Effective January 1, 2016, California law will impose new requirements when
there is a change in control of a large retail grocery store in California.
The new law, Assembly Bill 359, will require that, upon a “change in control”
of a “grocery establishment,” the seller must prepare a list of “specified
eligible grocery workers” for a successor grocery employer, which would be
required to hire from the list during a 90-day transitional period.
The law will also require the successor grocery employer to retain eligible
grocery workers for a 90-day period after the grocery establishment is fully
operational and open to the public, and prohibit the successor grocery employer
from discharging those workers without cause during that period.
Upon the expiration of the 90-day transitional period, the successor grocery
employer is required to complete a written performance evaluation for each
eligible grocery worker retained pursuant to this law. If the grocery worker’s
performance during the 90-day transition employment period is satisfactory, the
successor grocery employer is required “to consider” offering continued
employment to the worker.
The law defines a “change in control” to include 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 seller grocery employer or person who controls the
An “eligible grocery worker” is defined for purposes of this law as “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 purchase
agreement or other document effecting the change in control of the grocery
establishment. Of note, managerial and supervisory employees are expressly
excluded from this definition.
A “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.” To qualify as a “grocery establishment,” the law requires
that “[o]ther household supplies or other products shall be secondary to the
primary purpose of food sales.”
The law will also impose new recordkeeping obligations. All written
performance evaluations completed pursuant to this law are required to be
retained for at least three years. In addition, written verification of all
offers of employment that are extended to eligible grocery workers must be
retained for at least three years after the date of the offer. The verification
must include the name, address, date of hire and employment occupation
classification of each eligible grocery worker.
The law will impose additional notice obligations as well when there is a
change in control. Specifically, the seller will be required to post public
notice of the change in control at the location of the affected grocery
establishment within five business days following the execution of the purchase
agreement. The required notice must include the name of the seller grocery
employer and its contact information, as well as the effective date of the
change in control. The notice must be posted in a conspicuous place at the
grocery establishment so that it may be readily viewed by eligible grocery
workers and other employees, customers, and members of the public.
The new law exempts a grocery establishment located in a “food desert,”
provided that (a) more than six years have elapsed since the most recent grocery
establishment was located in the area designated as a food desert; and (b) the
grocery establishment stocks and during normal business hours sells fresh fruit
and vegetables in amounts and of a quality that is comparable to what the
establishment sells in its three geographically closest stores, which are
located outside of the food desert.
Collective Bargaining Agreements and Local Ordinances
The new law may be superseded by collective bargaining agreements, and does
not preempt any local ordinances that provide equal or greater protection to
eligible grocery workers.
Further Legislative Developments
In its current form, the provisions of Assembly Bill 359 do not address
circumstances where a grocery establishment has ceased operations. It is
expected that the authors and sponsors of the law will clarify that it does not
apply to a grocery store that has ceased operations for six months or more.
Please reach out to your McGuireWoods contact or members of the firm’s Food
and Beverage and Labor and Employment teams with any questions you may have
concerning this advice memorandum, the food and beverage industry or California
employment matters in general.