Calif. SC decision protects L.A. grocery workers

By Jessica M. Karmasek | Jul 20, 2011


SACRAMENTO, Calif. (Legal Newsline) - The California Supreme Court ruled Monday that a Los Angeles city ordinance protecting grocery workers is "fully consistent" with both state and federal equal protection clauses.

The Court concluded that such an ordinance is not preempted as intruding on matters of health and safety, already regulated by the state, or matters of employee organization and collective bargaining, under federal law.

Los Angeles, like other municipalities in California, regulates the ability of certain employers to summarily replace the workforce after acquiring a new business.

The city adopted the Grocery Worker Retention Ordinance in December 2005.

For grocery stores of a specific size (15,000 square feet or larger) that undergo a change of ownership, the ordinance vests current employees with certain individual rights during a 90-day transition period.

First, the incumbent owner is to prepare a list of nonmanagerial employees with at least six months' employment as of the date of transfer in ownership, and the successor employer must hire from that list during the transition period. Second, during that same period, the hired employees may be discharged only for cause. Third, at the conclusion of the transition period, the successor employer must prepare a written evaluation of each employee's performance.

The ordinance does not require that anyone be retained, but if an employee's performance is satisfactory, the employer must consider offering continued employment.

If the workforce is unionized, however, the union and the employer may agree on terms that supersede the ordinance.

In this case, plaintiff California Grocers Association filed a complaint against the city seeking to enjoin enforcement of the ordinance on the grounds that it was preempted by provisions of the Health and Safety Code, the Labor Code and federal labor law, and that it violated the equal protection provisions of the state and federal constitutions.

The Los Angeles Alliance for a New Economy, a nonprofit organization, intervened to defend the ordinance.

A trial court entered a judgment enjoining enforcement of the ordinance, declaring it void on two of the four asserted grounds. The court concluded the ordinance affected health and sanitation standards for retail food establishments, an area fully occupied by state law, and was on that basis preempted, and further concluded it violated equal protection because there was no rational basis for its differential treatment of grocery stores smaller than 15,000 square feet or its permitting employers and unions to contract around the ordinance's terms.

A divided appeals court affirmed. The majority agreed with the trial court that the California Retail Food Code fully occupied the field of health and sanitation standards for retail food establishments, and the ordinance had the impermissible purpose and effect of regulating in the same area.

It also concluded, contrary to the trial court, that the ordinance was also preempted by the National Labor Relations Act because, in the majority's view, federal labor law guaranteed successor employers the right to pick and choose whom they wished to employ, free of local regulation.

The dissent argued that the ordinance was neither preempted nor inconsistent with equal protection principles.

The state's high court granted review "to resolve significant preemption and constitutional questions placing into doubt the validity of this and other similar worker retention ordinances" in the state.

The Court, in a 6-1 decision, reversed the appeals court's decision. Justice Kathryn M. Werdegar authored the Court's 38-page opinion.

The Court said the appeals court incorrectly relied on language in the ordinance's preamble and statements by city officials indicating the city was concerned with promoting health and safety.

"In contrast, the ordinance imposes no substantive food safety standards. Its provisions regulate, for certain grocery stores during ownership transitions, how a new owner may select its workforce," it wrote. "It does not speak to how employees must conduct themselves to ensure sanitation, how food should be handled or transported, how grocery stores should be designed or cleaned, or any of the various other topics for which the Retail Food Code sets out exclusive state standards."

The code, the Court explained, establishes standards for what certain employees, particularly one certified owner or supervising food service employee, must know or be taught, but does not regulate who must be hired.

The ordinance, it pointed out, regulates the pool of nonsupervising, nonmanagerial employees from which a new owner temporarily must hire, but imposes no standards concerning what the hired employees must know or be taught about food safety.

The Court, in evaluating the grocers' claims of federal preemption, said it could find no evidence that Congress intended to leave the subject of employee retention unregulated by states and municipalities.

"On the subject of employee hiring and firing, the text of the (National Labor Relations Act) is, with one notable exception, resoundingly silent," it said.

The ordinance, the Court explained, regulates the terms and conditions of employment, extending the benefit of a potential temporary extension of employment to each employee individually, rather than conferring a collective right, and applying the benefit to all employees equally, irrespective of union or nonunion status.

"It does not regulate the process by which a bargaining agreement may be reached. Nor does the ordinance speak directly to the process of organizing; rather, it temporarily preserves the status quo, whatever that might be, whether the workforce is unionized or not," it wrote.

As to the equal protection issue, the Court deemed the ordinance constitutional.

Under the ordinance, one of its purposes is the promotion of job security and the minimization of community disruption that arises from job losses and changes.

"The city rationally could conclude both that disruptions at larger stores, involving larger workforces, would have a larger impact on the community, and that larger stores would be more readily positioned to absorb any short-term burdens the ordinance's requirements might impose on employers," the Court wrote.

"Both Congress and the state Legislature frequently, and constitutionally, have incorporated exceptions for smaller employers when regulating the employment relationship.

"So long as we can identify a rational relationship between a classification and at least one legitimate purpose of an enactment, the classification will pass constitutional muster."

From Legal Newsline: Reach Jessica Karmasek by e-mail at jessica@legalnewsline.com.

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