The New York City Council’s targeted attacks on specific industries continue unabated. After levying onerous new labor law requirements on car washes this past summer, the Council recently turned its attention to the grocery industry, passing a bill dubbed the Grocery Worker Retention Act (the Act). The Act requires that successor grocery employers retain their predecessor’s employees for a period of 90 days following a change in control. The Act is similar to a 2002 NYC law requiring retention of building service workers.
Specifically, the Act, which was passed on January 19, prohibits a successor grocery employer from discharging certain grocery store employees without cause, a term left undefined by the law, during a 90-day transition period following a “change in control.” A “change in control,” in turn, is defined as “any sale, assignment, transfer, contribution or other disposition of all or substantially all of the assets of, or a controlling interest in, including by consolidation, merger or reorganization, any grocery establishment.”
Notably, only grocery stores where “the sale of food for off-site consumption comprises fifty percent or more of store sales and that exceed 10,000 square feet in size, exclusive of any storage space, loading dock, food preparation space or eating area designated for the consumption of prepared food,” are covered by the Act. Also excluded from coverage are managerial, supervisory, and confidential employees, as well as any worker who regularly works fewer than eight hours per week, meaning that such workers do not have to be retained following a change in control. Essentially, the Act protects unionized employees or those eligible to form a union.
Following the end of the 90-day transition period, the successor employer must complete written performance evaluations for each of the retained employees, and maintain a record of such evaluations for at least three years. At the end of the transitional period, successors may, but are not required to, offer such employees continued employment.
Although the Act permits the Department of Consumer Affairs (or the newly created Office of Labor Standards, if it is given jurisdiction over the Act) to levy civil penalties for violations, it does require affected employees to exhaust their administrative remedies with the appropriate city agency before filing a civil suit. Regardless of the venue in which employees assert their claims, however, violations of the Act can be costly. Among other penalties, aggrieved employees may recover “three times the pay for each the eligible grocery employee was discharged or not retained in violation of” the Act, plus attorneys’ fees and costs.
Finally, the Act does not apply to a successor employer who, before a change in control occurs, enters into a collective bargaining agreement covering the eligible employees or, instead, agrees to assume its predecessor’s collective bargaining agreement covering the same employees, provided that such agreement sets terms and conditions regarding employee discharge. The Act will take effect 90 days after it is signed into law by Mayor Bill de Blasio, which is expected to occur within the next few weeks, if not sooner.
What’s the Takeaway for My Company?
The Act raises concerns on a number of fronts. First and foremost, it reinforces the expectation that the NYC Council will continue to target industries it believes require greater regulation, regardless of the tenuousness of Council’s belief. Second, it places successor grocery employers in a sticky situation in light of an August 2015 National Labor Relations Board decision concluding that a successor employer becomes obligated to recognize and bargain with a union even where the successor is required by law to hire its predecessor’s employers. As a result, grocery store employers, and those entities considering purchasing grocery stores, should consult with counsel immediately.