In a victory for organized labor, the Los Angeles City Council approved an ordinance Wednesday that would make it harder for a company that buys a grocery store to get rid of the previous owner's employees for at least three months.
The council's move comes as supermarket chain Albertsons Inc., which has about 20 stores in Los Angeles, weighs offers from several bidders to acquire all or part of the company.
It also comes two years after Albertsons and the parent companies of Ralphs and Vons, the two other major Southern California supermarket chains, went through a bitter labor dispute with their unionized employees.
The ordinance passed 11 to 2 despite the threat of a lawsuit by the grocery industry. It was strongly opposed by the business community, which said the measure would cost the city tax revenue by driving grocery stores outside the city limits. The Los Angeles Area Chamber of Commerce also complained that the ordinance was put on a fast track to approval with little input from the grocery industry.
"We're very disappointed," said Peter Larkin, president of the California Grocers Assn. "Obviously we weren't able to communicate our message to the City Council. They don't seem to understand how serious an issue this is to our industry."
Mayor Antonio Villaraigosa will sign the ordinance into law, a spokesman said. The measure would require the purchasers of grocery stores larger than 15,000 square feet to keep existing employees for at least 90 days. After that, the acquiring company would be required to conduct a written performance evaluation of employees. If a worker's evaluation is satisfactory, the new owner would have to consider offering a job to the worker before hiring from outside.
The ordinance also would require that workforce cutbacks be determined according to seniority.
"People matter ... and this gives a little more dignity to the process of mergers and acquisitions," Councilman Bill Rosendahl said.
Council President Alex Padilla, a leading supporter of the ordinance, cited the pending sale of Albertsons as a reason the ordinance is needed: "Not that we are going after Albertsons, but it is indicative of what is going on in an industry."
Boise, Idaho-based Albertsons declined to comment.
Councilman Dennis Zine voted for the ordinance even though he said a 90-day transition period was too short.
"At least it gives that employee three months to figure out what to do," Zine said, adding that an underlying concern is that new owners are buying unionized stores and bringing in nonunion employees.
Union officials agreed.
"This recognizes the plight of grocery workers. We have lost so many jobs as a result of mergers and the fact that a lot of the stores have been taken over by nonunion entities," said Rick Icaza, president of the United Food and Commercial Workers union Local 770 in Los Angeles.
Councilmen Bernard C. Parks and Greg Smith opposed the ordinance, arguing that the extra regulations would discourage supermarkets from opening or staying open in economically disadvantaged neighborhoods where markets either don't exist or are barely hanging on.
"If you put all of these limits on the buyer, they are going to go outside the limits of the city of Los Angeles and buy a store," Parks said.
Parks and Smith also challenged the use of a "health and safety" argument as the ordinance's legal justification, saying it was a stretch to say that public health was safeguarded by forcing grocers to retain experienced employees with knowledge of food-handling laws.
Even many of the supporters of the ordinance chose to emphasize the protection of workers over the public health requirement in their public arguments.
Representatives of several grocery chains told the council that state and county laws already protect public health.
William Cote, chief financial officer of Superior Super Warehouse, said his company spent six months to a year remodeling the stores it bought before reopening, and he said the cost of retaining workers during that period could be "preventative."
Icaza estimated that the ordinance would affect more than 500 grocery stores in Los Angeles.
Roxana Tynan, a director of the Los Angeles Alliance for a New Economy, said the city was simply following the lead of other cities that had approved worker retention laws. Los Angeles has a similar measure mandating that when a company doing business with the city changes hands, workers cannot be fired without cause for 90 days, the group said.
Larkin's grocers group said the ordinance conflicted with federal and state laws and provided unequal treatment by exempting stores of less than 15,000 square feet.
After the vote, Larkin said he would have to consult with the association's board of directors about whether to challenge the ordinance in court.