Regulatory Environment For Kudler Fine Foods
Length: 1724 words (4.9 double-spaced pages)
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Due to the decisions made to use local growers of organic products and start a catering service, Kudler Fine Foods has decided to close three departments for refurbishing and simultaneously lay-off workers within each department. For the focus of this paper, Kudler will be analyzed concerning any legal obligations the store may have toward the employees, supplying contractual agreements with local organic farmers, product liability, and regulatory implications.
Obligations to Employees
Kudler Fine Foods (KFF) is located in California where they support the "employment-at-will" policy. Per the KFF handbook (2004):
KFF has to right to add new policies, change policies, or cancel policies at any time. The only policy that will never be changed or canceled for any reason is the employment-at-will policy. The employment-at-will policy allows the employee or KFF to terminate the employment at any time for any reason (para. 2).
This statement reiterates that legally, Kudler does have the right to shut down the three departments, (a) confectionary, (b) deli, and (c) on-site prepared meals for the three months needed to re-establish the business.
Concerns Kudler will need to recognize are the possible, if any, moral obligations to the employees being laid-off. For example, (a) Will KFF offer temporary re-assignment to these employees in other areas of the business, (b) Are the positions in question guaranteed to be replaced with the same employees, (c) Will a new application process be implemented once refurbishing is complete, (d) Will there be compensation packages offered to employees who are not rehired? Possible resolutions to these concerns are, re-assigning work loads, retraining for new positions, guaranteed holds for employees wishing to return after the closing of the department, and if not returning, a compensation package for those employee who qualifies.
Contracting Local Organic Growers
"The law of contracts deals with the enforcement of promises .The law of contracts sorts out what promises are enforceable, to what extent, and how they will be enforced" (Mallor, Barnes, Bowers & Langvardt, 2003, p. 222). Contracts are private agreements between two or more parties that usually involve one party paying the other for a supplied service or for another service. The local organic growers have recently approached Kudler with requests for contracts to assist in the security regarding where the produce is to be sold. By entering into a contract with the growers, each party is accepting the legally binding, and voluntary agreement.
This type of scenario would be beneficial for KFF, as long as the contracts meet the legal requirements for the state and satisfy both parties' needs. Kudler would be helping to secure a partnership, professionally and personally, with the local farmers and local community, while improving its business needs. The stores are not as popular as large-chain grocery stores; therefore, using local farmers is more cost effective then purchasing from outside the states or in massive bulk. It will be necessary for the local organic farmers to continuously supply each store with adequate amounts of produce to meet the publics growing demand. In 2005, the United States Department of Agriculture reported, "in 2004, organic food and beverage sales were $10.9 billion, an increase of 18 percent from 2003" (Gold, 2005, p.4) showing the public increased interest in purchasing things organic.
Negative drawbacks to local contracts with organic farmers are if a natural disaster were
to take place or Kudler found its stores going out of business. For both parties to be satisfied, the contracts will need to have clauses included that cover the "what if's" of for natural disasters. The contracts would also include specific instructions of which area of the local community is accessible for production, desired produce, amounts of produce, and general understanding of not purchasing from the competition. To protect the local growers a clause may also be included to cover the costs if Kudler were to close the shops completely. Another form of protection for all parties involved is requiring that the local growers participate in the certification process introduced by the USDA in 1990 for packaging and selling of goods and services.
Organic trade warrants that products carry a certification mark, which guarantees genuineness in the production system and conforms to the standards required. This guarantees consumers that the products they are purchasing are genuinely organic and that the integrity of the product is maintained from farm to plate (Eaternal, 2007).
In 2002, the USDA ruling for certification was not required on small organic farmers and processors (USDA, 2006) however; this would be a positive to push the farmers to obtain for the safety and success of all parties. Kudler could accept the cost for such certifications if the farmers rejected the concept.
Product Liability Implications
Kudler does have a responsibility to the consumers for the products being sold in the stores. If the products do not meet the USDA qualifications for organic produce and Kudler displays them as such, KFF will be held liable for misrepresentation. The certified USDA label should be displayed by the local farmer on each piece of produce to be sold. This allows for the local growers to be held liable for any complaints by the consumers, not Kudler. The USDA and the National Organic Program (NOP) suggests that retailers selling organic products (a) keep proof of organic certification for direct suppliers, (b) contract with private label suppliers, to confirm manufacturers and the products meet the NOP requirements, and (c) keep pest-management or sanitation records from the stores and farmers (Food Marketing Institute, 2002, p.6). Kudler is also responsible for identifying the manner is which each organic product is handled or processed prior to reaching the store along with the preparation and display steps taking while in stores prior to purchasing.
Organic produce does not have preservatives, therefore, Kudler and the local farmers will need to address the ways in which the produce will be handled, packaged, delivered, stored, sold, and displayed. The USDA and NOP have a list of guidelines for all organic products sold in the U.S., and even the smallest of organic farmers must comply with these regulations. A certification is not mandatory for small business owners selling organic produce but they are required to follow the Organic Food Production Act of 1990 (Food Marketing Institute, 2002, p1). For Kudler to clearly comprehend each regulation, management should research the "Federal Register" which list each expectation required. To avoid any future implications of product liability, as mentioned prior in the paper, Kudler should take implement additional measures for non-regulatory reasons (Food Marketing Institute, 2002, p.1)
After deciding all Kudler store locations will participate in an expansion of services for organic produce and catering, the question of how to hire new employees has arisen.
Based on the current employment laws for the U.S., Kudler will need to carefully review and follow KFF's current store handbook. The employee handbook shows that KFF currently complies with Equal Employment Opportunity Act.
KFF does not discriminate in employment opportunities or practices on the basis of race, color, religion, sex, national origin, age or any other characteristics protected by law policy covers all employment practices, including selection, job assignment, compensation, discipline, termination, and access to benefits and training (University of Phoenix, Kudler Employee Handbook, 2004).
Under California law, Kudler does not have to continue providing handbooks to the current and new employees; however, those handbooks are a very convenient way for all employees to have immediate access to company rules, regulations, and expectations. The hiring managers will need to be aware of what is considered legally acceptable questioning regarding a potential employee's personal lifestyle. Questioning ones personal characteristics becomes acceptable only when the characteristics, " could possibly hinder ones ability to fulfill the job requirements" (LexisNexis Martindale-Hubbell, 2007, Hiring).
Along with abiding to the Equal Employment Opportunity Act, hiring managers will need to follow the Equal Pay Act, Age Discrimination, and Disabilities Acts to avoid possible legal issues. To lessen the cost of training an all-new staff, Kudler could present the current employment staff the opportunity to apply for the new positions. Kudler could also present the new employment opportunities to a select group of those that were directly affected by the lay-off.
Kudler is attempting to expand its services by adding catering and contracting with local organic farmers. During the refurbishing period, a number of employees will either be re-assigned or released from their job tasks. To prevent a chaotic uprising, Kudler would benefit by offering temporary re-assignment to employees and working with the local farmers to create mutually acceptable contracts. It is said that knowledge is key, and in situations like lay-offs and company restructuring, the more knowledgeable one is the better they will be. To ensure future success of Kudler Fines Foods with employees and the local community, management will need to work closely and stay focused on answering as many questions as possible during the rebuilding phase. Showing the community Kudler wants to provide the best possible solutions that benefit all the persons involved, will help in the acceptance and promotion of the new services.
Food Marketing Institute (2002/October) USDA National Organic Program Requirements for Food Retailers and Distribution Centers. Retrieved November 4, 2007, from http://www.fmi.org.
Gold, M. (2005, September) Organic Agricultural Products: Marketing and Trade Resources. Retrieved November 4, 2007, from http://nal.usda.gov/afsic/AFSIC_pubs/srb0301.pdf.
Eaternal (2007) Organic and Natural Products: Certification. Retrieved November 4, 2007, from http://www.eaternal.com.
LexisNexis Martindale-Hubbell (2007, October). Employment Law in California. Retrieved November 6, 2007, from http://research.lawyers.com/California/Employment-Law-in-California.html.
Mallor, J., Barnes, A., Bowers, T., and Langvardt, A. (2003) Business Law: The Ethical, the Global & E-Commerce Environment. Chapter 3, Chapter 9, Chapter 20, and Chapter 51 (12th ed) [University of Phoenix Customer Edition e-text]. New York: McGraw-Hill Companies. Retrieved November 2, 2007, from University of Phoenix rEsource, MBA-1e web site.
University of Phoenix. (2007) Virtual Organization Portal: Kudler Fine Foods-Employee Handbook-September 2004. Retrieved October 21, 2007 from University of Phoenix, rEsource Week 5 web link, MBA 502-Managing the Business Enterprise.
USDA (2006) Economic Research Service. Retrieved November 4, 2007, from http://www.usda.gov/documents/ORGANIC_FARMING.doc.