WEST SACRAMENTO, Calif. (AP) — The union on strike over contract talks with Northern California supermarket chain Raley's has agreed to new terms with a rival grocer — a move that labor experts say will put pressure on Raley's to make a deal.
Pleasanton-based Safeway announced on Thursday that it had reached a tentative contract agreement with the United Food and Commercial Workers, the same union that went on strike against West Sacramento-based Raley's on Sunday after last-ditch contract talks failed. The deal would protect existing health benefits, including provisions providing coverage to retirees.
Among the sticking points in the Raley's dispute is the chain's desire to eliminate retiree health benefits for those who have turned 65 and are eligible for Medicare.
The tentative Safeway deal still requires the approval of the union's local units.
Raley's and Safeway compete for business in the Sacramento region.
Striking workers, who have picketed outside Raley's stores, could increase efforts to redirect customers to Safeway or Save Mart Supermarkets, another chain with which the union has reached a labor deal.
"I think Raley's is in a very tenuous position," Ken Jacobs, a labor relations expert at UC Berkeley, told the Bee. "This isolates them further."
BMO Capital Markets analyst Karen Short has told The Associated Press Safeway could see a bump in its fourth-quarter sales because of the Raley's strike.
In a statement, Raley's disputed that the Safeway deal will have any impact on its labor dispute.
"We chose to negotiate on our own with the union because of our specific situation and need to reduce our operating costs," the company said.
It has hired 500 replacement employees and said revenue has been improving in recent days.
Company officials said they need to cut costs in the face of competition from nonunionized companies.
Union officials said the chain has not agreed to a full audit of its finances and has been bargaining in bad faith since contract negotiations began.