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 grocery employer.
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.