Title
Introduction of an Ordinance Amending the Alameda Municipal Code by Adding Chapter VI, Article XIII, Section 6-56 to Impose Requirements Relating to the Retention of Grocery Workers in Certain Circumstances Involving the Transfer of Ownership of Large Grocery Establishments. (Community Development 7010)
Body
To: Honorable Mayor and Members of the City Council
From: John A. Russo, City Manager
Re: Introduction of an Ordinance Amending the Alameda Municipal Code by Adding Chapter VI, Article XIII, Section 6-56 to Impose Requirements Relating to the Retention of Grocery Workers in Certain Circumstances Involving the Transfer of Ownership of Large Grocery Establishments
BACKGROUND
On February 3, 2015, the Alameda City Council (City Council) passed a motion, based on a Council referral, directing staff to draft and present to the City Council an ordinance to require a transitional workforce retention period when there is a change of ownership, control, or operation of a large grocery store. The theory is that the general welfare of local residents will be protected by keeping in place experienced grocery workers with knowledge of proper sanitation procedures and health regulations.
The Council referral referenced the City of Los Angeles's "Grocery Worker Retention Ordinance," which has been upheld by the California State Supreme Court and may be used as a possible model for Alameda's proposed ordinance. The referral noted that since the passage of the Los Angeles ordinance, a number of other local jurisdictions have passed similar measures.
The City Council requested that staff analyze specific impacts that the proposed ordinance would have on Alameda. The Council also directed staff to analyze any differences between the ordinances in other jurisdictions.
DISCUSSION
Supermarkets and other grocery retailers play a vital public health and economic role in the community. They are the primary sources of fresh food, canned and cartoned goods, and similar items. Supermarkets are anchors to Alameda's regional and neighborhood shopping centers (such as Alameda Landing, South Shore Center, Marina Village Shopping Center, Bridgeside Shopping Center, and Harbor Bay Landing Shopping Center), providing the customer base and foot traffic to support adjacent stores. Supermarkets are also major employers in Alameda.
The City of Los Angeles passed its Grocery Worker Retention Ordinance in December 2005. In the following year, the cities of Santa Monica, San Francisco, and Gardena passed identical ordinances. Staff identified these cities through an internet search and discussions with staff at the United Food and Commercial Workers International (UFCW). UFCW is the union representing grocery workers. Copies of the ordinances were obtained from the cities' websites. Staff also talked with representatives from each city. It is unknown if other cities have passed similar ordinances.
These ordinances define "grocery establishments" as being over 15,000 square feet in size and include the following major provisions:
· the seller must post a public notice of change of ownership within five business days following the execution of transfer documents;
· the seller must prepare a list of non-managerial employees at the store and direct the new owner to hire from this "preferential hiring list" beginning with the execution of transfer documents and continuing for a 90-day transition period after the grocery store is fully operational under the new ownership;
· employees will be retained under the terms and conditions established by the new owner, as required by law and pursuant to the terms of a relevant collective bargaining agreement, if any;
· employees may only be discharged "for cause" during the transition period;
· the new owner must prepare a written evaluation of each employee's performance at the end of the transition period;
· the new owner must consider offering continued employment if an employee's performance is satisfactory; and
· private enforcement of the ordinance is by grocery employees against the seller and/or new owner. Remedies for violation include hiring and reinstatement rights as well as back pay. There are no criminal penalties for violation of the ordinance.
In California Grocers Association v. City of Los Angeles, 52 Cal. 4th 177 (2011), the State Supreme Court upheld the Los Angeles ordinance. The California Grocers Association sought to block the ordinance on the grounds that it was prohibited by provisions in the Health and Safety Code, the Labor Code, and federal labor law, and that it violated constitutional equal protection rights.
The California Supreme Court rejected each argument. The court held that the health and safety laws dealt with food safety, not employee rights during a change in ownership. Likewise, the court held that the state and federal labor laws regulated the process of labor relations, and the ordinance did not regulate the process of negotiation. Finally, the court rejected the equal protection challenge on the ground that the ordinance was a valid exercise of a local government's police power authority to regulate its local workforce.
The attached draft ordinance for the City Council's consideration is based on the Los Angeles ordinance with some modifications. First, the draft ordinance defines "grocery store" with language from the City's existing zoning ordinance, while adding a 15,000 square foot threshold consistent with the other ordinances in the State. The definition also clarifies that a grocery store has at least fifty-one percent (51%) of its floor space devoted to grocery sales. Under this definition, the proposed ordinance would affect five of the approximately 12 grocery stores located in Alameda (see Exhibit 1, Alameda Grocery Stores).
Second, the draft ordinance clarifies that it pertains to the change of ownership from one grocery establishment to another grocery establishment. It does not apply to a grocery store going out-of-business with no identified buyer. This direct change of ownership is implicit in the Los Angeles ordinance. For example, the Los Angeles ordinance states that the public notice must name both the buying and selling grocery stores.
Grocery Worker Retention ordinances have been in place in four jurisdictions in the State for almost 40 years. In its research, staff was not able to clearly identify specific impacts from these ordinances either positive or negative. For example, several years ago, a new company bought a grocery store chain and the new company retained the grocery workers in jurisdictions with, and without, a Grocery Workers Retention ordinance.
Based on City Council's February 3, 2015 direction, staff has prepared a Grocery Worker Retention ordinance for City Council consideration and action.
FINANCIAL IMPACT
There is no financial impact on to the General Fund to adopt this ordinance as the ordinance requires no City enforcement mechanism or staff time to implement.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
The ordinance as drafted, is very similar to the City of Los Angeles' ordinance (and all other Grocery Worker Retention ordinances in the State). This is because the Los Angeles ordinance has been tested in the courts and has been upheld by the California Supreme Court.
ENVIRONMENTAL REVIEW
This action is exempt from the California Environmental Quality Act ("CEQA") pursuant to CEQA Guidelines section 15061(b)(3).
RECOMMENDATION
Introduction of an ordinance amending the Alameda Municipal Code by adding Chapter VI, Article XIII, Section 6-56 to impose requirements relating to the retention of grocery workers in certain circumstances involving the transfer of ownership of large grocery establishments
Respectfully submitted,
Debbie Potter, Community Development Director
Janet C. Kern, City Attorney
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibit:
1. Alameda Grocery Stores