Lucky Stores Inc. settled a severance pay dispute.

The Dublin, Calif.-based supermarket chain said it reached an agreement on severance pay for about 3,000 former Gemco grocery employees in Southern California. Union and company officials said employees who worked in Gemco’s food departments will have two options: up to four weeks of severance pay, depending on tenure with the company or a “preferential hiring arrangement” at Lucky supermarkets. Severance pay and benefits are still being negotiated for up to 5,000 former general merchandise workers and 180 pharmacy employees, said Calvin Bussi, Lucky Stores director of labor relations.