LA Law Would Require New Owners to Keep Workers On
By George Anderson
A controversial new law tentatively approved by the Los Angeles City Council yesterday would require a company acquiring a supermarket to retain workers who have been on the job for at least six months for a period of 90 days.
Councilman Alex Padilla, who introduced the ordinance, told the LA Daily News, “What this ordinance is really about is the health and safety of the residents of Los Angeles. These workers ensure that our food is safe and sanitary.”
The municipal ordinance could have unintended negative consequences for Los Angeles, said Peter Larkin, president of the California Grocers Association. “If this ordinance were to go in effect, much of the capital that would be available for investment in supermarkets in the city might indeed flow elsewhere due to the lack of this type of ordinance in other municipalities,” he said.
Councilman Bernard Parks, one of two on the Council who voted against the ordinance, shares Mr. Larkin’s concerns and also believes it may inadvertently hurt smaller businesses looking to expand through acquisition.
“I think there are some land mines in the ordinance,” he said.
Moderator’s Comment: Will the proposed Los Angeles law requiring new owners (short of cause) from replacing workers of acquired supermarkets have a positive
or negative effect on the grocery business within the city’s limits? If it survives legal challenge, will we see similar measures passed in other municipalities across the U.S.?
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George Anderson – Moderator
We only have to look at the German and French economies to see what happens when restrictive labor laws are put in place. In both of these countries job growth is virtually nil and unemployment is above the EU average. Clearly this move by the LA City Council ranks up there as a move to bolster unions and the perception of retaining jobs when all it really does is limit the number of jobs long-term.
Obviously guys named “Mark” are pretty savvy on labor and politics. I was trying to figure out the point of this ordinance beyond simply providing a short-term safety net against “union busters.” Sounds like the other panelists haven’t found one either?
“What this ordinance is really about is the health and safety of the residents of Los Angeles,” said Councilman Alex Padilla, who introduced the ordinance, which was approved 12-2. “These workers ensure that our food is safe and sanitary.”
What does this mean? The presumption is that workers who are displaced will do something to the food in the store rendering it unsafe and/or unsanitary? That kind of stuff is what we have police and the court system for.
Just another piece of nonsensical legislation added to a long list.
I cannot imagine why such a law is necessary or desirable. Surely when buying a new business some degree of continuity is beneficial. They are, presumably, trained, familiar with stock and customers. Keeping the same staff could also lead to further loyalty and possibly even better customer service. This seems like common sense to me. Legislating sounds like time wasting. Have Councillors nothing better to think about?
This law has one goal and that is to help the United Food and Commercial Workers Union (UFCW) in their efforts to continue making it difficult for supermarket companies to do business in California. For the Los Angeles City Council to concoct such a law just shows how much influence this union has in Los Angeles. Such laws are anti-business and will ultimately discourage businesses to open stores in that city.
This is bad for business. Government should not involve themselves in personnel issues such as this. Businesses should have a right to hire and fire as they please unless the employee has a contract. This is just “feel good” rhetoric to get votes and probably will never be applied.
This issue should be a non-starter for retail management. I completely agree with the writers who argue the sensibility of ordinances and legislation of this type. No question. Politicians aren’t businesspeople for a very good reason, and seldom, if ever, are quick-fix moves like this good for anyone in the long run.
Having said all that, it really doesn’t make any difference. Fight the ordinance that WILL make a difference. Rest assured, given the proclivity of politicians to meddle outside their competency…..there WILL come a time to speak out. This one? Come on. If I’m going to acquire a chain with LA stores, I simply factor in the 90 days as one of the elements of the acquisition. Period. No different from golden parachutes I have to accept, debt limitations or restrictions, lease provisions I don’t like, etc. It’s just a cost of doing the acquisition, and really, isn’t that big a deal.
Many retailers would be happy if their employees would promise to stick around for 90 days, since their turnover is so high! Any seriously capitalized acquirer wouldn’t care about this law, since they’ll need people to work in the store. (And investment bankers won’t fill in.) The law’s motivation has nothing to do with food safety. It’s just a gesture to get political support from unions. And the argument against it, that people won’t buy or build supermarkets, is equally spurious. People who buy supermarkets these days certainly face much harsher obstacles to profit than this.
Any acquirer of any business needs the flexibility to make the decisions required to take the business to the next level. Forcing them to keep people on as a matter of course, whether or not they are integral to the next phase of the business, is unnecessarily tying the hands of the acquirer and limiting the potential success of the business. Contrary to the opinion of the councilman Padilla, I have to believe that the health and safety of the community will be just fine without this ordinance.
When a country nationalizes businesses, it initially imposes restrictions on them and eventually takes them over “in the interests of the nation.” This happens most frequently in nations that are emerging, third-world, totalitarian, in rebellion, or at war, and is based on what the government designates as “businesses or industries critical to the survival, defense, and well-being of the sovereign nation.” Historically, many of the oil businesses developed by British and Dutch companies in the Middle East, the Indian Continent, and South America are the best examples of nationalization, but it happens to other types of businesses as well – especially in the industrial manufacturing and raw materials processing areas. Think of WWII Germany.
When a government of any size designates a specific type of business as “critical to the well-being of the community” and therefore begins to regulate it, they step onto a slippery slope. In the U.S., business deregulation is the accepted – and successful – way of promoting competition that benefits consumers. The Los Angeles proposal to regulate supermarket employment practices goes against our experience.