (a).)
5. Requires the successor grocery employer to maintain a preferential hiring list of eligible grocery workers identified by the incumbent grocery employer in 4) above and to hire from that list for a period beginning upon the execution of the transfer document and continuing for 90 days after the grocery establishment is fully operational and open to the public. (Section 2504 (b).)
6. Requires a successor grocery employer to retain each eligible grocery worker hired pursuant to 5) above for 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. (Section 2506 (a).)
7. Prohibits the successor grocery employer during the 90-day transition employment period from discharging without cause an eligible grocery worker retained pursuant to 6) above. (Section 2506 (c).)
8. Requires, at the end of the 90-day transition employment period, the successor grocery employer to make a written performance evaluation for each eligible grocery worker who was retained. If the eligible grocery worker’s performance during the 90-day transition employment period is satisfactory, the successor grocery employer shall consider offering the eligible grocery worker continued employment under the terms and conditions established by the successor grocery employer and as required by law. (Section 2506 (d).)

FISCAL EFFECT: As currently in print this bill is keyed fiscal.

COMMENTS: In October 2022, Kroger announced its plan to purchase Albertsons in a blockbuster deal valued at $24.6 billion. Kroger owns and operates nearly 3,000 stores nationwide, including Ralphs and Food 4 Less. On its own, Kroger employs 420,000 employees. Albertsons, which owns and operates stores such as Safeway and Vons in addition to several other regionally branded stores employs nearly 300,000 workers and operates approximately 2,300 stores across the country. In California, Kroger and Albertsons own 302 and 593 stores, respectively. (California State Impact, Kroger, available at https://www.thekrogerco.com/wp-content/uploads/2022/01/Kroger-FactSheet-California.pdf, and Number of Albertsons Companies stores in the United States as of February 2022, by state, Statista, available at https://www.statista.com/statistics/1167508/albertsons-operating-stores-by-state-us/.) The merger of these two grocery titans has, unsurprisingly, drawn significant attention and criticism from state and federal regulators. Since the announcement of the merger, the Federal Trade Commission (FTC) has initiated its regulatory review process of the proposal and the merger is facing significant scrutiny from state and federal lawmakers, as well as consumer advocacy groups, seeking to fully evaluate the impact of the merger. (Alina Selyukh, Kroger and Albertsons plan merger to combine 2 largest supermarket chains, National Public Radio (October 14, 2022) available at https://www.npr.org/2022/10/14/1129014897/kroger-and-albertsons-plan-merger-to-combine-2-largest-supermarket-chains.) As part of its proposal to the FTC, Kroger has announced a preemptive divestiture plan, which would see Kroger sell off a portion of grocery stores in a given geographic area to other retailers in order to maintain sufficient competition within that area. Most recently, the plan appears to propose divestiture of approximately 650 Albertsons stores. (Kroger-Albertsons Divestiture Bid Aims to Head Off Challenge (1), Dan Papscun, Bloomberg Law (October 14, 2022) available at https://news.bloomberglaw.com/antitrust/kroger-albertsons-divestiture-plan-is-bid-to-deflect-regulators.)

The proposed merge coincides with a growing level of food insecurity for low and middle income Americans. While some of the financial inaccessibility of healthy food and fresh produce is due to nationwide inflation levels, there is concern that the pending merger will further exacerbate several issues. Moreover, an additional potential consequence of the divestiture is the ultimate failure of the newly separated and resold stores, resulting in even less access to grocery retailers. These concerns are in addition to potential job loss for the workers employed by the separated stores. Many of the vulnerable workers are considered low-income, with the average employee at an Albertsons-operated store in California earning $36,011 annually. (Albertsons Companies Salaries in California, Zippia: The Career Expert, available at https://www.zippia.com/albertsons-co-careers-14070/salary/california/.) Grocery stores also employ workers with highly specialized knowledge, including pharmacists and workers with training in sanitation and health procedures, all of which may be impacted by store closures. Considering the financial realities these workers face, as well as their role in the communities they serve, the threat of job loss in the grocery retail sector stemming from such a massive merger is significant.

In 2015, the Legislature passed AB 359 (Gonzalez), which addressed the prevalent practice at the time of grocery retailers that purchased or acquired other stores (referred to as successor grocery retailer, or successor) terminating the employees of the grocery retailer that was purchased or acquired (referred to as the incumbent grocery retailer, or incumbent.) AB 359 established requirements that the successor must recall, or rehire, employees from a list of eligible employees provided by the incumbent for 90 days after the successor reopens the purchased establishment to the public. Additionally, the successor retailer must retain eligible employees for a minimum of 90 days. (Labor Code Sections 2500 et seq.) While AB 359 was certainly a landmark bill in its own right, the pending Kroger-Albertsons merger has highlighted a need to update the law to further strengthen protections for impacted grocery workers.

According to the author:

While Kroger is leading consumers and workers to believe that this merger will result in more access to cheaper foods, a merger between these two companies will instead result in large scale layoffs for workers and grocery stores closing down. Based on the volume of both chains in California, this could result in an estimated 5,750 jobs lost in the Los Angeles region alone. The latter consequence of grocery store closures will contribute to food deserts, occurring rural areas or vulnerable communities. This will result in increased food costs and a reduction in product variety, including seasonal, organic, and climate-friendly plant-based foods for consumers. With already dwindling grocery store numbers, an unregulated merger of this size has very real implications for our grocery store workers and the communities they serve.

AB 647 addresses these concerns by strengthening the existing California Grocery Worker Retention Law, specifically by expanding the retention period from 90 days after the change in control to 120 days, including warehouse employees in retention laws, and authorizing the Labor Commissioner to enforce a private right of action for aggrieved employees. In addition, this bill adopts a process for recall and rehiring of grocery workers by requiring the use of a preferential hiring list for successor grocery employers, creating a specific right of recall for employees unable to work due to a transfer, and giving employees the right to refuse a transfer or recall without loss of seniority. With this, AB 647 ensures that skilled and trained workers can continue to provide our communities with access to safe food and lessen the economic impact to our social safety net.

This bill proposes modifications to existing grocery worker retention laws, as well as a novel private right of action for aggrieved employees. Additionally, this bill establishes an administrative complaint procedure with the Department of Labor Standards Enforcement (DLSE) and the Labor Commissioner. As previously stated, successor grocery retailers must abide by statutorily specified recall and retention timelines with regard to the incumbent grocery retailer’s employees. This bill expands the protections initially established by AB 359 in several ways. First, the bill increases both the recall and retention periods from 90 to 120 days. Additionally, the bill expands the types of positions covered by the recall and retention requirements to include warehouse workers and those who are unable to accept a position due to a transfer to a location more than 15 miles from their home without any loss of seniority.

The bill also attempts to close a potential loophole by modifying the exemption for retail stores that have been inoperative for at least six months. Under existing law, a retailer that has been closed for six months or more is exempted from any recall or retention requirements. The bill currently in print has struck “six” months, but has not replaced the language with an alternative time period. The author proposes to amend this portion of the bill by replacing the six month time period with 18 months. This change appears to be sufficient to allow an exemption for retailers that have effectively shuttered their doors while closing a loophole that would allow retailers to avoid any liability by simply remaining closed for six months and one day. The proposed amendments would be as follows:

(f) “Grocery establishment” means a retail store in this state that is over 15,000 square feet in size and that sells primarily household foodstuffs for offsite consumption, including the sale of fresh produce, meats, poultry, fish, deli products, dairy products, canned foods, dry foods, beverages, baked foods, or prepared foods. Other household supplies or other products shall be secondary to the primary purpose of food sales. A distribution center owned and operated by a grocery establishment that is used primarily to distribute goods to or from its owned stores is a “grocery establishment” regardless of its square footage. A grocery establishment does not include a retail store that has ceased operations for ____ 18 months or more.

This bill proposes significant new enforcement mechanisms. The most substantial changes to existing law proposed by this bill lie in the novel enforcement mechanisms proposed by this measure. This bill authorizes a private right of action for aggrieved employees, as well as an administrative complaint process via the DLSE and the Labor Commissioner. The proposed private right of action would authorize an aggrieved employee, or their employee representative, to bring a claim for a violation of either the employees’ recall or retention rights. A successful claim would entitle the employee to significant remedies, including front and back pay calculated at the highest of various pay rates, the value of any benefits the employee would have received, punitive damages, and reasonable attorney’s fees and costs. The bill also authorizes an employer to obtain reasonable attorney’s fees and costs if they are able to demonstrate that the employee’s claim was frivolous. The new administrative process through the Labor Commissioner would require an employee, or their employee representative, to file a complaint with DLSE, and for the agency’s investigation to be conducted pursuant to existing statutory procedures. The remedies available through an administrative complaint are similar in scope to those available through a claim made in court, but the bill adds civil penalties for claims made through the Labor Commissioner. The amounts recovered under this provision are directed to the Labor and Workforce Development Fund, and subsequently distributed to the employee as compensatory damages. A court is also authorized to order injunctive relief in a claim brought by the Labor Commissioner.

Each of these enforcement mechanisms appear appropriately tailored to both dissuade successor retailers from violating the expanded recall and retention provisions, and, in the event of any violation, make the aggrieved employee whole. Moreover, the additional remedies available to the Labor Commissioner would help bolster DLSE’s enforcement abilities.

Opposition. Opponents of this measure appear to indicate various concerns with the bill. While the opponents state that their “biggest concern is the legal implications that were recently amended into the bill,” it is not clear what their specific concerns are, as the letter goes on to simply identify “a rebuttable presumptions in favor of an employee, […] arbitrary standards for the reinstatement of employees and […] significant litigation risks for the grocery industry.” However, the opponents do not extrapolate any further on these stated concerns. Nonetheless, the proposed increase from 90 to 120 days, or from approximately three to four months, for the recall and retention period seems a sensible increase in order to effectuate the intent of AB 359. The one-month change is not so significant as to seem overly burdensome to successor employers, yet provides additional stability to affected employees. Additionally, the requirements laid out by the bill are clear enough that the “significant litigation risks” to the grocery industry should be easily avoided by compliance with the new timelines.

The opponents identify their second concern as pertaining to a 180-day written notice requirement in a prior version of the bill, stating that it would “result in less investment in the areas where grocery stores are most needed.” However, this concern appears to have been addressed through amendments in the previous committee that removed this section in its entirety.

Author’s amendments. In addition to the amendments identified above, the author proposes various clarifying technical amendments. They are as follows:

SECTION 1. Section 2502 of the Labor Code is amended to read:

2502. For purposes of this part, the following definitions shall apply:

[…]

(i) “Separated employee” means an employee who was employed by the incumbent grocery employer for 6 months or more in the 12 months preceding the change in control and whose most recent separation from active service was due to change in control, lack of business, reduction in force, a transfer of more than 15 miles from the employee’s residence, or another economic nondisciplinary reason. There is a rebuttable presumption that any termination occurring within a year of a change in control was due to a nondisciplinary reason. A separated employee is an eligible grocery worker.

SEC. 6. Section 2510 is added to the Labor Code, to read:

2510. (a) An aggrieved employee or an employee representative, such as a collective bargaining representative or nonprofit corporation, may bring an action in the superior court of the State of California for violations of this part and may be awarded the following:

(1) Hiring and reinstatement rights pursuant to this part. For violations of the retention provision, whereupon the 120-day transition employment period shall not commence until the eligible grocery worker’s employment commencement date with the successor grocery employer.

[…]

(b) Enforcement of this section by the Division of Labor Standards Enforcement shall enforce this section be as follows:

(1) An aggrieved employee or employee representative may file a complaint with the division for a violation of this section and may be awarded any of the following:

(A) Hiring and reinstatement rights pursuant to this chapter. For violations of the retention provision, whereupon the 120-day transition employment period shall not commence until the eligible grocery worker’s employment commencement date with the successor grocery employer.

ARGUMENTS IN SUPPORT: This bill is supported by a coalition of workers’ rights and legal services organizations. In support of the measure, the Western Center on Law and Poverty writes:

Western Center is California’s oldest and largest legal services support center with the goal of ending poverty in California. The connection between structural racism and poverty is not new or coincidental and we will only end poverty in California if we are able to dismantle the structures that perpetuate racism. Every one of our issue areas, whether it be ensuring access to housing, economic justice, or health care holds a history of racism that has served to exclude people of color.

As the pandemic has showcased, grocery store and pharmacy workers are skilled and trained essential workers. Grocery store workers are experienced in the safe and sanitary storage and sale of food and pharmacy workers are experienced in the safe dispensing of medication and delivery of critical healthcare services. This workforce is essential to the health and well-being of every community. Building on current law and the lessons of the pandemic, AB 647 enacts new reforms and closes current loopholes to prevent mass layoffs of trained grocery workers and professional pharmacy employees.

[…]

Communities need to retain, to the extent possible, experienced grocery retail workers with knowledge of proper sanitation procedures, health regulations and laws, and an experience-based understanding of the clientele and communities in which the retailer is located. It is for these reasons and more, we strongly support AB 647 and urge your “aye” vote when it comes before you in committee

ARGUMENTS IN OPPOSITION: This bill is opposed by the California Chamber of Commerce, the California Grocers Association, and the California Retailers Association. They state:

We find the changes and additions to the worker retention laws unnecessary and the elements relating to food deserts will make matters worse for consumers in California. Our biggest concern is the legal implications that were recently amended into the bill.

Due to the recent amends, CGA and the undersigned [sic] are still analyzing the impacts this overreaching legislation will have on our industry and workforce.

[…]

The most recent amendments to AB 647 create a rebuttable presumptions in favor of an employee, sets arbitrary standards for the reinstatement of employees and create significant litigation risks for the grocery industry, including the addition of punitive damages.

Another disincentive for our industry is the requirement for a 180-day written notice to the city council, city attorney, board of supervisors, county counsel, State Department of Public Health, and the Attorney General before a store ceases operations in a USDA designated food desert. This Section will actually result in less investment in the areas where grocery stores are most needed.

[…]

Furthermore, the bill requires a written analysis of the impact a closure will have on the consumer and a two-year profit and loss statement (PLS) for the affected store. There is no justified rationale for this information to be provided to these public entities.

A company seeking to invest in a USDA designated food desert will have second thoughts about making that investment if these requirements were to become law, which will likely make the problem AB 647 seeks to resolve an even bigger problem for the people living in those areas. Rather than creating disincentives for grocery stores to open in these areas, the Legislature should be developing programs to incentivize investment.

Pending or past related legislation. AB 853 (Maienschein, 2023) would require a party intending to acquire a retail grocery firm or retail drug firm to submit written notice given to the Attorney General at least 180 days before the acquisition is to become effective. The bill would specify information required to be included in the notice, including information required to assess the competitive effects of the proposed acquisition and to assess the economic and community impact of any planned divestiture or store closures. This bill is awaiting hearing in this Committee.

SB 627 (Smallwood-Cuevas, 2023) would require an employer, for a year after the closure of a covered establishment, to provide to all covered workers the opportunity to remain employed by the employer and to transfer to a location of the chain within 25 miles of the covered establishment subject to closure as positions become available. Would also require the employer to maintain a preferential transfer list of covered workers and make offers of transfer to qualified covered workers based on length of service, as specified. This bill is awaiting hearing in the Senate Committee on Labor, Public Employment and Retirement.

SB 725 (Smallwood-Cuevas, 2023) would prohibit a grocery establishment, where the change in control is a merger, from ordering a mass layoff, relocation, or termination at a covered establishment unless, 180 days before the order takes effect, the employer gives notice of the order to the employees of the covered establishment affected by the order, the Employment Development Department, the local workforce investment board, and the chief elected official of each city and county government within which the termination, relocation, or mass layoff occurs. This bill is awaiting hearing in the Senate Committee on Labor, Public Employment and Retirement.

SB 93 (Committee on Budget and Fiscal Review) required hospitality and service industry employers to offer to rehire qualified former employees who were laid off due to the COVID-19 pandemic. The bill also required these employees to be rehired for the same or similar positions as they last held. Chapter 16, Statutes of 2021.

AB 359 (Gonzalez) required, upon a change in ownership of a grocery store, that an incumbent employer prepare a list of specified eligible grocery workers for a successor grocery employer, and required the successor grocery employer to hire from this list during a 90-day transition period. This bill required the successor grocery employer to retain eligible grocery workers for a 90-day period, prohibited the successor grocery employer from discharging those workers without cause during that period, and required the successor employer to consider, upon the end of the period, offering continued employment to those workers. Chapter 212, Statutes of 2015,

REGISTERED SUPPORT / OPPOSITION:

Support

United Food and Commercial Workers, Western States Council (sponsor)

California Employment Lawyers Association
California Food and Farming Network
California Indivisible State Strong
California State Legislative Board, Sheet Metal, Air, Rail and Transportation Workers - Transportation Division (SMART-TD)
Central California Environmental Justice Network
Centro Binacional Para El Desarrollo Indígena Oaxaqueno
Economic Security Project Action
LAANE (Los Angeles Alliance for A New Economy)
Los Angeles County Federation of Labor, AFL-CIO
Pesticide Action Network
San Mateo Labor Council, AFL-CIO
TechEquity Collaborative
Western Center on Law and Poverty

Opposition

California Chamber of Commerce

California Grocers Association

California Retailers Association

Analysis Prepared by: Manuela Boucher-de la Cadena / JUD. / (916) 319-2334

Date of Hearing: March 22, 2023

ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT

Ash Kalra, Chair

ABPCA Bill Id:AB 647 (

Author:Holden) – As Amended Ver:March 16, 2023

SUBJECT: Grocery workers

SUMMARY: Revises recall and retention rights for grocery workers when there is a change of control in a grocery establishment to: 1) increase from 90 to 120 days the time a successor employer must hire from an eligible grocery worker list and the time an eligible grocery worker must be retained; and 2) create a private right of action and administrative complaint process for violations of these provisions. Specifically, this bill:

Definitions:

1. Defines “controlling person” in the context of a change in control of a grocery establishment to mean a person who directly or indirectly owns, controls, or holds with power to vote, including through coordination with other persons, 20 percent or more of the outstanding voting interests of a corporation.
2. Revises the definition of eligible grocery worker to include a separated employee.
3. Revises the definition of a grocery establishment to include a distribution center owned and operated by a grocery establishment that is used primarily to distribute goods to and from its owned stores.
4. Defines separated employee to mean an employee who was employed by the incumbent grocery employer for 6 months or more in the 12 months preceding the change in control and whose most recent separation from active service was due to change in control, lack of business, reduction in force, a transfer of more than 15 miles from the employee’s residence, or another economic nondisciplinary reason.
   1. There is a rebuttable presumption that any termination of an employee occurring within a year of a change in control was due to a nondisciplinary reason.

Recall and Retention Provisions:

1. Requires the incumbent grocery employer to also provide the eligible grocery worker list to any collective bargaining representative.
2. Increases from 90 to 120 the number of days that the successor grocery employer shall hire from the eligible grocery worker list.
3. Provides that any separated employee who is offered a position that is more than 15 miles from their place of residence shall have the right to refuse such recall without a loss of seniority and shall still retain a right to recall based on seniority prior to hiring of any new employees for one year after the separation from employment.
4. Increases from 90 to 120 the number of days that a successor grocery employer shall retain each eligible grocery worker hired under this part.

Enforcement Provisions:

1. Prohibits an employer from refusing to employ, terminating, reducing the compensation of, or otherwise taking adverse action against any laid-off employee for seeking to enforce their rights under this part, as specified.
2. Provides that an aggrieved employee or an employee representative, as specified, may bring an action in the superior court of the State of California for violations of this part and may be awarded various remedies, including but not limited to:
   1. Hiring and reinstatement rights pursuant to this part, as specified.
   2. Front pay or back pay for each day during which the violation continues, which shall be calculated at a rate of compensation not less than the highest of any of the following rates:
      1. The average regular rate of pay received by the employee during the last three years of the employee’s employment in the same job classification.
      2. The most recent regular rate received by the employee while employed by the employer.
      3. The regular rate of pay received by the employee during the last three years of that employee’s employment in the same job classification.
   3. The value of the benefits the employee would have received under any benefit plans.
   4. Reasonable attorney’s fees and costs to any employee or employee representative who prevails in an enforcement action and to an employer who prevails and obtains a court determination that the employee’s lawsuit was frivolous.
3. Provides that an aggrieved employee or employee representative may file a complaint with the Division of Labor Standards Enforcement (DLSE) for a violation of this section and may be awarded the remedies in 10) (a-c) above.
4. Provides for civil penalties for a violation of this part, as specified, which shall be recovered by the Labor Commissioner (LC), deposited into the Labor and Workforce Development Fund, and paid to the employee as compensatory damages.
5. Requires the LC to enforce this section, including investigating an alleged violation and ordering appropriate temporary relief to mitigate the violation and pending the completion of a full investigation or hearing, through specified procedures, such as issuing a citation against an employer who violates this section and by filing a civil action.
6. Authorizes a court, in an action brought by the LC for enforcement of this section, to issue preliminary and permanent injunctive relief.
7. Authorizes the DLSE to promulgate and enforce rules and regulations and issue determinations and interpretations consistent with and necessary for the implementation of this section. Those rules and regulations, determinations, and interpretations shall have the force of law.
8. States that, notwithstanding any other law, contract, or agreement, a controlling private fund and any holder of an active interest in a controlling private fund shall be jointly and severally liable for all liabilities created by this part of each grocery establishment for which the controlling private fund is a controlling person, and for all liabilities of any affiliate of each grocery establishment.

EXISTING LAW:

1. Defines grocery establishment to mean a retail store that is over 15,000 square feet in size and that sells primarily household foodstuffs for offsite consumption, including the sale of fresh produce, meats, poultry, fish, deli products, dairy products, canned foods, dry foods, beverages, baked foods, or prepared foods. A grocery establishment does not include a retail store that has ceased operations for six months or more. Labor Code § 2502 (d).
2. 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. An eligible grocery worker does not include a managerial, supervisory, or confidential employee. Labor Code § 2502 (b).
3. Defines transfer document to mean the purchase agreement or other document effecting the change in control. Labor Code § 2502 (h).
4. Requires the 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. Labor Code § 2504 (a).
5. Requires the successor grocery employer to maintain a preferential hiring list of eligible grocery workers identified by the incumbent grocery employer in 3) above and to hire from that list for a period beginning upon the execution of the transfer document and continuing for 90 days after the grocery establishment is fully operational and open to the public. Labor Code § 2504 (b).
6. Requires a successor grocery employer to retain each eligible grocery worker hired pursuant to 4) above for 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. Labor Code § 2506 (a).
7. Prohibits the successor grocery employer during the 90-day transition employment period from discharging without cause an eligible grocery worker retained pursuant to 5) above. Labor Code § 2506 (c).
8. Requires, at the end of the 90-day transition employment period, the successor grocery employer to make a written performance evaluation for each eligible grocery worker who was retained. If the eligible grocery worker’s performance during the 90-day transition employment period is satisfactory, the successor grocery employer shall consider offering the eligible grocery worker continued employment under the terms and conditions established by the successor grocery employer and as required by law. Labor Code § 2506 (d).

FISCAL EFFECT: Unknown.

COMMENTS: Note: This bill has been double-referred to the Assembly Judiciary Committee upon passage out of this Committee.

The last few decades have seen a rise in the consolidation of grocery store chains by mergers and acquisitions. The recent Kroger and Albertsons proposed billion dollar merger is just one example. Researchers studying past supermarket mergers have identified significant risks for grocery store workers. They argue that the “consolidation of the food industries is what leads to the exploitation of workers… In the past it has led store closings and loss of good jobs.^[1]” In addition, the impact of supermarket consolidation extends to consumers and local communities that rely on and are beholden to food prices. According to the U.S. Department of Agriculture, the merger comes as food prices have risen precipitously—11.2% from September 2021 to September 2022.^[2]

According to the author, “In October 2022, Kroger and Albertsons announced their plans for an unprecedented $25 billion merger. These two grocery giants operate as some of the nation’s largest full-service grocery chains, and have retail footprints in nearly every state and most major metropolitan areas. In addition, they employ over 700,000 workers across their numerous banners, with over 50 manufacturing facilities and over 5,000 retail stores.

While Kroger is leading consumers and workers to believe that this merger will result in more access to cheaper foods, a merger between these two companies will instead result in large scale layoffs for workers and grocery stores closing down. Based on the volume of both chains in California, this could result in an estimated 5,750 jobs lost in the Los Angeles region alone. The latter consequence of grocery store closures will contribute to food deserts, occurring rural areas or vulnerable communities. This will result in increased food costs and a reduction in product variety, including seasonal, organic, and climate-friendly plant-based foods for consumers. With already dwindling grocery store numbers, an unregulated merger of this size has very real implications for our grocery store workers and the communities they serve.

AB 647 addresses these concerns by strengthening the existing California Grocery Worker Retention Law, specifically by expanding the retention period from 90 days after the change in control to 120 days, including warehouse employees in retention laws, and authorizing the Labor Commissioner to enforce a private right of action for aggrieved employees. In addition, this bill adopts a process for recall and rehiring of grocery workers by requiring the use of a preferential hiring list for successor grocery employers, creating a specific right of recall for employees unable to work due to a transfer, and giving employees the right to refuse a transfer or recall without loss of seniority. With this, AB 647 ensures that skilled and trained workers can continue to provide our communities with access to safe food and lessen the economic impact to our social safety net.”

The author also points out that the bill will benefit underserved and marginalized communities. “For example, the sponsor, UFCW, has a Southern California chapter that represents over 55,000 workers at Kroger and Albertsons stores, a majority of whom identify as female, 49% of which identify as Hispanic, 7% of which identify as Black, and 6% of which identify as Asian. In a 2022 report conducted by the Economic Roundtable, Kroger employees reported that 78% are food insecure, 67% cannot pay for basic expenses every month, 44% are unable to pay for rent, 29% are below or near the federal poverty level, and 14% are homeless now or in the past year. In sum, this bill would not only help provide job protections for those employees in marginalized communities, but it will also prevent the creation of food deserts – or lack of access to affordable food – which primarily affects our most vulnerable, underserved communities.”

Arguments in Support

The United Food and Commercial Workers Western States Council, sponsor of the bill, states, “The number of grocery stores has already declined by 30 percent from 1993 to 2019. The trend is clear: the U.S. grocery supermarket industry is moving toward a tiny handful of nation-spanning corporations.

California is not immune from these national consolidating trends. Again, consider the Albertsons-Kroger merger. There are 734 Albertsons, Safeway, Vons and Ralphs stores in the state. Obviously, these stores are critically important sources for Californians being able to buy food.

However, the merger could force store closures in California neighborhoods where Vons,

Albertsons, Ralphs or Safeway overlap. Putting aside stores closing to increase profits, as many

as 400 stores could be sold or closed, just to avoid antitrust scrutiny of the merger.

Based on the volume of both chains in California, this could result in an estimated 5,750 grocery

jobs lost in the Los Angeles region alone. When federal regulators require the sale of stores as a

condition of approving a merger, the results are, at best, uncertain. In 2015, there was the

disastrous fall out of the Safeway-Haggen merger where thousands of workers were laid off, 100

stores were shut down, and Haggen declared bankruptcy 4-months after the merger. Indeed,

from experience we know grocery store and pharmacy closures will specifically occur in existing

food deserts and rural areas. This will not only result in increased food costs and a reduction in

product variety, including seasonal, organic, and climate-friendly plant-based foods for

consumers. Skilled grocery employees experienced and trained in food safety and public health

requirements will need to leave their neighborhoods to seek comparable work elsewhere.”

Arguments in Opposition

The California Chamber of Commerce, the California Grocers Association, and the California Retailers Association are opposed and state, “In 2015, AB 359 was signed into law, which added protections for grocery workers from being laid off for 90 days after a store changes ownership through consolidation, merger, or reorganization. AB 647 seeks to extend the timelines in AB 359 by 40 days and include distribution centers, with no supporting data to show this change is needed for the transfer of information or the protection of employees.

The most recent amendments to AB 647 create a rebuttable presumptions in favor of an employee, sets arbitrary standards for the reinstatement of employees and create significant litigation risks for the grocery industry, including the addition of punitive damages.”

Related and Prior Legislation

AB 853 (Maienschein) of 2023 would prohibit a person from acquiring any voting securities or assets of a retail grocery firm or retail drug firm, as those terms are defined, unless specified written notice is given to the Attorney General at least 180 days before the acquisition is to become effective. The bill would specify information required to be included in the notice, including information required to assess the competitive effects of the proposed acquisition and to assess the economic and community impact of any planned divestiture or store closures. This bill is pending before this committee.

SB 627 (Smallwood-Cuevas) of 2023 would require an employer, for a year after the closure of a covered establishment, to provide to all covered workers the opportunity to remain employed by the employer and to transfer to a location of the chain within 25 miles of the covered establishment subject to closure as positions become available. Would also require the employer to maintain a preferential transfer list of covered workers and make offers of transfer to qualified covered workers based on length of service, as specified. This bill is awaiting hearing in the Senate Committee on Labor, Public Employment and Retirement.

SB 725 (Smallwood-Cuevas) of 2023 would prohibit a grocery establishment, where the change in control is a merger, from ordering a mass layoff, relocation, or termination at a covered establishment unless, 180 days before the order takes effect, the employer gives notice of the order to the employees of the covered establishment affected by the order, the Employment Development Department, the local workforce investment board, and the chief elected official of each city and county government within which the termination, relocation, or mass layoff occurs. This bill is awaiting hearing in the Senate Committee on Labor, Public Employment and Retirement.

SB 93 (Committee on Budget and Fiscal Review) Chapter 16, Statutes of 2021 requires hospitality and service industry employers to offer to rehire qualified former employees who were laid off due to the COVID-19 pandemic. These employees must be notified for the same or similar positions as they last held.

AB 359 (L. Gonzalez) Chapter 212, Statutes of 2015 requires that a successor grocery employer retain their current workforce for a minimum of 90 days after a change in ownership.

REGISTERED SUPPORT / OPPOSITION:

Support

United Food and Commercial Workers, Western States Council (Sponsor)
California Labor Federation
Los Angeles County Federation of Labor
Techequity Collaborative

Oppose

CalChamber
California Grocers Association
California Retailers Association

Analysis Prepared by: Megan Lane / L. & E. /

1. “Kroger-Albertsons mega-merger could cause more US food deserts, experts say,” The Guardian, Matt Krupnick, October 27, 2022, quoting Suzanne Adley, co-director of the Food Chain Workers Alliance. ↑

2. Quoted in the article in the above footnote. ↑