In California Grocers Association v. City of Los Angeles, the California Supreme Court upheld a Los Angeles Ordinance that guarantees grocery workers jobs for 90 days following a sale of the grocery store. In doing so, the California Supreme Court rejected the argument that the ordinance was preempted by the NLRA.

The Grocery Worker Retention Ordinance imposes several restrictions on the purchaser of a grocery store larger than 15,000 square feet. First, the purchaser is required to continue the employment of all non-managerial employees who have been employed for at least six months, for a period of 90 days. During that 90-day period, employees may only be discharged for cause. At the end of the 90-day period, the purchaser must prepare a written evaluation of each employee’s performance. Second, while there is no requirement to continue to offer employment, the purchaser must “consider” doing so.

The ordinance was challenged by the California Grocers Association on several grounds, including an argument that the ordinance was preempted by the NLRA. The California Supreme Court rejected the preemption argument (as well as all other arguments) holding the ordinance does not intrude into an area governed by the NLRA. Rather, the court analogized the ordinance to laws that establish minimum employment benefits – such as state minimum wage statutes.

The main argument in support of preemption advanced by the Grocers Association was that the ordinance will, in reality, force a purchaser to become a “successor” under the NLRA. Briefly, if a purchaser retains the workforce of a purchased entity, it will likely be deemed to be a “successor” under the NLRA, with obligations to recognize and bargain with an incumbent union or even to accept the existing collective bargaining agreement in certain circumstances. The Grocers Association argued that by requiring a purchaser to employ its predecessor’s workforce for 90 days, the ordinance is effectively dictating the outcome that the purchaser will be treated as a successor. The court rejected this argument writing the ordinance will “not dictate the outcome of the successorship inquiry in any way...” Whether the NLRB takes this same approach is the big question.