Costly Employee Retention Mandate Job Killer on the Assembly Floor

CA-Job-KillersCroppedA California Chamber of Commerce-opposed job killer bill that denies employers the basic choice of whom to hire is awaiting a vote on the Assembly Floor.

AB 359 (Gonzalez; D-San Diego) inappropriately alters the employment relationship and increases frivolous litigation by allowing a private right of action and by requiring any successor grocery employer to retain employees of the former grocery employer for 90 days and continue to offer continued employment unless the employees’ performance during the 90-day period was unsatisfactory.

The bill passed the Assembly Judiciary Committee last week.

Job Killer Problems

In addition to the flaws identified above, the CalChamber considers AB 359 a job killer because it:

  • Subjects employers to multiple threats of litigation. Despite recent amendments, AB 359 still subjects employers to multiple threats of litigation.  The bill states that nothing in the bill should be interpreted to limit an employee’s ability to file a private right of action for wrongful termination.
  • Denies employers the basic choice of whom to hire in their workforce. AB 359 mandates a successor employer retain the predecessor’s employees for no fewer than 90 days and then offer those employees continued employment unless the successor employer can identify unsatisfactory conduct during the 90-day period.  Absent unlawful conduct by the employer such as discrimination or retaliation, the choice of whom an employer wants to hire and retain should be left to the employer, not the government.
  • Eliminates an employer’s opportunity to investigate applicants before hiring. This unequivocal mandate precludes the successor grocery employer from conducting any pre-hiring background checks or interviews to determine if the employees of the predecessor employer are individuals who meet the unique and specific employment criteria of the subsequent employer. As such, AB 359 basically eliminates any distinction from one employer to the next regarding the type of workforce the employer can deliver.
  • Undermines the at-will presumption in order to protect the incumbent union.  Because AB 359 mandates subsequent employers to hire the predecessor’s employees for at least the 90-day retention period and, thereafter, only terminate such employees for unsatisfactory performance committed during the 90-day period, it limits a successor employer’s ability to voluntarily choose its workforce, thereby triggering the successor employer doctrine.
  • Forces an employer to adhere to terms of a contract to which it is not a party. AB 359 mandates a successor employer to abide by these contractual provisions, even though the successor employer is not actually a party to that collective bargaining agreement. Moreover, this provision of AB 359 places a successor employer in a vulnerable position for an unfair labor practice claim between the “terms and conditions” it establishes versus the provisions of the predecessor employer’s collective bargaining agreement.
  • Does not provide stability or reduce unemployment in the grocery industry. Due to the fact that AB 359 mandates that a subsequent employer must hire all of the predecessor’s employees, the subsequent employer will be forced to either: (1) displace its existing workforce to take on the new employees or (2) eliminate positions it would have opened to new applicants in the grocery industry, as those positions will be filled by the prior grocer’s employees.
  • Discourages investment in grocery establishments and jeopardizes jobs. Eliminating a successor grocery employer’s ability to voluntarily choose its own workforce will ultimately discourage those employers from investing in failing grocery stores or even taking over an existing grocery establishment.
  • Offers no evidence that it preserves health and safety standards. Although AB 359 states that retaining employees of a prior employer will preserve “health and safety standards” in grocery establishments, the bill makes this presumption without any evidence as to how maintaining employees of a prior grocery establishment that was failing in some manner achieves this preservation.

Key Vote

AB 359 passed Assembly Judiciary on May 12 on a party-line vote of 7-3:

Ayes: Mark Stone (D-Scotts Valley), Alejo (D-Salinas), Chau (D-Monterey Park), Chiu (D-San Francisco), Cristina Garcia (D-Bell Gardens), Holden (D-Pasadena), O’Donnell (D-Long Beach).

Noes: Wagner (R-Irvine), Gallagher (R-Yuba City), Maienschein (R-San Diego).

Staff Contact: Jennifer Barrera​

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