San Francisco Codifying Successorship Liability for All Companies, Union and Non-Union Alike

An ordinance requiring some hotel and restaurant workers to be retained for at least 90 days following a change in control passed the San Francisco Board of Supervisors by an 11-0 vote. The effect of this ordinance is remarkably similar to what appears in some union collective bargaining agreements.

For example, successor companies may not terminate workers without cause during the 90-day transition period even if the new employer requires fewer hospitality workers than the former employer and hiring of the former employer’s workers will be based on seniority. The ordinance, like collective bargaining agreements, does not apply to supervisory, managerial, or confidential employees. Damages for breaking this law will cost companies $50 per worker per day.

This type of ordinance is not unprecedented. In 2006, San Francisco enacted a similar ordinance covering grocery store workers. In 2011, a Los Angeles city ordinance requiring the purchasers of large grocery stores to employ the prior owner’s employees for 90 days was upheld, despite arguments from the California Grocers’ Association that the ordinance was preempted by the Labor-Management Relations Act.

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