California Governor Vetoes Safety Net for Grocery Workers Affected by Merger Layoffs

California Gov. Gavin Newsom has vetoed Senate Bill 725 (Smallwood-Cuevas), the Grocery Worker Safety Net. 

SB 725 was part of United Food and Commercial Workers’ (UFCW) legislative package to mitigate the effects of mergers and acquisitions on the retail and grocery industries. It would have required a grocery establishment that conducts layoffs as a result of a merger or acquisition to provide workers with a one-week displaced-grocery-worker allowance for every year of service. 

Newsom said that he vetoed the bill because other laws already protect these workers.

The UFCW Western States Council released the following statement following the veto: “The veto of SB 725 unfortunately denies ... [grocery] workers the safety net they need and deserve if they lose their jobs to greedy corporate grocery chains. Unemployment insurance does not provide an adequate wage replacement for grocery workers already living paycheck to paycheck. SB 725 would have ensured they knew how they were going to pay their rent or put food on the table if they lost their job.

“The grocery industry has been ravaged by mergers and acquisitions for decades now, and the trend will only continue. Corporations put profits over people. SB 725 was a potential check on this rampant corporate power.  Our hope and expectation is that Gov. Newsom will work with UFCW and its leadership when the inevitable and foreseeable store closures and mass layoffs occur if and when the merger between Kroger and Albertsons is approved.”

In October 2022, The Kroger Co. said it would pursue a $24.6 billion mega-merger with Albertsons Cos., joining together two of the largest grocery chains in the United States. Nationally, these two grocery chains employ more than 700,000 workers and operate 50-plus manufacturing facilities and 5,000 retail stores. UFCW pointed out that California has more of these two grocery chains than any other state in the country, with Kroger operating approximately 233 stores under the Ralphs, Food 4 Less and Foods Co banners, and Albertsons operating approximately 579 grocery stores under the Albertsons, Safeway, Vons and Pavilions banners. 

UFCW is concerned that a merger between these two companies could result in large-scale layoffs for workers, and without protections, the loss of this many jobs in one region will have ripple effects throughout the local economy. 

However, Kroger Co. has pledged to expand resources for associates after its merger with Albertsons is completed. The retailer said in August that it will provide the combined Kroger-Albertsons workforce of more than 700,000 part- and full-time associates access to its continuing-education benefit, which offers up to $21,000 of reimbursement toward higher learning or continued development. The grocer will also expand access to its Goldman Sachs Ayco financial coaching tool. These programs build on a previously revealed commitment that the combined company will invest $1 billion to continue raising associate wages and comprehensive benefits.

In September, a divestiture of 413 Kroger and Albertsons stores and other assets to C&S Wholesale Grocers occurred as part of the merger deal. During last month’s Groceryshop, in Las Vegas, Kroger CEO Rodney McMullen stressed that C&S was one of the few potential buyers that agreed to recognize its labor contracts from day one.

“Importantly in our agreement, C&S commits to honoring all collective-bargaining agreements which include industry-leading benefits, retaining front-line associates and further investing for growth,” McMullen noted.

Kroger also emphasized that the deal follows through on Kroger and Albertsons’ initial promise that no stores will close as a result of the merger, which could be completed as soon as January 2024.

Meanwhile, although Newsom vetoed SB 725, he did sign the following two grocery worker protection bills: 

• AB 647 (Holden), Protect Grocery Workers Job Act. This bill will protect grocery and pharmacy workers’ jobs by strengthening California’s existing Statewide Grocery Worker Retention Law. This will ensure that skilled and trained workers can continue to provide  communities with access to safe food and lessen the economic impact to the social safety net. 
• AB 853 (Maienschein), Californians’ Right to Know on Essential Goods and Services. California residents and workers must have the right to know about proposed mergers in the grocery and drug retail industries that affect the supply and affordability of food and medicine and the supply of experienced grocery retail workers with knowledge of food safety and licensed pharmacy staff entrusted with supplying safe and accurate medications and clinical services to ailing Californians. AB 853 will require grocery or drug retail companies to notify the California attorney general 180 days in advance of finalizing a proposed merger or acquisition and submit an impact analysis report on the effect of the merger or acquisition on communities, including food deserts, food prices and access to food, and workers, such as supply of experienced grocery workers, unemployment, wages and benefits, and more. 

Cincinnati-based Kroger is No. 4 on The PG 100, Progressive Grocer’s 2023 list of the top food and consumables retailers in North America, while Boise, Idaho-based Albertsons is No. 9 on The PG 100. PG also named both companies to its Retailers of the Century list.