Safeway, Union Reach Pact on Job-Loss Benefits : Company Will Pay Up to $35 Million to Casualties of Massive Reorganization
Safeway Stores and the union representing 100,000 of its employees Friday announced an agreement providing benefits to workers who lose jobs because of a massive company reorganization.
Safeway is restructuring--selling or closing hundreds of stores--to become more cost competitive in the wake of its leveraged buyout last year.
The company may pay out up to $35 million in severance benefits depending on how many employees are put out of work, according to a union source. The United Food & Commercial Workers union (UFCW) has estimated up to 15,000 Safeway workers may lose their jobs as the chain attempts to cut costs and pay off a huge debt it incurred to avoid raiders.
Friday’s announcement came after months of negotiations aimed at settling a suit the UFCW filed against the Oakland-based company under California’s fraudulent conveyance statute last August. The suit alleged that Safeway violated workers’ rights when it went private last July in a $4.2-million leveraged buyout.
‘Major Breakthrough’
“This is a major breakthrough in our efforts to protect our members in the aftermath of Safeway’s leveraged buyout,” union President William H. Wynn said in a prepared statement released in Washington. “It provides immediate relief for thousands of our laid-off members in Texas and greatly strengthens job security for all our Safeway members.”
The agreement provides that Safeway will give severance pay to unionized employees who lose their jobs if Safeway sells the divisions in which they work and the new employers do not retain the employees and negotiate a contract with the union, according to settlement documents to be filed in Alameda County Superior Court.
Specifically, the agreement provides one-half week’s current pay for each year the laid-off employee worked for Safeway, up to a maximum of 16 years. For example, a worker who had 15 years at Safeway and now earns $10 an hour would receive $3,000.
Employees who worked for Safeway for less than a year, and part-time workers averaging less than 20 hours a week, would not eligible.
Preferential Hiring
Additionally, the settlement provides that laid-off Safeway employees will be eligible for preferential hiring for jobs for which they are qualified if they move to an area where Safeway is retaining its division. These transfer provisions are unique in the supermarket industry “and very meaningful to people in a depressed area like Dallas,” said Richard McCracken, the San Francisco attorney who filed the suit for the union.
Safeway also will make contributions to pension trust funds for UFCW members in divisions that close to enable workers within one year of vesting in pension plans to meet the vesting requirement. And Safeway agreed to work with the union in seeking government retraining funds for dislocated Safeway workers in areas where stores are closed, according to William J. Olwell, the union’s executive vice president.
Safeway has taken five major restructuring steps since going private last July. It sold its 20% interest in Woolworths Ltd. of Australia, sold its 240-store division in Britain, announced plans to sell 24 Southern California stores that were deemed too old or too small, sold its Dallas stores to a variety of retailers there and sold its 60-store Salt Lake City division to Borman’s, a Detroit-based grocery chain.
Safeway announced in November that it intends to retain six divisions: Southern California; Northern California; Phoenix; Seattle; Portland, Ore, and Washington, D.C. Its remaining six domestic divisions--Houston, El Paso, Denver, Kansas City, Oklahoma, Little Rock, Ark.--are being reviewed for sale because of comparatively higher labor costs.
